Form 4562, Depreciation and Amortization, is the IRS form you attach to your business tax return to claim depreciation on assets you placed in service this year, to elect Section 179 expensing, to report bonus depreciation, and to begin amortizing intangibles. If you bought equipment, vehicles, software, or other property for your business in 2025, this is where those deductions get calculated. Two major changes took effect after Congress passed the One, Big, Beautiful Bill Act: the Section 179 limit doubled, and 100 percent bonus depreciation was restored permanently for qualifying property acquired after January 19, 2025.
When You Have to File It
You need to include Form 4562 with your return if any of these apply:1Internal Revenue Service. Instructions for Form 4562 (2025)
- You placed depreciable property in service during the tax year and want to claim depreciation on it.
- You want to elect Section 179 expensing for qualifying property bought this year.
- You began amortizing an intangible asset this year.
- You are claiming depreciation on any vehicle or other listed property, regardless of when you first started using it.
- You are a corporation claiming depreciation, even on assets placed in service in prior years.
If you run more than one business, you file a separate Form 4562 for each. The one exception is Part I: the Section 179 election is completed only once across all forms.1Internal Revenue Service. Instructions for Form 4562 (2025)
Section 179 Expensing in 2025
Section 179 lets you deduct the full purchase price of qualifying equipment and software in the year you place it in service instead of spreading it out. For most small and mid-sized businesses, this is the deduction that drives the decision to file Form 4562 in the first place.
The One, Big, Beautiful Bill Act permanently raised the limits. For tax year 2025, the maximum deduction is $2,500,000, and the phase-out begins when total Section 179 property placed in service exceeds $4,000,000.1Internal Revenue Service. Instructions for Form 4562 (2025) Both figures are indexed for inflation after 2025. The deduction phases out dollar-for-dollar once you cross the investment ceiling, so a business spending well above $4,000,000 in a single year loses the Section 179 benefit entirely.
The property has to be tangible, depreciable, and used more than 50 percent for business. Buildings, land, and property held for investment do not qualify. SUVs rated above 6,000 pounds gross vehicle weight have their own cap on the Section 179 amount, set at $31,300 for 2025 and indexed going forward. You report the election in Part I.
Bonus Depreciation After the OBBBA
Bonus depreciation lets you write off a large percentage of an asset’s cost in the first year, on top of any Section 179 deduction. The One, Big, Beautiful Bill Act permanently restored 100 percent bonus depreciation for qualified property acquired after January 19, 2025.2Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One, Big, Beautiful Bill
Unlike Section 179, bonus depreciation has no dollar ceiling and no investment phase-out. It applies automatically unless you elect out. The property must be new to you (used property qualifies if it’s your first use of that specific asset) and must have a MACRS recovery period of 20 years or less. You report it in Part II.
If you bought property before January 20, 2025, the older phase-down schedule still applies to that property. So if a purchase was delayed getting placed in service, check the acquisition date, not just the in-service date.
Working Through the Six Parts
Before you start, gather three things for every asset: the full purchase price (including sales tax, delivery, and installation), the date it was placed in service, and its business-use percentage if it also has any personal use.
Part I: Section 179 Election
Enter the total cost of qualifying property you want to expense, up to the annual limit. If you have listed property, complete Part V first, because the business-use percentage you calculate there affects what you can expense here.3Internal Revenue Service. Form 4562 – Depreciation and Amortization Only one Part I is completed even if you file multiple copies of the form for different businesses.
Part II: Bonus Depreciation
Report the additional first-year depreciation for qualified property. For most property acquired after January 19, 2025, this is 100 percent of the remaining depreciable basis after any Section 179 deduction.2Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One, Big, Beautiful Bill
Part III: MACRS Depreciation
Most long-term business assets go here. MACRS assigns each asset to a recovery period based on its class life: three years for certain specialized tools, five years for computers and office machinery, seven years for furniture, 15 years for qualified improvement property, 27.5 years for residential rental property, and 39 years for nonresidential real property.4Internal Revenue Service. Publication 946 (2025) – How To Depreciate Property
You also pick a convention. Most taxpayers use the half-year convention, which treats all property placed in service during the year as if you started using it at the midpoint. If more than 40 percent of your total depreciable property for the year was placed in service during the last three months, the mid-quarter convention kicks in and applies to everything you placed in service that year.5eCFR. 26 CFR 1.168(d)-1 – Half-Year and Mid-Quarter Conventions Property expensed under Section 179 is excluded from that 40 percent calculation. Timing a large purchase in December versus January can shift your deductions in a real way.
Part IV: Summary
Totals your depreciation from the other parts and carries the result to the correct line on your tax return.
