Get IRS Publication 463 2021-2024

Overview of Auto Depreciation Limits in 2023 $12,200 for the first tax year. $19,500 for the second year. $11,700 for the third year. $6,960 for each year after that.

For new and pre-owned (used) vehicles, the maximum write-off for the first year is $10,200, plus an additional $8,000 in bonus depreciation. For SUVs with weights over 6,000 lbs., but no heavier than 14,000 lbs., the full 100% of cost can be depreciated.

You would use the 200% declining balance rate for the vehicle. Now, to obtain the depreciation rate, you divide the 2.00 for the 200% by 5 for the 5-year property and obtain a 40% depreciation rate. You will then take 40% of your $18,000 basis to obtain your deduction. The deduction will be $7,200.

Yep, if your business uses vehicles that weigh over 6,000 lbs., you can write off $28,900 in 2023.

Only ordinary and necessary travel expenses are deductible; expenses that are deemed unreasonable, lavish, or extravagant are not deductible. The IRS considers employees to be traveling if their business obligations require them to be away from their "tax home” substantially longer than an ordinary day's work.

An accountable car allowance plan is a way for employers to reimburse mobile employees for work-related travel expenses. Governed by IRS publication 463, this program uses the IRS standard mileage rate (65.5 cents per mile, as of 2023) as a guideline for calculating monthly reimbursement funds and possible tax burdens.

Publication 463 explains what expenses are deductible, how to report them on your return, what records you need to prove your expenses, and how to treat any expense reimbursements you may receive.

168(k) first-year, or “bonus,” depreciation is applied, the limitation is $20,200 for the first tax year, an increase of $1,000 from the 2022 amount. The succeeding-year limitations are $19,500 for the second tax year, $11,700 for the third year, and $6,960 for each year after that.