Automobile Depreciation Numbers and Lease Inclusion Amounts for 2025
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.