May 21, 2019

The IRS recently released the depreciation deduction limits for passenger autos (includes trucks and vans as well) that were placed in service in 2019.

If bonus first-year depreciation was taken (also known as Section 168(k) additional depreciation), the new limits are as follows:

• Passenger autos acquired before 9-28-17 and first placed in service in 2019: $14,900 for the first tax year; $16,100 for the second tax year; $9,700 for the third tax year; and $5,760 for each succeeding year.
• Passenger autos acquired after 9-27-17 and first placed in service in 2019: $18,100 for the first tax year; $16,100 for the second tax year; $9,700 for the third tax year; and $5,760 for each succeeding year.

If no bonus first-year depreciation was taken, the depreciation limit is $10,100 for the first tax year; $16,100 for the second tax year; $9,700 for the third tax year; and $5,760 for each succeeding year.

If an auto is leased rather than purchased (this also includes trucks and vans), Internal Revenue Code Section 280F(c) places a limit on the amount of the lease cost of an automobile that may be deducted. An amount is required to be included in income as an offset (“income inclusion amount”). Table 4 of Revenue Procedure 2019-26 reflects the amount of income that must be included for lessees of passenger automobiles that were initially leased during 2019, based on a range of fair market values for each tax year after the automobile is first leased.