Tax Reform Changes Depreciation Limits on Luxury Automobiles


The Tax Cuts and Jobs Act changed depreciation limits for passenger vehicles placed in service after December 31, 2017. If the taxpayer does not claim bonus depreciation, the greatest allowable depreciation deduction is:

  • $10,000 for the first year;
  • $16,000 for the second year;
  • $9,600 for the third year; and
  • $5,760 for each later taxable year in the recovery period.

If a taxpayer claims 100% bonus depreciation, the greatest allowable depreciation deduction is:

  • $18,000 for the first year;
  • $16,000 for the second year;
  • $9,600 for the third year; and
  • $5,760 for each later taxable year in the recovery period.

This change applies to property placed in service after December 31, 2017.

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