IRS provides inflation adjustments for vehicle depreciation deductions

The Internal Revenue Service has issued a revenue procedure updating the depreciation deductions allowed for owners of passenger automobiles, trucks and vans placed in service in 2019, providing the annual inflation adjustments.

The IRS headquarters in Washington
The IRS headquarters in Washington.

Revenue Procedure 2019-26 provides tables of limitations on depreciation deductions, along with a table of amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2019.

The tables detailing the depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by section 280F(d)(7) of the tax code. In the revenue procedure, the term “passenger automobiles” also includes trucks and vans.

For qualified property acquired and placed in service after Sept. 27, 2017, section 168(k)(2)(F)(i) increases the first year depreciation allowed under section 280F(a)(1)(A)(i) by $8,000. For qualified property acquired by the taxpayer before Sept. 28, 2017, and placed in service by the taxpayer during 2019, section 168(k)(2)(F)(iii) increases the first year depreciation allowed under section 280F(a)(1)(A)(i) by $4,800.

In terms of the depreciation limitations for passenger automobiles acquired before Sept. 28, 2017, and placed in service during calendar year 2019 for which the section 168(k) additional first year depreciation deduction applies, the amount in the first tax year is $ 14,900. In the second tax year, it’s $ 16,100, and in the third tax year, it’s $ 9,700. In each succeeding year, it’s $5,760.

As for the depreciation limitations for passenger automobiles acquired after Sept. 27, 2017, and placed in service during calendar year 2019, for which the section 168(k) additional first year depreciation deduction applies, the amount in the first tax year is $18,100. In the second tax year it’s $16,100, and in the third tax year, it’s $ 9,700. In each succeeding year, it’s $ 5,760.

Finally, for the depreciation limitations for passenger automobiles placed in service during calendar year 2019 for which no section 168(k) additional first year depreciation deduction applies, the amount in the first tax year is $10,100. In the second tax year, it’s $16,100, and in the third tax year it’s $9,700. In each succeeding year, it’s $ 5,760.

The annual inflation adjustments now use the chained consumer price index, or chained CPI, method of calculating the amounts, in accordance with the Tax Cuts and Jobs Act.

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