Business Vehicle Depreciation Calculator
Calculate MACRS depreciation for business vehicles with luxury vehicle limits.
By Konstantin Iakovlev · Updated April 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 | $14,080.00 |
| Year 3 | $8,448.00 |
| Year 4 | $5,068.80 |
| Year 5 | $163.20 |
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, which attach extra record-keeping obligations to vehicles whenever business use isn't over 50%.
Example: New SUV Purchased in 2026
- 1 Input the purchase price of your new business SUV: $70,000. Assume the vehicle was placed in service in July 2026.
- 2 The calculator first applies the 200% declining balance method for the 5-year recovery period. It then compares this against the 2026 luxury vehicle depreciation limits. For a vehicle placed in service in July, the half-year convention is applied for the first year.
- 3 Based on a $70,000 vehicle purchased in 2026, the calculated depreciation for Year 1 (2026) would be limited to the luxury vehicle cap, which for 2026 is projected to be around $20,000 (this is an estimate as actual 2026 limits are not yet released, but based on historical increases). Subsequent years' depreciation would also be capped.
- 4 This example highlights how the luxury vehicle limits can significantly reduce your first-year depreciation deduction compared to a direct MACRS calculation without the cap. Always consult with a tax professional for personalized advice and the most up-to-date IRS figures.
Source: IRS — Publication 946, How To Depreciate Property · Last updated: April 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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