Business Vehicle Depreciation Calculator
Calculate MACRS depreciation for business vehicles with luxury vehicle limits.
By Konstantin Iakovlev · Updated September 2026 · Source: IRS — Publication 946, How To Depreciate Property
Section 280F caps apply (passenger auto, ≤6,000 lbs).
Annual depreciation is limited to the IRS §280F caps below, regardless of the vehicle's cost. Heavy vehicles over 6,000 lbs GVWR are exempt.
Year 1 Deduction
$16,240.00
Total Deductions
$44,000.00
Depreciable Basis
$44,000.00
Year-by-Year Depreciation Schedule
| Year 1 | $16,240.00 |
| Year 2 | $8,883.20 |
| Year 3 | $5,329.92 |
| Year 4 | $3,197.95 |
| Year 5 | $3,197.95 |
| Year 6 | $1,598.98 |
| Year 7 | $5,552.00 |
2026 Luxury Vehicle Limits
| Year 1 (with bonus) | $20,300.00 |
| Year 1 (no bonus) | $12,300.00 |
| Year 2 | $19,800.00 |
| Year 3 | $11,900.00 |
| Year 4+ | $7,160.00 |
Use the Business Vehicle Depreciation Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.
Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.
How It Works
Depreciating a business vehicle under the Modified Accelerated Cost Recovery System (MACRS) means working within the luxury vehicle caps the IRS sets each year, and this tool handles both. Getting the figure right is central to tax planning and to claiming the deductions you're entitled to, particularly given the 2026 luxury vehicle limits.
Calculations run on the MACRS general depreciation system (GDS) across a 5-year recovery period. The method applies the 200% declining balance approach and switches to straight-line at the point where that produces a larger deduction. Throughout, the IRS luxury vehicle depreciation limits for each year are built in so the results stay within current tax law.
Two things commonly trip people up. The first is overlooking Section 179 expensing or bonus depreciation, either of which can substantially change your first-year write-off. The second is the 'listed property' rules: if business use is 50% or less, the vehicle gets no Section 179 deduction and no bonus depreciation, and it must be depreciated straight-line over the ADS recovery period.
Example: New Passenger Vehicle Placed in Service in 2026
- 1 Input: a $70,000 passenger vehicle (6,000 lbs GVWR or less), placed in service in July 2026 and used 100% for business.
- 2 With bonus depreciation: 100% bonus would allow the full $70,000, but the Section 280F cap limits year 1 to $20,300 (Rev. Proc. 2026-15, Table 1). Later years are capped at $19,800, then $11,900, then $7,160 a year.
- 3 Without bonus depreciation: year 1 is 20% × $70,000 = $14,000 under the half-year convention, capped at $12,300. Year 2: 32% = $22,400, capped at $19,800. Year 3: 19.2% = $13,440, capped at $11,900. Years 4 and 5: 11.52% = $8,064, capped at $7,160 each. Year 6: 5.76% = $4,032, under the cap.
- 4 That leaves $7,648 unrecovered after the six tax years of the 5-year recovery period; it is deducted afterwards at up to $7,160 a year ($7,160 in year 7, $488 in year 8). A vehicle over 6,000 lbs GVWR is not capped, so with bonus depreciation the full $70,000 comes off in year 1.
Source: IRS — Publication 946, How To Depreciate Property · Last updated: September 2026
Frequently Asked Questions
What are the 2026 vehicle depreciation limits?
Can I write off a vehicle over 6,000 lbs in one year?
What is the difference between Section 179 and bonus depreciation?
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