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2010 Luxury Auto Depreciation Limits, Tables and Explanations

Introduction

 

Before 1984, you could write off the entire cost of a vehicle over the course of three years, regardless of its cost.

 

In 1984, however, lawmakers believed that some business taxpayers were taking advantage of this rule, so they enacted the luxury auto limits, which continue to be in use today.1

 

Your business vehicle is going to fall into one of the following four categories:

 

·

Passenger auto subject to the luxury limits because it has a gross vehicle weight of 6,000 pounds or less;

 

·

Passenger auto exempt from the luxury limits because its gross vehicle weight is more than 6,000 pounds (almost no cars meet this curb-weight test);

 

·

Truck or van subject to the luxury limits because it has a gross vehicle weight rating (GVWR) of 6,000 pounds or less (GVWR is curb weight plus people and cargo; the people and cargo are fixed by the rules—you don’t get to pick your own); or

 

·

Truck or van not subject to the luxury limits because it has a GVWR of more than 6,000 pounds.

SUVs and crossover vehicles fall into either the auto or the truck category. The U.S. Department of Transportation sets the standards for classifying passenger autos, pickups, SUVs, and vans as either passenger autos or trucks.

 

Tax law takes the classifications a couple of steps further. New and used SUVs, crossover vehicles, pickup trucks, and vans with GVWRs greater than 6,000 pounds that are purchased and placed in service during 2010 can qualify for Section 179 expensing of up to,

 

·

$25,000 on qualifying SUVs or crossover vehicles, or

 

·

$250,000 on qualifying pickup trucks and vans.

Once your vehicle lands in this Section 179 expensing–eligible category, you get five-year MACRS depreciation with no luxury limits. In other words, you write off the entire cost or other basis of the vehicle, using the five-year MACRS depreciation table.

 

Tip. Open the driver door to locate the GVWR of your vehicle. Generally, there is a metal or paper tag with the GVWR information on either the door frame or the door itself.

 

If the Section 179 qualifying vehicle is new, you also qualify for 50 % bonus depreciation in the first year.

 

Example. To put this in perspective, assume that you spend $80,000 today on a 100 % business-use vehicle, and you want to deduct as much as possible this year. Your first-year deduction for both depreciation and expensing is

 

·

$80,000 on a Section 179 qualifying pickup truck;

 

·

$80,000 on a Section 179 qualifying van;

 

·

$58,000 on a Section 179 qualifying SUV or crossover vehicle;

 

·

$11,060 on a new car, SUV, or crossover vehicle classified as a car and not eligible for Section 179 expensing;

 

·

$3,060 on a used car, SUV, or crossover vehicle classified as a car and not eligible for Section 179 expensing;

 

·

$11,160 on a new SUV, crossover vehicle, pickup truck, or van classified as a truck but not eligible for Section 179 expensing; or

 

·

$3,160 on a used SUV, crossover vehicle, pickup truck, or van classified as a truck but not eligible for Section 179 expensing.

2010 Auto Depreciation Tables

 

There are limits on the amount you can deduct for depreciation of your car, truck or van. The section 179 deduction and special depreciation allowance are treated as depreciation for purposes of the limits. The maximum amount you can deduct each year depends on the year you place the car in service. The 2010 luxury vehicle tables appear below.2 The tables show

 

·

Limitations on depreciation deductions for owners of passenger autos, trucks and vans first placed in service by the taxpayer in 2010, and

 

·

The amounts to be included in income by lessees of passenger autos, trucks and vans first leased by the taxpayer in 2010.

 

To stay on top these and future tax law changes, we suggest that you read the monthly articles published online at the Bradford Tax Institute. We provide cutting-edge tax information for the self-employed, the one owner business, and the husband and wife owned business.

