The tax law has special depreciation limits for motor vehicles - often incongruously called the "luxury auto" rules. The IRS has released (Rev. Proc. 2025-16) the updated limits, which apply to vehicles far below the Rolls-Royce level.
Different limits apply when bonus depreciation (Sec. 163(k) additional first-year depreciation) is elected and when it is not . The tables:
REV. PROC. 2026‑15 — Table 1
Depreciation limitations for passenger automobiles acquired after September 27, 2017 and placed in service during calendar year 2026, for which the §168(k) additional first‑year depreciation deduction applies.
| Tax Year | Amount |
|---|---|
| 1st Tax Year | $20,300 |
| 2nd Tax Year | $19,800 |
| 3rd Tax Year | $11,900 |
| Each Succeeding Year | $7,160 |
REV. PROC. 2026‑15 — Table 2
Depreciation limitations for passenger automobiles placed in service during calendar year 2026 for which no §168(k) additional first‑year depreciation deduction applies.
| Tax Year | Amount |
|---|---|
| 1st Tax Year | $12,300 |
| 2nd Tax Year | $19,800 |
| 3rd Tax Year | $11,900 |
| Each Succeeding Year | $7,160 |
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