Is Vehicle Depreciation Tax Deductible?

Standard mileage vs. actual expenses

You only claim vehicle depreciation if you use the actual expenses method. If you use the standard mileage rate (70¢/mile for 2025), depreciation is already built into that rate.

You can't use both methods for the same vehicle in the same year. If you want to use actual expenses, you must choose it in the first year you use the vehicle for business.

Luxury vehicle limits (passenger cars)

For passenger vehicles (under 6,000 lbs), the IRS caps annual depreciation:

• Year 1: $20,400 (with bonus depreciation)
• Year 2: $19,800
• Year 3: $11,900
• Year 4+: $7,160

These limits are for 100% business use. Multiply by your business-use percentage.

Heavy vehicles (over 6,000 lbs)

SUVs, trucks, and vans over 6,000 lbs gross vehicle weight rating (GVWR) are exempt from the luxury vehicle caps. This is the famous "Section 179 SUV deduction."

You can deduct up to $30,500 under Section 179 for heavy SUVs, plus regular depreciation. For heavy trucks and vans that aren't SUVs, the full cost may be deductible in year one.

Common qualifying vehicles: Ford F-150, Chevy Silverado, Toyota Tundra, BMW X5, Mercedes GLS, Land Rover Defender.