Rev. Proc. 2021-31: Automobile depreciation deduction limits for 2021
Section 280F limitations as adjusted for inflation
Section 280F limitations required to be adjusted for inflation for automobiles
The IRS today released an advance version of Rev. Proc. 2021-31 that provides the annual depreciation deduction limitations under section 280F for automobiles placed in service in 2021. The section 280F limitations are required to be adjusted for inflation for automobiles placed in service after 2018.
Rev. Proc. 2021-31 [PDF 122 KB] provides:
- The annual depreciation limitations for passenger automobiles (including trucks and vans) first placed in service in calendar year 2021
- The income inclusion amounts for passenger automobiles (including trucks and vans) first leased in 2021
The tables listed in Rev. Proc. 2021-31 provide the depreciation limits for automobiles placed in service during 2021:
- Table 1 provides the depreciation limits for automobiles acquired after September 27, 2017, and placed in service during 2021—thus reflecting the section 168(k) additional first year depreciation deduction (“bonus depreciation”).
- Table 2 provides the depreciation limits for automobiles placed in service during 2021 for which no bonus depreciation deduction applies—including when the taxpayer (1) does not use the automobile during 2021 more than 50% for business purposes, or (2) elected out of the bonus depreciation deduction, or (3) acquired a used automobile that fails to satisfy the statutory rules, or (4) acquired the automobile before September 28, 2017, and placed it in service after 2019.
- Table 3 provides the dollar amount used by lessees of passenger automobiles with a lease term beginning in 2021 to determine the income inclusion amount for those passenger automobiles, and provides dollar amounts for “a range of fair market values.”
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.