The IRS has published the revised depreciation limits for vehicles under IRC §280F(d)(7) in Revenue Procedure 2021-31.[1]  The limits on depreciation for such assets are adjusted for inflation each year.

For passenger automobiles acquired after September 27, 2017 and placed in service during 2021, the limitation on depreciation if §168(k)’s bonus depreciation applies is:

• 1st tax year - $18,200

• 2nd tax year - $16,400

• 3rd tax year - $9,800

• Each succeeding year - $5,860.[2]

For such a passenger automobile where §168(k)’s bonus depreciation rules do not apply, including when the taxpayer has elected not to have them apply or for vehicles acquired on or before September 27, 2017, the limits are:

• 1st tax year - $10,200

• 2nd tax year - $16,400

• 3rd tax year - $9,800

• Each succeeding year - $5,860.[3]

The revenue procedure also includes a table to determine the lease inclusion amount under Reg. §1.280F-7(a) for passenger automobiles with a lease term beginning in 2021.[4]

[1] Revenue Procedure 2021-31, August 6, 2021, https://www.taxnotes.com/research/federal/irs-guidance/revenue-procedures/irs-announces-limits-on-depreciation-deduction-for-cars/76zx8 (retrieved August 13, 2021)

[2] Revenue Procedure 2021-31, Table 1

[3] Revenue Procedure 2021-31, Table 2

[4] Revenue Procedure 2021-31, Table 3