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IRS Announces New 2011 Auto Depreciation Limits

March 15, 2011

EDITOR'S NOTE: To get the most updated information about depreciation limits for 2013, please click here.

WASHINGTON – The IRS has published new guidelines for inflation-adjusted depreciation limits and lease inclusion amounts for passenger vehicles. Revenue Procedure 2011-21 (click on the link to download the document) applies to passenger cars, vans, and trucks placed in service in 2011 and to first leases occurring in that year. The guidelines also provide updated limits for vehicles placed into service in 2010 to which the 50- or 100-percent additional first year depreciation deductions apply.

The guidelines provide separate tables, for passenger automobiles and another for trucks and vans, as well as revised tables of depreciation limitations and lessee inclusion amounts for passenger cars placed in service, or first leased by the taxpayer, during 2010 to which the 50 percent or 100 percent additional first year depreciation deduction applies.

Federal legislation enacted in 2010 extended some depreciation provisions that had been set to expire. Section 401(a) of the Small Business Jobs Act of 2010 extended the 50 percent additional first year depreciation deduction that applied to property placed in service after Dec. 31 2007 through Dec. 31 2010 (as long as there was no written, binding contract for acquisition of the vehicle in place before Jan. 2008).

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extended the 50-percent additional first year depreciation deduction to property acquired and put into service before Jan. 1 2013.

Section 401(b) of the new rules allowed a 100 percent additional first year depreciation deduction for qualified property acquired by a taxpayer after Sept. 8, 2010 but before Jan. 1, 2012, if the vehicle was placed in service before that date. The guidelines provide tables for vehicles that the additional 100 percent depreciation does apply to and tables for vehicles that it does not apply to. It also includes tables for leased vehicles.

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