Tax Reform Series 24 – Depreciation Caps on Luxury Cars


Plain Language of Change:

  • Annual depreciation caps are increased for vehicles placed in service after December 31, 2017 as follows:
    • Tax Year 1 – $10,000 ($18,000 if bonus depreciation claimed)
    • Tax Year 2 – $16,000
    • Tax Year 3 – $  9,600
    • Thereafter – $  5,760
  • $8,000 of bonus depreciation is eligible in first year placed in service
  • No depreciation deduction after first year if bonus is claimed unless IRS provides a safe harbor
  • $25,000 section 179 expensing allowed on SUVs. Amount indexed for inflation after 2018

Detailed Analysis of Depreciation Caps on Luxury Automobiles

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