IRS releases 2022 limits for depreciation deductions for autos
TAX ALERT | April 06, 2022
Authored by RSM US LLP
Key Takeaways - quick facts for Rev. Proc. 2022-17:
- Passenger automobiles have special depreciation rules, with limits released in a new Rev. Proc. every year.
- Section 280F(d)(7) requires the IRS to adjust the depreciation limits to reflect inflation.
- Rev. Proc. 2022-17 contains two tables with permitted yearly depreciation deductions updated for 2022, for bonus and non-bonus assets.
- Table 3 describes the inclusions in gross income required by Reg. section 1.280F-7(a) (applicable only to leases).
On March 16, 2022, the IRS released Rev. Proc. 2022-17, providing rules for depreciating passenger automobiles.
Rev. Proc. 2022-17 provides two major updates: (1) two tables of limitations on depreciation deductions for owners of passenger automobiles placed in service in the calendar year 2022, and (2) amounts that lessees must include in income for passenger automobiles first leased in 2022.
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.
Accordingly, the new revenue procedure contains three tables. Tables 1 and 2 list the permitted yearly depreciation deductions updated for 2022, which vary depending on whether bonus depreciation applies. Table 3 describes the inclusions in gross income required by Reg. section 1.280F-7(a) (applicable only to leases).
All taxpayers placing passenger automobiles in service in 2022 must use the limits in the tables below. Please see 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 the calendar year 2022 for which bonus depreciation applies
Tax year | Amount |
1st Tax Year | $19,200 |
2nd Tax Year | $18,000 |
3rd Tax Year | $10,800 |
Each Succeeding Year | $6,460 |
Table 2: depreciation limits for passenger automobiles placed in service during the calendar year 2022 for which bonus depreciation does not apply
Tax year | Amount |
1st Tax Year | $11,200 |
2nd Tax Year | $18,000 |
3rd Tax Year | $10,800 |
Each Succeeding Year | $6,460 |
Table 3: income inclusions for passenger automobiles with a lease term beginning in calendar year 2022
Fair Market Value of | Tax year during lease | |||||
Over | Not over | 1st | 2nd | 3rd | 4th | 5th & later |
$ 56,000 | $ 57,000 | 1 | 1 | 1 | 2 | 2 |
$ 57,000 | $ 58,000 | 2 | 4 | 5 | 7 | 7 |
$ 58,000 | $ 59,000 | 3 | 7 | 9 | 11 | 13 |
$ 59,000 | $ 60,000 | 4 | 9 | 14 | 16 | 19 |
$ 60,000 | $ 62,000 | 6 | 13 | 20 | 23 | 28 |
$ 62,000 | $ 64,000 | 9 | 19 | 27 | 34 | 38 |
$ 64,000 | $ 66,000 | 11 | 24 | 36 | 43 | 50 |
$ 66,000 | $ 68,000 | 14 | 30 | 43 | 53 | 61 |
$ 68,000 | $ 70,000 | 16 | 35 | 52 | 63 | 72 |
$ 70,000 | $ 72,000 | 19 | 40 | 61 | 72 | 83 |
$ 72,000 | $ 74,000 | 21 | 46 | 68 | 82 | 95 |
$ 74,000 | $ 76,000 | 24 | 51 | 77 | 91 | 106 |
$ 76,000 | $ 78,000 | 26 | 57 | 85 | 101 | 117 |
$ 78,000 | $ 80,000 | 29 | 62 | 93 | 111 | 128 |
$ 80,000 | $ 85,000 | 33 | 72 | 107 | 128 | 148 |
$ 85,000 | $ 90,000 | 39 | 86 | 127 | 152 | 176 |
$ 90,000 | $ 95,000 | 45 | 100 | 147 | 177 | 204 |
$ 95,000 | $ 100,000 | 52 | 113 | 167 | 201 | 233 |
$ 100,000 | $ 110,000 | 61 | 133 | 198 | 238 | 274 |
$ 110,000 | $ 120,000 | 73 | 161 | 239 | 286 | 330 |
$ 120,000 | $ 130,000 | 86 | 188 | 279 | 335 | 387 |
$ 130,000 | $ 140,000 | 98 | 216 | 319 | 384 | 443 |
$ 140,000 | $ 150,000 | 111 | 243 | 360 | 432 | 499 |
$ 150,000 | $ 160,000 | 123 | 270 | 401 | 481 | 555 |
$ 160,000 | $ 170,000 | 135 | 298 | 441 | 529 | 612 |
$ 170,000 | $ 180,000 | 148 | 325 | 482 | 578 | 667 |
$ 180,000 | $ 190,000 | 160 | 352 | 523 | 626 | 724 |
$ 190,000 | $ 200,000 | 173 | 379 | 563 | 676 | 779 |
$ 200,000 | $ 210,000 | 185 | 407 | 603 | 724 | 836 |
$ 210,000 | $ 220,000 | 198 | 434 | 644 | 773 | 892 |
$ 220,000 | $ 230,000 | 210 | 461 | 685 | 821 | 949 |
$ 230,000 | $ 240,000 | 222 | 489 | 725 | 870 | 1,005 |
$ 240,000 | and over | 235 | 516 | 766 | 918 | 1,061 |
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This article was written by John Charin and originally appeared on 2022-04-06.
2022 RSM US LLP. All rights reserved.
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