 

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TABLE 1

Luxury Depreciation Limit for USED Passenger Autos (not Trucks or Vans) Placed in Service in Calendar Year 2010

Tax Year

Amount

1st Tax Year

$3,060

2nd Tax Year

$4,900

3rd Tax Year

$2,950

Each Succeeding Year

$1,775

 

 

TABLE 2

Luxury Depreciation Limit for NEW Passenger Autos (not Trucks or Vans) Placed in Service in Calendar Year 2010

Tax Year

Amount

1st Tax Year

$11,060

2nd Tax Year

$4,900

3rd Tax Year

$2,950

Each Succeeding Year

$1,775

 

 

TABLE 3

Luxury Depreciation Limit for USED Trucks and Vans Placed in Service in Calendar Year 2010

Tax Year

Amount

1st Tax Year

$3,160

2nd Tax Year

$5,100

3rd Tax Year

$3,050

Each Succeeding Year

$1,875

 

TABLE 4

Luxury Depreciation Limit for NEW Trucks and Vans Placed in Service in Calendar Year 2010

Tax Year

Amount

1st Tax Year

$11,160

2nd Tax Year

$5,100

3rd Tax Year

$3,050

Each Succeeding Year

$1,875

 

 

TABLE 5

Dollar Amounts for Passenger Automobiles (not Trucks or Vans) with a Lease Term Beginning in Calendar Year 2010

Fair Market Value of Passenger Automobile

Tax Year During Lease

Over

Not Over

1st

2nd

3rd

4th

5th & later

$16,700

$ 17,000

3

7

10

11

14

17,000

17,500

4

8

13

15

16

17,000

18,000

5

10

16

19

21

18,000

18,500

6

13

18

23

26

18,500

19,000

7

15

22

26

31

19,000

19,500

8

17

25

30

35

19,500

20,000

9

19

29

34

39

20,000

20,500

10

21

32

38

44

20,500

21,000

11

23

35

42

48

21,000

21,500

12

26

38

45

53

21,500

22,000

13

28

41

50

57

22,000

23,000

14

31

46

56

63

23,000

24,000

16

36

52

63

73

24,000

25,000

18

40

59

71

81

25,000

26,000

20

44

66

78

90

26,000

27,000

22

49

71

86

100

27,000

28,000

24

53

78

94

108

28,000

29,000

26

57

85

101

118

29,000

30,000

28

61

92

109

126

30,000

31,000

30

66

97

117

135

31,000

32,000

32

70

104

125

144

32,000

33,000

34

74

111

132

153

33,000

34,000

36

79

117

140

161

34,000

35,000

38

83

123

148

171

35,000

36,000

40

87

130

156

179

36,000

37,000

42

92

136

163

188

37,000

38,000

44

96

143

170

198

38,000

39,000

46

100

149

179

206

39,000

40,000

48

105

155

186

215

40,000

41,000

50

109

162

194

224

41,000

42,000

52

113

169

201

233

42,000

43,000

54

118

174

210

241

43,000

44,000

56

122

181

217

251

44,000

45,000

58

126

188

225

259

45,000

46,000

60

131

194

232

269

46,000

47,000

61

135

201

240

277

47,000

48,000

63

140

207

248

286

48,000

49,000

65

144

213

256

295

49,000

50,000

67

148

220

263

304

50,000

51,000

69

153

226

271

313

51,000

52,000

71

157

232

279

322

52,000

53,000

73

161

239

287

331

53,000

54,000

75

166

245

294

340

54,000

55,000

77

170

252

302

348

55,000

56,000

79

174

258

310

358

56,000

57,000

81

178

265

318

366

57,000

58,000

83

183

271

325

375

58,000

59,000

85

187

278

333

384

59,000

60,000

87

191

284

341

393

60,000

62,000

90

198

294

352

406

62,000

64,000

94

207

306

368

424

64,000

66,000

98

215

320

382

443

66,000

68,000

102

224

332

398

460

68,000

70,000

106

232

346

413

478

70,000

72,000

110

241

358

429

496

72,000

74,000

114

250

371

444

513

74,000

76,000

118

258

384

460

531

76,000

78,000

122

267

396

476

549

78,000

80,000

126

276

409

491

566

80,000

85,000

132

291

432

518

598

85,000

90,000

142

313

464

556

643

90,000

95,000

152

334

497

594

687

95,000

100,000

162

356

528

634

731

100,000

110,000

177

388

577

691

798

110,000

120,000

196

432

641

768

887

120,000

130,000

216

475

705

846

976

130,000

140,000

236

518

770

922

1,065

140,000

150,000

256

561

834

1,000

1,154

150,000

160,000

275

605

898

1,077

1,243

160,000

170,000

295

648

963

1,153

1,333

170,000

180,000

315

691

1,027

1,231

1,421

180,000

190,000

334

735

1,091

1,308

1,510

190,000

200,000

354

778

1,155

1,386

1,599

200,000

210,000

374

821

1,220

1,462

1,688

210,000

220,000

393

865

1,284

1,539

1,777

220,000

230,000

413

908

1,348

1,617

1,866

230,000

240,000

433

951

1,413

1,693

1,956

240,000

and up

453

995

1,476

1,771

2,044

 

