2022 Luxury Automobile Depreciation Caps and Lease Inclusion Amounts

The IRS released luxury car depreciation limits for business vehicles placed in service in 2022 as well as its lease inclusion amounts for business vehicles with leases beginning in 2022.

Tax Depreciation RulesLuxury Passenger Car Depreciation Caps

The depreciation caps for a luxury passenger car placed in service in 2022 are:

  • $11,200 for the first year without bonus depreciation
  • $19,200 for the first year with bonus depreciation
  • $18,000 for the second year
  • $10,800 for the third year
  • $6,460 for the fourth through the sixth year

SUV, Truck, and Van Depreciation Caps

The depreciation caps for a luxury SUV, truck, or van placed in service in 2022 are:

  • $11,200 for the first year without bonus depreciation
  • $19,200 for the first year with bonus depreciation
  • $18,000 for the second year
  • $10,800 for the third year
  • $6,460 for the fourth through the sixth year

Excess Depreciation on Luxury Vehicles

If depreciation is greater than the annual cap, the excess depreciation will be deducted starting in the year following the end of the vehicle’s regular depreciation period. The annual cap for excess depreciation is $6,460 for passenger cars, SUVs, trucks, and vans.

Lease Inclusion Amounts for Luxury Cars, SUVs, Trucks, and Vans

If a vehicle’s lease began in 2022, the taxpayer is required to add a lease inclusion amount to their gross income each year of the lease if its fair market value at the time of the lease is greater than $56,000 for a passenger car, SUV, truck or van. A taxpayer’s lease inclusion amount results in a permanent reduction in their deduction for lease payments. For more information on the lease inclusion amounts for each year of a lease, please see the 2022 lease inclusion tables.

Exempt Vehicles

Certain vehicles are exempt from the depreciation caps and lease inclusion amounts, including:

  • Cars with an unloaded gross vehicle weight of greater than 6,000 pounds
  • SUVs, trucks, and vans with a gross vehicle weight rating (GVWR) of greater than 6,000 pounds

Taxpayers looking to avoid these limits should opt for a larger vehicle.

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