The new Tax Cuts and Jobs Act raises the cap placed on depreciation write-offs of business-use vehicles. The new Code Sec. 280F annual depreciation caps are
- $10,000 for the first year a vehicle is placed in service (up from a current level of $3,160)
- $16,000 for the second year (up from $5,100)
- $9,600 for the third year (up from $3,050)
- $5,760 for each subsequent year (up from $1,875) until costs are fully recovered
For passenger autos eligible for bonus first-year depreciation, that maximum first-year bonus depreciation allowance remains at $8,000 (raising the first-year write-off to $18,000). The new, higher limits only apply to vehicles placed in service after December 31, 2017.
For vehicles placed in service in 2018, the preceding caps will apply to all types of vehicles. However, the IRS figures inflation adjustments differently for trucks (including SUVs treated as trucks) and vans than for regular passenger cars. Thus, beginning in 2019 when these figures are first adjusted for inflation, separate inflation adjusted caps will be provided for (1) trucks (including SUVs) and vans and for (2) regular passenger cars.
The $25,000 section 179 expensing limit on certain heavy trucks, vans, and SUVs is inflation-adjusted after 2018. The $25,000 limit applies to a sport utility vehicle, a truck with an interior cargo bed length less than six feet, or a van that seats fewer than 10 persons behind the driver’s seat if the vehicle is exempt from the Code Sec. 280F annual depreciation caps because it has a gross vehicle weight rating in excess of 6,000 pounds or is otherwise exempt.