Vehicle depreciation limits likely to drop for 2018


Some “luxury vehicle” depreciation caps for cars and trucks first placed in service in 2018 are likely to drop. The projection is based on consumer price data released by the Bureau of Labor Statistics in October. The IRS will announce official amounts, likely before year-end or early next year.

2018 vehicle depreciation caps

The projected luxury auto depreciation limits under Code Sec. 280F for passenger automobiles placed in service in 2018 are:

  • $3,160 for the first year (the same as for 2017 if bonus depreciation is not elected);
  • $9,560 for the first year if bonus depreciation is elected (down $11,160 for 2017 to reflect a drop in bonus depreciation in 2018 to 40 percent);
  • $5,000 for the second tax year (down from $5,100 for 2017);
  • $2,950 for the third year (down from $3,050 for 2017; and
  • $1,775 for each tax year thereafter (down from $1,875 for 2017).

Trucks and vans

The projected maximum depreciation limits under Code Sec. 280F for trucks and vans first placed in service in 2018 are:

  • $3,560 for the first year (the same as for 2017 if bonus depreciation is not elected);
  • $9,960 for the first year if bonus depreciation is elected (down $11,160 for 2017 to reflect a drop in bonus depreciation in 2018 to 40 percent);
  • $5,700 for the second tax year (the same as for 2017);
  • $3,350 for the year tax year (down $100 from 2017); and
  • $2,075 for each tax year thereafter (same as for 2017).

Tax reform

These 2018 projections do not take into account any changes that may be made by tax reform proposals now being considered in Congress. For example, one initial proposal would have increased the luxury auto limit for Section 168(k) bonus deprecation property by an additional $16,000, instead of $6,400. The proposed use of a “chained” CPI may also change the inflation factor used in certain annual adjustments.

Rev. Proc. 2017-29