Depreciation Caps for Luxury Passenger Cars
- $12,200 for the first year without bonus depreciation
- $20,200 for the first year with bonus depreciation
- $19,500 for the second year
- $11,700 for the third year
- $6,960 for the fourth through sixth year
SUV, Truck & Van Depreciation Caps
The luxury car depreciation caps for a sport utility vehicle, truck, or van placed in service in 2023 are:
- $12,200 for the first year without bonus depreciation
- $20,200 for the first year with bonus depreciation
- $19,500 for the second year
- $11,700 for the third year
- $6,960 for the fourth through sixth year
Excess Depreciation on Luxury Vehicles
If depreciation exceeds the annual cap, the excess depreciation is deducted beginning in the year after the vehicle’s regular depreciation period ends. The annual cap for this excess depreciation is:
- $6,960 for passenger cars and
- $6,960 for SUVS, trucks, and vans.
Car, SUV, Truck & Van Lease Inclusion Amounts
If a vehicle is first leased in 2023, a taxpayer must add a lease inclusion amount to gross income in each year of the lease if its fair market value at the time of the lease is more than:
- $60,000 for a passenger car, or
- $60,000 for an SUV, truck or van.
The 2023 lease inclusion tables provide the lease inclusion amounts for each year of the lease, resulting in a permanent reduction in the taxpayer’s deduction for the lease payments.
Vehicles Exempt from Depreciation Caps & Lease Inclusion Amounts
The depreciation caps and lease inclusion amounts do not apply to:
- Cars with an unloaded gross vehicle weight of more than 6,000 pounds
- SUVs, trucks and vans with a gross vehicle weight rating (GVWR) of more than 6,000 pounds
So taxpayers who want to avoid these limits should “think big.”