Insights

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:

  1. Passenger automobiles have special depreciation rules, with limits released in a new Rev. Proc. every year.
  2. Section 280F(d)(7) requires the IRS to adjust the depreciation limits to reflect inflation.
  3. Rev. Proc. 2022-17 contains two tables with permitted yearly depreciation deductions updated for 2022, for bonus and non-bonus assets.
  4. 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

passenger automobile

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.
https://rsmus.com/insights/tax-alerts/2022/irs-releases-2022-limits-for-depreciation-deductions-for-autos.html

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