Business Vehicle Depreciation Calculator
See your yearly tax deduction for a business car, pickup or SUV under MACRS, 100% bonus depreciation or straight-line, with the 2026 IRS caps applied.
| Tax year | Deduction | Basis left |
|---|---|---|
| Year 1 | $8,800 | $35,200 |
| Year 2 | $14,080 | $21,120 |
| Year 3 | $8,448 | $12,672 |
| Year 4 | $5,069 | $7,603 |
| Year 5 | $5,069 | $2,534 |
| Year 6 | $2,534 | $0 |
Assumes placed in service in 2026, half-year convention (no mid-quarter), no Section 179 election. Bonus on a capped car uses the Rev. Proc. 2019-13 safe harbor for later years. General information, not tax advice.
Get a plain-English read of your numbers, or ask anything about depreciation, when to sell or lease vs buy. Nothing is sent until you press Ask.
How business vehicle depreciation works
Under IRS Publication 946, cars and light trucks are 5-year property. The default method, MACRS 200% declining balance with the half-year convention, front-loads the deduction. Only the business-use share of the cost is depreciable, and you need a mileage log to prove it.
2026 caps for passenger automobiles (Rev. Proc. 2026-15)
| Tax year | With bonus | Without bonus |
|---|---|---|
| Year 1 | $20,300 | $12,300 |
| Year 2 | $19,800 | $19,800 |
| Year 3 | $11,900 | $11,900 |
| Year 4 and later | $7,160 | $7,160 |
Multiply by the business-use percentage. A passenger car that hits the caps keeps deducting up to $7,160 a year after year six until the basis is used up.
Section 179 vs bonus depreciation
Both let you deduct most of the cost up front. Since 2025, 100% bonus depreciation is permanent for qualifying property, so many owners use bonus instead of §179. §179 can't create a loss and heavy SUVs have a separate §179 cap, but §179 lets you pick exactly how much to expense. Both are limited by the §280F caps on passenger cars.
The IRS assumes every vehicle was placed in service mid-year, so year one gets only half a year: half of the 40% double-declining rate = 20%.
On a passenger car the §280F cap can bite before these percentages do: on a $90,000 car, 20% is $18,000, but the 2026 no-bonus cap allows only $12,300 in year one.
| Year | Depreciation | Book value |
|---|---|---|
| 1 | $6,400 | $33,600 |
| 2 | $6,400 | $27,200 |
| 3 | $6,400 | $20,800 |
| 4 | $6,400 | $14,400 |
| 5 | $6,400 | $8,000 |
Straight-line: (cost − salvage) ÷ life each year. Declining balance: book value × factor ÷ life, switching to straight-line when that's larger. These are accounting (book) methods; for US tax use the MACRS calculator above.
Questions people ask
How do you depreciate a business vehicle?
Cars, light trucks and vans are 5-year property under MACRS (IRS Publication 946). Most businesses use the 200% declining balance method with the half-year convention, which spreads the deduction over six tax years: 20%, 32%, 19.2%, 11.52%, 11.52% and 5.76% of the business-use basis.
What are the 2026 depreciation limits for cars?
For passenger automobiles placed in service in 2026, Rev. Proc. 2026-15 caps depreciation at $20,300 in year one if bonus depreciation applies ($12,300 without), $19,800 in year two, $11,900 in year three and $7,160 in each later year, multiplied by the business-use percentage.
Is 100% bonus depreciation back for vehicles?
Yes. The 2025 tax law made 100% bonus depreciation permanent for qualifying property acquired after January 19, 2025 (IRS Notice 2026-11). For passenger cars the §280F cap still limits year one to $20,300; heavy SUVs, pickups and vans over 6,000 lb GVWR are not subject to those caps.
What is the 6,000 lb rule?
Vehicles with a gross vehicle weight rating above 6,000 lb are not "passenger automobiles" for the §280F caps, so the full business-use cost can be deducted through bonus depreciation. Section 179 expensing of heavy SUVs has its own lower inflation-adjusted cap. Check the GVWR on the driver-door sticker.
What if I use the vehicle 50% or less for business?
You must use straight-line depreciation (the alternative depreciation system rate) and cannot claim bonus depreciation or Section 179. If business use later drops to 50% or below, excess depreciation is recaptured as income.
Standard mileage rate or actual expenses?
With the standard mileage rate, depreciation is built into the per-mile rate and you cannot also deduct it. Actual expenses (including depreciation) often win for expensive vehicles with high business use. Confirm with a tax professional.