Can You Depreciate a Used Vehicle for Business? MACRS and Section 179

Yes, you can depreciate a used vehicle for business, and the rules are the same ones that apply to a new one. For 2026, a used passenger car placed in service for business can generate a first-year write-off of roughly $20,400 when bonus depreciation applies, while a used SUV, pickup, or van rated above 6,000 pounds can often be written off in full in year one. The vehicle’s weight and your business-use percentage matter far more than whether it left the lot new or used.

Who Can Claim Depreciation on a Used Vehicle

Three conditions all have to be true. You must own the vehicle outright (leased vehicles get lease-payment deductions instead), you must use it in a trade or business or to produce income, and its useful life has to extend beyond one year.¹² Almost any car or truck clears that last one.

The threshold that trips people up is business use. More than 50% of the vehicle’s total miles for the year must be for business, and you have to meet that test every year of the recovery period, not just the first.² Only the business-use share of depreciation is deductible. A truck driven 70% for business and 30% for personal use produces a deduction equal to 70% of the allowable depreciation. Commuting between home and your regular workplace counts as personal miles.

Setting Your Cost Basis

Your depreciable basis starts with the purchase price plus costs to put the vehicle in service, such as sales tax, delivery, and dealer prep. Substantial later improvements add to basis.²

If you’re converting a personal vehicle to business use, the rule is different. Your basis is the lesser of fair market value on the conversion date or your original cost plus improvements.³ Buy a car for $35,000, drive it personally for three years, then convert it to business use when it’s worth $22,000, and $22,000 is what you depreciate.

The Three Depreciation Methods

The IRS offers three paths, and they can be layered on the same vehicle: regular MACRS depreciation, Section 179 expensing, and bonus depreciation. The right mix depends on your income, the vehicle’s weight, and how much you want to deduct now versus later.

MACRS

Under the Modified Accelerated Cost Recovery System, cars and light trucks are 5-year property. Because of the half-year convention, the write-off actually spans six calendar years.⁴ MACRS front-loads the deductions but produces smaller first-year numbers than the alternatives. It is the default when you don’t elect anything else.

Section 179

Section 179 lets you expense the full cost of a qualifying vehicle in the year you place it in service. Used vehicles qualify as long as you buy from an unrelated party and use the vehicle in the active conduct of your business.⁵

For heavy SUVs and trucks rated above 6,000 pounds but no more than 14,000 pounds, Section 179 alone is capped at approximately $32,000 for 2026.⁵ Bonus depreciation and MACRS can be stacked on top of that cap, which is how heavy vehicles often end up fully written off in year one.

100% Bonus Depreciation Is Back

The One, Big, Beautiful Bill Act, signed July 4, 2025, permanently reinstated 100% bonus depreciation for qualifying property acquired after January 19, 2025, reversing the phase-down that had been shrinking the bonus percentage every year since 2023.⁶ A used vehicle placed in service in 2026 can claim 100% bonus depreciation on the full depreciable basis, subject to the passenger-vehicle caps below.

Used property qualifies as long as you didn’t previously use the vehicle yourself and it isn’t coming from a related party.⁴ Buying a two-year-old truck from an unrelated seller counts. Shifting a vehicle between businesses you control does not.⁷

The 6,000-Pound Line Decides Almost Everything

Section 280F imposes hard annual dollar caps on depreciation for any passenger vehicle rated at 6,000 pounds or less, no matter what you paid.⁸ A $55,000 sedan hits the same ceiling as a $25,000 sedan.

For passenger automobiles placed in service in 2025 with bonus depreciation, the caps under Revenue Procedure 2025-16 are:⁹

Year 1: $20,200
Year 2: $19,600
Year 3: $11,800
Each succeeding year: $7,060

The IRS adjusts the figures annually for inflation, and 2026 numbers are expected to be modestly higher, roughly $20,400 in year one. Without bonus depreciation, the year-one cap drops sharply — to $12,200 for 2025 — because the $8,000 bonus add-on under Section 168(k) is excluded.

That “each succeeding year” line matters more than it looks. If your basis exceeds what you can deduct in the first six years, you keep claiming the annual amount until the vehicle is fully depreciated or you stop using it for business. A $45,000 sedan can take well over a decade to write off completely.

Heavy Vehicles Escape the Caps

Vehicles with a gross vehicle weight rating above 6,000 pounds are exempt from the Section 280F caps.⁸ With 100% bonus depreciation permanently back, a used heavy SUV or pickup costing $70,000 can potentially be written off in full in year one. The only related restriction is the roughly $32,000 SUV cap on the Section 179 portion; bonus depreciation covers the rest.