Part V: Listed Property
Vehicles, aircraft, and other property that lends itself to personal use require extra documentation. For vehicles, record total mileage, business miles, and commuting miles. For all listed property, provide the business-use percentage. If business use drops to 50 percent or less, you lose the ability to use accelerated depreciation and must switch to the straight-line method under the Alternative Depreciation System.
Part VI: Amortization
Report intangibles you began amortizing this year, with the start date, cost basis, the applicable Code section, and the amortization period. Goodwill, trademarks, business licenses, and other Section 197 intangibles acquired as part of a business purchase are amortized ratably over 15 years.6Office of the Law Revision Counsel. 26 USC 197 – Amortization of Goodwill and Certain Other Intangibles
Listed Property and Vehicle Caps
Listed property has its own restrictions because these assets frequently double as personal items. The category includes passenger automobiles weighing 6,000 pounds or less, other vehicles and aircraft used for transportation, and property used for entertainment or recreation.1Internal Revenue Service. Instructions for Form 4562 (2025)
For passenger automobiles placed in service during 2026, annual depreciation is capped regardless of the vehicle’s actual cost. With bonus depreciation, the first-year limit is $20,300, then $19,800 in year two, $11,900 in year three, and $7,160 for each year after that until the vehicle is fully depreciated. Without bonus depreciation, the first-year cap drops to $12,300, with the remaining years unchanged.7Internal Revenue Service. Rev. Proc. 2026-15 – Depreciation Limitations for Passenger Automobiles
Vehicles rated above 6,000 pounds gross vehicle weight generally are not “passenger automobiles” under Section 280F, so they escape these annual caps.8Office of the Law Revision Counsel. 26 US Code 280F – Limitation on Depreciation for Luxury Automobiles That is why heavy SUVs and trucks are popular business-vehicle choices, though they remain subject to the separate Section 179 SUV cap noted above.
You have to report listed property on Form 4562 every year you claim depreciation on it, even if it was placed in service years ago. The records need to be contemporaneous: logs of business versus personal use, mileage records for vehicles, and documentation of the business purpose for each trip. Weak records here are one of the most common audit triggers.
What Happens When You Sell the Asset
Every dollar of depreciation you claim on Form 4562 reduces the asset’s tax basis. When you sell that asset for more than its adjusted basis later, the IRS takes back some of those deductions through depreciation recapture, reported on Form 4797.9Internal Revenue Service. Instructions for Form 4797
For equipment and vehicles (Section 1245 property), the recapture is straightforward: gain is taxed as ordinary income up to the total depreciation you previously claimed.10Office of the Law Revision Counsel. 26 US Code 1245 – Gain From Dispositions of Certain Depreciable Property Only gain above the total depreciation claimed qualifies for capital gains treatment.
This matters more than people expect once they have claimed large Section 179 or bonus depreciation deductions. Writing off the full $200,000 cost of a piece of equipment in year one feels good; selling it three years later for $120,000 means you owe ordinary income tax on the entire $120,000 gain. Plan for it before you elect the big first-year write-off.
Attaching the Form and When It’s Due
Form 4562 is never filed on its own. Attach it to your primary federal return: Form 1040 (with Schedule C or Schedule E) for sole proprietors, Form 1065 for partnerships, Form 1120 for C corporations, or Form 1120-S for S corporations.11Internal Revenue Service. About Form 4562, Depreciation and Amortization
The deadline follows the underlying return. Calendar-year individuals file by April 15.12Internal Revenue Service. When to File Partnerships and S corporations file by March 15. Calendar-year C corporations file by April 15.13Internal Revenue Service. Publication 509 (2026) – Tax Calendars An extension on the main return automatically covers Form 4562. The IRS cross-checks the depreciation and amortization totals against deductions claimed elsewhere on your return, so the numbers have to match.
Penalties for Getting It Wrong
The most basic consequence of filing Form 4562 incorrectly (or not filing when required) is disallowance: the IRS can deny the depreciation or Section 179 deduction entirely. Beyond that, an underpayment can trigger the accuracy-related penalty of 20 percent of the underpaid tax if the IRS finds negligence or a substantial understatement.14Office of the Law Revision Counsel. 26 US Code 6662 – Imposition of Accuracy-Related Penalty on Underpayments Interest also accrues on unpaid tax from the due date at a rate the IRS adjusts quarterly.15Internal Revenue Service. Quarterly Interest Rates
Deliberately inflated basis figures, personal assets disguised as business property, or fabricated deductions can rise to tax evasion under 26 USC 7201, which carries up to five years in prison and fines of up to $100,000 for individuals or $500,000 for corporations.16Office of the Law Revision Counsel. 26 USC 7201 – Attempt to Evade or Defeat Tax Contemporaneous records and the correct recovery periods are the simplest way to stay clear of all of this.