2021 Depreciation Limits Announced for Cars and Trucks

The IRS has issued Rev. Proc. 2021-31 which provides annual updates to depreciation limitations for passenger automobiles. The following represents a summary of that document.

  • Autos where first-year bonus depreciation applies and were acquired after September 27, 2017 and placed in service during 2021 calendar year:

Deprecation limits

    • $18,200 for the first tax year (up $100 from 2020)
    • $16,400 for the second tax year (up $300 from 2020)
    • $9,800 for the third tax year (up $100 from 2020)
    • $5,860 for each succeeding year (up $100 from 2020)
  • Autos where no first-year bonus depreciation applies and placed in service during 2021 calendar year:

Deprecation limits

    • $10,200 for the first tax year
    • $16,400 for the second tax year
    • $9,800 for the third tax year
    • $5,860 for each succeeding year
  • The Rev. Proc. 2021-31 also details limits on deductions for the cost of leasing passenger vehicles which is intended to be substantially equivalent to the depreciation limitation amounts.

Table 3 indicates those amounts for an auto lease term beginning in 2021.