IRS announces 2023 depreciation deduction limitations for automobiles
Executive summary: Rev. Proc. 2023-14 updates depreciation limits on autos
Rev. Proc. 2023-14 announces depreciation deduction limitations applicable to automobile owners placing such automobiles in service in 2023 and lessees’ income inclusions.
IRS announces 2023 depreciation deduction limitations for automobiles
The IRS recently released Rev. Proc. 2023-14, providing rules for depreciating passenger automobiles.
Rev. Proc. 2023-14 provides two major updates: (1) limitations on depreciation deductions for owners of passenger automobiles placed in service in calendar year 2023 and (2) amounts that lessees must include in income for passenger automobiles first leased in 2023.
Section 280F(a) limits depreciation deductions for the year taxpayers place passenger automobiles in service, as well as succeeding years. Section 280F(d)(7) requires the IRS to adjust the depreciation limits to reflect inflation with reference to the Department of Labor’s Chained Consumer Price Index for all Urban Consumers.
All taxpayers placing passenger automobiles in service in 2023 must use the limits in the tables below. Please refer to our Tax Alert on the Rev. Proc. 2019-13 safe harbor method for bonus depreciation on passenger automobiles for more detail on classifying property and using the depreciation limits.
Table 1: Depreciation limits for passenger automobiles acquired after Sept. 27, 2017 and placed in service during calendar year 2023 for which bonus depreciation applies
| Tax Year | Amount |
| 1st Tax Year | $ 20,200 |
| 2nd Tax Year | $ 19,500 |
| 3rd Tax Year | $ 11,700 |
| Each Succeeding Year | $ 6,960 |
Table 2: Depreciation limits for passenger automobiles placed in service during calendar year 2023 for which bonus depreciation does not apply
| Tax Year | Amount |
| 1st Tax Year | $ 12,200 |
| 2nd Tax Year | $ 19,500 |
| 3rd Tax Year | $ 11,700 |
| Each Succeeding Year | $ 6,960 |
Table 3: Income inclusions for passenger automobiles with a lease term beginning in calendar year
| Fair Market Value of Passenger Automobile | Tax Year During Lease | |||||
| Over | Not Over | 1st | 2nd | 3rd | 4th | 5th & later |
| $60,000 | $62,000 | 0 | 0 | 1 | 3 | 5 |
| 62,000 | 64,000 | 13 | 29 | 43 | 54 | 63 |
| 64,000 | 66,000 | 26 | 57 | 86 | 104 | 122 |
| 66,000 | 68,000 | 39 | 86 | 128 | 154 | 181 |
| 68,000 | 70,000 | 52 | 114 | 170 | 206 | 239 |
| 70,000 | 72,000 | 65 | 143 | 212 | 256 | 297 |
| 72,000 | 74,000 | 78 | 171 | 255 | 306 | 356 |
| 74,000 | 76,000 | 91 | 200 | 296 | 358 | 414 |
| 76,000 | 78,000 | 104 | 228 | 339 | 408 | 473 |
| 78,000 | 80,000 | 117 | 257 | 381 | 459 | 531 |
| 80,000 | 85,000 | 140 | 306 | 455 | 548 | 634 |
| 85,000 | 90,000 | 172 | 378 | 560 | 674 | 780 |
| 90,000 | 95,000 | 204 | 449 | 666 | 801 | 926 |
| 95,000 | 100,000 | 237 | 520 | 772 | 927 | 1,073 |
| 100,000 | 110,000 | 286 | 627 | 930 | 1,117 | 1,292 |
| 110,000 | 120,000 | 350 | 769 | 1,142 | 1,371 | 1,584 |
| 120,000 | 130,000 | 415 | 912 | 1,353 | 1,623 | 1,877 |
| 130,000 | 140,000 | 480 | 1,054 | 1,564 | 1,877 | 2,169 |
| 140,000 | 150,000 | 545 | 1,196 | 1,776 | 2,130 | 2,462 |
| 150,000 | 160,000 | 610 | 1,339 | 1,986 | 2,384 | 2,754 |
| 160,000 | 170,000 | 675 | 1,481 | 2,198 | 2,637 | 3,046 |
| 170,000 | 180,000 | 740 | 1,623 | 2,409 | 2,891 | 3,338 |
| 180,000 | 190,000 | 805 | 1,766 | 2,620 | 3,143 | 3,632 |
| 190,000 | 200,000 | 870 | 1,908 | 2,831 | 3,397 | 3,924 |
| 200,000 | 210,000 | 935 | 2,050 | 3,043 | 3,650 | 4,216 |
| 210,000 | 220,000 | 999 | 2,193 | 3,254 | 3,903 | 4,509 |
| 220,000 | 230,000 | 1,064 | 2,335 | 3,465 | 4,157 | 4,801 |
| 230,000 | 240,000 | 1,129 | 2,478 | 3,676 | 4,410 | 5,094 |
| 240,000 | and over | 1,194 | 2,620 | 3,887 | 4,664 | 5,386 |