Business Vehicle Depreciation Calculator (US)

Vehicles are 5-year MACRS property, so the depreciation spans six tax years under the half-year convention. However, passenger automobiles are subject to annual 'luxury auto' depreciation caps that often stretch the effective recovery beyond six years because you can't deduct more than the capped amount each year, even with bonus depreciation.

The IRS sets annual dollar caps on depreciation (including Section 179 and bonus) for passenger automobiles, indexed yearly. They limit the first-year and subsequent-year deductions regardless of the car's cost, so an expensive car is written off more slowly than its price would suggest. Heavy vehicles over 6,000 lbs GVWR are exempt from these passenger-auto caps. Check the current year's figures, as they change.

Yes for qualifying vehicles used more than 50% for business, but passenger autos are limited by the luxury-auto caps, and SUVs in the 6,000–14,000 lb range have a separate Section 179 limit. Heavy trucks/vans over 6,000 lbs GVWR that meet certain criteria can be more fully expensed. The rules are vehicle-weight-specific and change annually — verify before claiming.

You depreciate only the business-use share of the vehicle's cost, and you must use it more than 50% for business to use accelerated methods (MACRS, Section 179, bonus). If business use drops to 50% or less in a later year after you've taken accelerated depreciation, you may have to 'recapture' some of it. Keep a mileage log — the business-use percentage is exactly what the IRS scrutinises on vehicle deductions.