The IRS has issued the luxury car depreciation limits for business vehicles placed in service in 2022 and the lease inclusion amounts for business vehicles first leased in 2022.
Luxury Passenger Car Depreciation Caps
The luxury car depreciation caps for a passenger car placed in service in 2022 limit annual depreciation deductions to:
- $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 sixth year
Depreciation Caps for SUVs, Trucks, and Vans
The luxury car depreciation caps for a sport utility vehicle, 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 sixth year
Excess Depreciation on Luxury Vehicles
If depreciation exceeds the annual cap, the excess depreciation is deducted beginning in the year after the vehicle’s regular depreciation period ends.
The annual cap for this excess depreciation is:
- $6,460 for passenger cars; and
- $6,460 for SUVS, trucks, and vans.
Lease Inclusion Amounts for Cars, SUVs, Trucks, and Vans
If a vehicle is first leased in 2022, a taxpayer must add a lease inclusion amount to gross income in each year of the lease if its fair market value at the time of the lease is more than:
- $56,000 for a passenger car, or
- $56,000 for an SUV, truck or van.
The 2022 lease inclusion tables provide the lease inclusion amounts for each year of the lease.
The lease inclusion amount results in a permanent reduction in the taxpayer’s deduction for the lease payments.
Vehicles Exempt from Depreciation Caps and Lease Inclusion Amounts
The depreciation caps and lease inclusion amounts do not apply to:
- cars with an unloaded gross vehicle weight of more than 6,000 pounds; or
- SUVs, trucks, and vans with a gross vehicle weight rating (GVWR) of more than 6,000 pounds.
