Luxury Auto Depreciation under the TCJA (Tax Cut & Jobs Act)

​The Tax Cut & Jobs Act affords a much greater deduction for business use of automobiles than under the previous MACRS depreciation under the old law.  Basically for a vehicle used 100% for business the depreciation deduction is now $49,360 over 4 years, (including bonus depreciation) where as under MACRS the deduction was $21,185.

That taken into consideration, we had previously advised clients to lease vehicles.  This change will cause us to reconsider the lease vs. purchase decision.  In addition the depreciation deduction will be indexed for inflation for years’ going forward.

The table below summarizes the “luxury auto depreciation, under the old tax law, (MACRS) and, to the right, under the new law:

Depreciation Allowance for Luxury Automobiles (<6,000Lbs)
MACRS Depreciation – (Old Tax Law)            Tax Cuts & Jobs Act
Passanger Automobiles             Passanger, Trucks & Vans
Tax Year   Amount            Tax Year   Amount
1st Tax Year 11,160.00            1st Tax Year 18,000.00
2nd Tax Year   5,100.00            2nd Tax Year 16,000.00
3rd Tax Year   3,050.00            3rd Tax Year   9,600.00
Each Succeeding Year   1,875.00            Each Succeeding Year   5,760.00
21,185.00 49,360.00
           For vehicles placed in service after
            December 31, 2017
Light Trucks & Vans, (MACRS DEPR)

Tax Year Amount
1st Tax Year 11,560.00
2nd Tax Year 5,700.00
3rd Tax Year 3,450.00
Each Succeeding Year 2,075.00
Tesla Model 3

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