The amount of depreciation that can be claimed on an automobile is limited by Regulation Section 280(F). $2,560 was established as the base limit for automobiles in 1988 and is adjusted for inflation every year based on the consumer price index. An automobile is a vehicle manufactured for use on public roads that weighs less than 6,000 pounds. In 2003 the IRS began using a different inflation rate for trucks and vans weighing less than 6,000 pounds resulting in additional depreciation. The vehicle limit applies to section 179 expense, special depreciation allowance and regular depreciation. The Jobs Growth and Tax Relief Reconciliation Act of 2003 increased the depreciation limit by an additional $7,650 (not adjusted for inflation) for qualified vehicles placed in service before January 1, 2005.
Some trucks and vans weighing less than 6,000 pounds may not be limited if they are qualified non-personal use vehicles. A qualified non-personal use vehicle is one that has been modified such that it does not lend itself to personal use. For example, a plumbing van which has had shelving placed in the back for transporting tools and equipment to job sites.
Vehicles weighing more than 6,000 pounds are not limited by these regulations. They may claim the maximum amount of depreciation allowed. However, for sport utility vehicles placed in service after 10/22/2004 the maximum amount of section 179 expense that can be claimed is $25,000. The full amount of special depreciation allowance and regular depreciation are still allowed.
For 2004 and 2005 the base limit is $2,960. Trucks and vans are entitled to an additional $300 of first year depreciation. Qualified vehicles placed in service before January 1, 2005 could claim up to $10,610 of depreciation.