You’ll find the GVWR on the manufacturer’s label inside the driver’s-side door jamb or on the registration. Check it before you sign a purchase agreement. Many full-size pickups, larger SUVs, and cargo vans clear the 6,000-pound line.

Standard Mileage Rate or Actual Expenses

Depreciation only applies if you use the actual expense method. The alternative is the standard mileage rate, which is 72.5 cents per mile for 2026.¹⁰ That rate already includes an allowance for depreciation along with fuel, insurance, maintenance, and repairs. You cannot claim separate depreciation on top of it.

Actual expenses let you deduct the business-use percentage of every operating cost, plus depreciation.¹¹ For expensive vehicles or high operating costs, this usually wins. Parking and tolls are deductible either way.

The switching rules constrain your future choices. If you use the standard mileage rate in the first year the vehicle is available for business, you can switch to actual expenses later, but you must then use straight-line depreciation for the remaining useful life rather than an accelerated method.¹¹ If you start with actual expenses and claim accelerated depreciation, you can never switch to the standard mileage rate for that vehicle. Pick carefully in year one.

What Happens Later: Recapture

Depreciation is a timing benefit, not free money. Two events pull some of it back.

Selling the Vehicle

Adjusted basis equals original cost minus all depreciation claimed, including Section 179 and bonus. Sell for more than adjusted basis and the gain up to the total prior depreciation is taxed as ordinary income under Section 1245, not at capital gains rates.¹² Any excess beyond that would be a Section 1231 gain, which can qualify for capital gains treatment.

A practical example: buy a used truck for $40,000, claim $40,000 in depreciation, sell it for $18,000. Adjusted basis is zero, and the entire $18,000 is ordinary income. Aggressive first-year write-offs almost always produce recapture on later sale because the basis is driven to zero fast.

Business Use Drops to 50% or Below

If business use falls to 50% or less in any year during the recovery period, you have to switch to straight-line depreciation over the 5-year Alternative Depreciation System period for all future depreciation on the vehicle. You also recapture the excess — the difference between what you deducted using accelerated methods and what you would have deducted using straight-line — as ordinary income on Form 4797. The same rule applies to Section 179: expense the whole vehicle in year one, drop below 50% business use in year three, and you owe tax on the recaptured amount.¹³ The bigger the front-loaded deduction, the bigger the sting.

Records and Form 4562

Vehicle depreciation is reported on Form 4562, which asks for the date placed in service, the cost basis, the depreciation method, and the business-use percentage.³ File it with your return every year you claim depreciation on any vehicle or listed property.

The claim stands or falls on a contemporaneous mileage log. Contemporaneous means recorded close to the time of the trip, not reconstructed at tax time. Each entry needs the date, destination, business purpose, and odometer readings or miles driven.² GPS-based apps hold up on audit if they capture the business purpose for each trip, not just the route. Without adequate records, the IRS can disallow the entire deduction, not just reduce it.

Keep records until the statute of limitations expires for the year you dispose of the vehicle: at least three years after filing the return that reports the sale, and six years if you underreported income by more than 25%.¹⁴ Because depreciation spans years and recapture can hit on sale, holding records through the full ownership period plus three to six years afterward is the safe approach.

1
Office of the Law Revision Counsel. 26 USC 167 – Depreciation
2
Internal Revenue Service. Publication 463, Travel, Gift, and Car Expenses
3
Internal Revenue Service. Instructions for Form 4562
4
Office of the Law Revision Counsel. 26 USC 168 – Accelerated Cost Recovery System
5
Office of the Law Revision Counsel. 26 USC 179 – Election to Expense Certain Depreciable Business Assets
6
Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One, Big, Beautiful Bill
7
Internal Revenue Service. One, Big, Beautiful Bill Provisions
8
Office of the Law Revision Counsel. 26 USC 280F – Limitation on Depreciation for Luxury Automobiles
9
Internal Revenue Service. Revenue Procedure 2025-16
10
Internal Revenue Service. Notice 2026-10, 2026 Standard Mileage Rates
11
Internal Revenue Service. Topic No. 510, Business Use of Car
12
Office of the Law Revision Counsel. 26 USC 1245 – Gain From Dispositions of Certain Depreciable Property
13
Internal Revenue Service. Publication 946, How To Depreciate Property
14
Internal Revenue Service. How Long Should I Keep Records