 

TABLE 6

Dollar Amounts for Trucks and Vans with a Lease Term Beginning in Calendar Year 2010

Fair Market Value of Truck or Van

Tax Year During Lease

Over

Not Over

1st

2nd

3rd

4th

5th & later

17,000

17,500

3

6

9

10

11

17,500

18,000

4

8

12

14

16

18,000

18,500

5

10

15

18

21

18,500

19,000

6

12

19

22

24

19,000

19,500

7

15

21

26

29

19,500

20,000

8

17

25

29

34

20,000

20,500

9

19

28

33

38

20,500

21,000

10

21

31

37

43

21,000

21,500

11

23

35

41

47

21,500

22,000

12

25

38

45

51

22,000

23,000

13

29

42

51

58

23,000

24,000

15

33

49

58

67

24,000

25,000

17

37

56

66

76

25,000

26,000

19

42

62

73

85

26,000

27,000

21

46

68

82

93

27,000

28,000

23

50

75

89

103

28,000

29,000

25

55

81

97

111

29,000

30,000

27

59

88

104

121

30,000

31,000

29

63

94

113

129

31,000

32,000

31

68

100

120

138

32,000

33,000

33

72

107

127

148

33,000

34,000

35

76

114

135

156

34,000

35,000

37

81

119

143

165

35,000

36,000

39

85

126

151

174

36,000

37,000

41

89

133

158

183

37,000

38,000

43

94

139

166

191

38,000

39,000

45

98

145

174

201

39,000

40,000

47

102

152

182

209

40,000

41,000

49

106

159

189

218

41,000

42,000

51

111

164

198

227

42,000

43,000

53

115

171

205

236

43,000

44,000

55

119

178

213

245

44,000

45,000

57

124

184

220

254

45,000

46,000

59

128

190

228

263

46,000

47,000

60

133

197

235

272

47,000

48,000

62

137

203

244

280

48,000

49,000

64

142

209

251

290

49,000

50,000

66

146

216

259

298

50,000

51,000

68

150

223

266

308

51,000

52,000

70

154

229

275

316

52,000

53,000

72

159

235

282

325

53,000

54,000

74

163

242

290

334

54,000

55,000

76

167

249

297

343

55,000

56,000

78

172

254

305

352

56,000

57,000

80

176

261

313

361

57,000

58,000

82

180

268

320

370

58,000

59,000

84

185

274

328

378

59,000

60,000

86

189

280

336

388

60,000

62,000

89

195

291

347

401

62,000

64,000

93

204

303

363

418

64,000

66,000

97

213

315

379

436

66,000

68,000

101

221

329

394

454

68,000

70,000

105

230

341

410

472

70,000

72,000

109

239

354

424

490

72,000

74,000

113

247

367

440

508

74,000

76,000

117

256

380

455

526

76,000

78,000

121

264

393

471

543

78,000

80,000

125

273

406

486

561

80,000

85,000

131

289

428

513

592

85,000

90,000

141

310

461

552

636

90,000

95,000

151

332

492

591

681

95,000

100,000

161

353

525

629

726

100,000

110,000

176

386

573

686

793

110,000

120,000

195

430

637

763

882

120,000

130,000

215

473

701

841

971

130,000

140,000

235

516

766

918

1,059

140,000

150,000

255

559

830

995

1,149

150,000

160,000

274

603

894

1,072

1,238

160,000

170,000

294

646

958

1,150

1,326

170,000

180,000

314

689

1,023

1,226

1,416

180,000

190,000

333

733

1,087

1,303

1,505

190,000

200,000

353

776

1,151

1,381

1,594

200,000

210,000

373

819

1,216

1,457

1,683

210,000

220,000

392

863

1,280

1,534

1,772

220,000

230,000

412

906

1,344

1,612

1,861

230,000

240,000

432

949

1,409

1,689

1,949

240,000

250,000

452

992

1,473

1,766

2,039

 


 

1    IRC Section 280F.

2    The IRS released tables 1, 3, 5 and 6 in Rev. Proc. 2010-18 on February 16, 2010. Tables 2 and 4 reflect bonus depreciation pursuant to H.R. 5297, signed into law September, 2010.