This revenue procedure, Rev. Proc. 2025-16, provides guidance on depreciation deductions for passenger automobiles placed in service in calendar year 2025, as well as income inclusion amounts for lessees of passenger automobiles with a lease term beginning in 2025. The procedure includes tables that reflect inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code.

Key Points:

The term "passenger automobiles" includes trucks and vans.
Depreciation deductions for passenger automobiles are subject to dollar limitations. These limitations are adjusted for inflation using the automobile component of the Chained Consumer Price Index for All Urban Consumers (C-CPI-U).
The § 168(k) additional first year depreciation deduction may apply to some vehicles, increasing the first-year depreciation amount.
The § 168(k) additional first year depreciation deduction does not apply in certain situations, such as when the vehicle is not used more than 50% for business purposes, or if the taxpayer elects out of this deduction, or if the vehicle was acquired before September 28, 2017 and placed in service after 2019.
Lessees of passenger automobiles must include an amount in gross income that is equivalent to the limitations on depreciation deductions imposed on owners.

Depreciation Limitations for Owners:

There are two tables that provide depreciation limitations for passenger automobiles placed in service during calendar year 2025.

Table 1 applies to vehicles acquired after September 27, 2017, and placed in service during 2025, for which the § 168(k) additional first year depreciation deduction applies.
- 1st Tax Year: $20,200
- 2nd Tax Year: $19,600
- 3rd Tax Year: $11,800
- Each Succeeding Year: $7,060
Table 2 applies to vehicles placed in service during 2025 for which no § 168(k) additional first year depreciation deduction applies.
- 1st Tax Year: $12,200
- 2nd Tax Year: $19,600
- 3rd Tax Year: $11,800
- Each Succeeding Year: $7,060

Income Inclusion Amounts for Lessees

Table 3 provides the dollar amounts that must be used by lessees to determine income inclusion amounts. The table is based on the fair market value of the vehicle.

Fair Market Value of Passenger Automobile Over	Fair Market Value of Passenger Automobile Not Over	1st Tax Year During Lease	2nd Tax Year During Lease	3rd Tax Year During Lease	4th Tax Year During Lease	5th Tax Year During Lease & Later
62,000	64,000	13	26	36	43	50
64,000	66,000	25	53	78	92	107
66,000	68,000	38	81	118	142	163
68,000	70,000	50	109	159	191	220
70,000	72,000	63	136	201	240	277
72,000	74,000	76	164	241	289	334
74,000	76,000	88	192	282	338	391
76,000	78,000	101	219	324	387	447
78,000	80,000	113	247	364	437	504
80,000	85,000	135	295	437	522	604
85,000	90,000	167	364	539	646	745
90,000	95,000	198	434	641	768	888
95,000	100,000	230	502	744	892	1,029
100,000	110,000	277	606	898	1,076	1,242
110,000	120,000	340	744	1,103	1,322	1,525
120,000	130,000	403	882	1,308	1,568	1,809
130,000	140,000	466	1,021	1,512	1,814	2,093
140,000	150,000	529	1,159	1,717	2,060	2,377
150,000	160,000	592	1,297	1,923	2,305	2,661
160,000	170,000	655	1,435	2,128	2,551	2,945
170,000	180,000	718	1,573	2,333	2,797	3,229
180,000	190,000	781	1,711	2,538	3,043	3,513
190,000	200,000	844	1,850	2,742	3,289	3,797
200,000	210,000	907	1,988	2,948	3,534	4,081
210,000	220,000	970	2,126	3,153	3,780	4,364
220,000	230,000	1,033	2,264	3,358	4,026	4,648
230,000	240,000	1,096	2,402	3,563	4,272	4,932
240,000 and over	-	1,159	2,540	3,768	4,518	5,216

Inflation Adjustment

The automobile price inflation adjustment for 2025 is 22.428 percent. This adjustment is applied to the 2018 limitations to determine the depreciation limitations for 2025.

Effective Date

This revenue procedure applies to passenger automobiles placed in service during calendar year 2025, or with a lease term beginning in calendar year 2025.

Prepared with assistance from NotebookLM.