How Many Years to Depreciate a Car for Taxes?

A business car is depreciated over five years under the IRS’s Modified Accelerated Cost Recovery System, but the deductions actually spread across six tax years because of the half-year convention, and for most passenger cars the annual dollar caps in Section 280F stretch the real timeline out to eight, ten, or even twelve years. So the short answer to how many years to depreciate a car for taxes is “five on paper, six in practice, and often much longer for anything above a modest price.”

The Five-Year Recovery Period and Why It Takes Six Tax Years

IRS Publication 946 puts automobiles, trucks, buses, and taxis in the five-year property class.¹ The clock starts the day you place the vehicle in service for your business, not the day you buy it. Buy a truck in November, park it in the garage, and start using it for the business in January, and January is when the recovery period begins.

The reason five years turns into six tax returns is the half-year convention. The IRS treats every asset as though it was placed in service at the midpoint of its first year, no matter the actual date. You get half a year of depreciation in Year 1, full deductions in Years 2 through 5, and the remaining half-year of depreciation in Year 6.¹

Within MACRS you pick a calculation method. The default for five-year property is 200% declining balance, which front-loads deductions and automatically switches to straight-line when straight-line gives a bigger number.¹ You can also elect 150% declining balance or straight-line if you want smoother, more predictable deductions.² The recovery period is the same either way. Only the size of each year’s deduction changes.

When Six Years Turns Into Ten or More

For any passenger automobile rated at 6,000 pounds or less, Section 280F caps the total annual depreciation deduction, including any Section 179 or bonus depreciation.³ For vehicles placed in service in 2026, the inflation-adjusted caps are $20,300 in Year 1 with bonus depreciation, $12,300 in Year 1 without it, $19,800 in Year 2, $11,900 in Year 3, and $7,160 for Year 4 and every year after that.⁴

Take a $60,000 sedan used 100% for business. With bonus depreciation you’d deduct $20,300, $19,800, $11,900, then $7,160 per year until the basis is exhausted. That gets you to roughly $59,160 after six tax years. Push the price to $70,000 or $80,000 and you still have unrecovered basis when Year 6 ends. The $7,160 annual cap keeps grinding forward until the full cost is written off, which can push the actual depreciation timeline to eight, ten, or even twelve years. The IRS calls these “luxury automobile” limits, but they bite well below the luxury price range.

Heavy Vehicles Escape the Caps

Vehicles with a gross vehicle weight rating above 6,000 pounds are generally not treated as passenger automobiles under Section 280F, so the annual dollar caps don’t apply.³ That covers most full-size pickups, large SUVs, and cargo vans. Without the caps, the full cost can be recovered in the standard MACRS window, or compressed into Year 1 using Section 179 and bonus depreciation.

One wrinkle: SUVs built on a truck chassis and rated between 6,000 and 14,000 pounds have their own Section 179 cap of $32,000. You can still stack bonus depreciation on the remaining basis, so the combined first-year deduction can still equal the full purchase price. Trucks, vans, and vehicles rated above 14,000 pounds have no SUV-specific cap.

Check the GVWR on the manufacturer’s sticker inside the driver’s door jamb, not the curb weight on the spec sheet. GVWR includes passengers and cargo at full capacity and is almost always higher.

Ways to Compress the Timeline to One Year

Two provisions let you collapse the five-year recovery period into a single tax year for qualifying vehicles.

Section 179 lets you treat the cost of qualifying business property as an immediate expense.⁵ The 2026 maximum is $2,560,000, phasing out dollar-for-dollar once total qualifying property placed in service exceeds $4,090,000 and disappearing at $6,650,000. Those numbers rarely constrain a small business buying vehicles; the real ceiling for a passenger car is Section 280F.

Bonus depreciation is the second tool. The One, Big, Beautiful Bill Act permanently restored 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025.⁶ For a vehicle placed in service in 2026, that means 100% of the depreciable basis can come off in Year 1, still subject to the Section 280F caps for passenger cars.⁷

Bonus depreciation has no overall dollar limit and no investment ceiling, but it is all-or-nothing unless you elect out of it. Section 179 lets you pick exactly how much to expense. Many owners use both, applying Section 179 first and bonus depreciation to whatever basis remains.

Business Use Has to Stay Above 50%

Whatever timeline you’re on depends on how much of the car’s use is for business. If you drive the vehicle for both business and personal reasons, only the business portion of the cost is depreciable. The IRS calculates that share by dividing business miles by total miles for the year.¹ A $50,000 car used 70% for business has a depreciable basis of $35,000.

Business use has to exceed 50% in the year you place the vehicle in service to use MACRS, Section 179, or bonus depreciation. If business use drops to 50% or below in any later year during the recovery period, you must switch to the alternative depreciation system and use straight-line going forward, and you owe recapture tax on the difference between what you already deducted and what you would have deducted under ADS.⁷ The ADS recovery period for cars is also five years, but the straight-line calculation means smaller early-year deductions than the 200% declining balance method.

If You Use the Standard Mileage Rate Instead

MACRS depreciation only applies if you use the actual expense method. The alternative is the standard mileage rate, which for 2026 is 72.5 cents per mile.⁸ The mileage rate has a depreciation component baked into it, so the cost is still being recovered over time, just automatically rather than through the MACRS tables.

To use the standard mileage rate you have to choose it in the first year the car is available for business use. You can switch to actual expenses later, but from that point on you must depreciate the vehicle using straight-line over its remaining useful life. The 200% declining balance method is no longer available.⁹ For a leased vehicle, the choice is locked in for the life of the lease, including any renewals.p>

Selling the Car Before You Finish Depreciating It

Depreciation you claimed doesn’t disappear when you sell the vehicle. Under Section 1245, any gain up to the total depreciation previously deducted is taxed as ordinary income rather than at capital gains rates.¹⁰ Buy a truck for $50,000, claim $35,000 in depreciation, sell for $25,000, and the $10,000 gain over the $15,000 adjusted basis is ordinary income.

Recapture applies whether you used straight-line MACRS, 200% declining balance, Section 179, or bonus depreciation. Faster deductions produce a lower adjusted basis sooner, which makes recapture more likely if you sell early. The recapture amount can’t exceed the lesser of total depreciation claimed or the actual gain, so you’ll never owe recapture on a paper amount you didn’t actually realize. If a trade-in or resale is likely within a few years, that changes the math on whether to accelerate deductions or spread them out.

1
Internal Revenue Service. Publication 946 (2024), How To Depreciate Property
2
Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
3
Office of the Law Revision Counsel. 26 USC 280F – Limitation on Depreciation for Luxury Automobiles
4
Internal Revenue Service. Revenue Procedure 2026-15
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. Instructions for Form 4562 (2025)
8
Internal Revenue Service. Notice 2026-10 – Standard Mileage Rates
9
Internal Revenue Service. Topic No. 510, Business Use of Car
10
Office of the Law Revision Counsel. 26 US Code 1245 – Gain From Dispositions of Certain Depreciable Property