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IRS Issues 2017 Auto, Light Truck, and Van Depreciation Dollar Limits

August 15, 2017

 

As you probably have already guessed, I have a lot of small business clients from all different sectors who utilize their primary vehicles for business. As car dealerships begin to ramp up the end of year sales, you all should understand the tax implications of buying a new car. 

 

Without a doubt, a popular question has always been depreciation limits for work vehicles. 

Good news! The IRS has released depreciation limits for business autos, light trucks and vans (including minivans) placed in service in 2017, this information also includes the annual income inclusion amounts for vehicles leased in 2017. 


Passenger autos placed in service in 2017 and to which 1st year bonus depreciation under Section 168 (k) applies, the deduction limit is:
 
•    $11,160 for the first tax year.
•    $5,100 for the second year.
•    $3,050 for the third year.
•    $1,875 for each successive year.


Automobiles placed in service during 2017 but not eligible for bonus depreciation, the deduction limit is:
•    $3,160 for the first tax year.
•    $5,100 for the second year.
•    $3,050 for the third year.
•    $1,875 for each successive year.


Trucks and vans placed in service in 2017 and to which bonus depreciation applies, the deduction limit is:
•    $11,560 for the first tax year.
•    $5,700 for the second year.
•    $3,450 for the third year.
•    $2,075 for each successive year.


Trucks and vans placed in service during 2017, but not eligible for bonus depreciation have a deduction limit of:
•    $3,560 for the first tax year.
•    $5,700 for the second year.
•    $3,450 for the third year.
•    $2,075 for each successive year.


As for leased vehicles used in a business, a taxpayer must follow the procedures in IRS Regs. Section 1.280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2017. Section 280F(c) limits deductions for the cost of leasing automobiles, expressed as an income inclusion amount, according to its revised formula and tables.


Click here for the ENTIRE IRS bulletin.  
Remember to always consult a tax professional to investigate your financial options on deductions.  
 

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