What is bonus depreciation for vehicles in 2024?

by | Jun 6, 2025 | Business Taxes, Vehicle & Mileage

Here’s what HIVE AI had to say about “What is bonus depreciation for vehicles in 2024?”:

Bonus depreciation for vehicles in 2024 is 60% of the adjusted basis for most qualified property placed in service during the year T.D. 9874 . This represents a continuation of the phaseout schedule established by the Tax Cuts and Jobs Act.

Current Bonus Depreciation Rates for 2024

The bonus depreciation deduction under section 168(k) continues its phaseout in 2024 with a reduction of the applicable limit from 80% to 60% IRS – Publication 527: Residential Rental Property (Including Rental of Vacation Homes) IRS – Publication 334: Tax Guide for Small Business (For Individuals Who Use Schedule C) . This applies to most qualified property, including vehicles that meet the requirements.

However, there are different rates for certain types of property. The special depreciation allowance is 60% for certain qualified property acquired after September 27, 2017, and placed in service after December 31, 2023, and before January 1, 2025 (other than certain property with a long production period and certain aircraft). For certain property with a long production period and certain aircraft placed in service after December 31, 2023, and before January 1, 2025, the special depreciation allowance is 80% IRS – Publication 225: Farmer’s Tax Guide .

Qualification Requirements for Vehicles

For a vehicle to qualify for bonus depreciation, it must meet the definition of “qualified property” under Section 168(k). “Qualified property” includes any tangible property with a recovery period of 20 years or less. Automobiles have a recovery period of five years Dawson U.S. Tax Court Opinions: Gregory R. Schnackel & Laura B. Schnackel , so they can potentially qualify.

However, there are important business use requirements. Property for which trade or business use does not exceed 50% of its total use is not “qualified property” Dawson U.S. Tax Court Opinions: Gregory R. Schnackel & Laura B. Schnackel . This means your vehicle must be used more than 50% for business purposes to qualify for bonus depreciation.

Interaction with Section 280F Limitations

Vehicles are subject to special limitations under Section 280F. Section 280F(a) limited the bonus depreciation deduction for automobiles with less than 6,000 pounds of “unloaded gross vehicle weight,” but no such limitation applies to automobiles with an “unloaded gross vehicle weight” of more than 6,000 pounds Dawson U.S. Tax Court Opinions: Gregory R. Schnackel & Laura B. Schnackel .

For passenger automobiles (those weighing 6,000 pounds or less), the annual depreciation limitations still apply even with bonus depreciation. Use Table 1 for a passenger automobile to which the § 168(k) additional first year depreciation deduction applies that is acquired by the taxpayer after September 27, 2017, and placed in service by the taxpayer during calendar year 2024 Rev. Proc. 2024-13 .

Substantiation Requirements

Even when claiming bonus depreciation on vehicles, strict substantiation requirements apply. To substantiate a claimed deduction with respect to any “listed property (as defined in section 280F(d)(4)),” a category including “any property used as a means for transportation,” the taxpayer must meet the heightened substantiation requirements under section 274(d). Relevant to the deduction claimed for depreciation, this includes “the business purpose of the expense or other item” Dawson U.S. Tax Court Opinions: Gregory R. Schnackel & Laura B. Schnackel .

Practical Application

For 2010 businesses could either elect to expense the cost of a qualifying new vehicle under section 179 and depreciate the remaining cost basis, or, if the property was used entirely for business purposes, depreciate the full cost in the first year under the 100% bonus depreciation provision Dawson U.S. Tax Court Opinions: Gregory R. Schnackel & Laura B. Schnackel . While this example is from 2010 when bonus depreciation was 100%, the same principle applies today – you can combine Section 179 expensing with bonus depreciation on the remaining basis, subject to the applicable limitations.

Future Phaseout Schedule

The bonus depreciation percentage will continue to decrease in future years. The Act amended these percentages to 100 percent for most property placed in service between September 28, 2017 and the end of 2022, 80 percent in 2023, 60 percent in 2024, 40 percent in 2025, 20 percent in 2026, and 0 thereafter T.D. 9874 .

Key Considerations for 2024

When considering bonus depreciation for vehicles in 2024:

Business Use Requirement: The vehicle must be used more than 50% for business purposes to qualify as “qualified property.”

Weight Considerations: Vehicles over 6,000 pounds gross vehicle weight are not subject to the passenger automobile limitations under Section 280F.

Coordination with Section 179: You can potentially combine Section 179 expensing with bonus depreciation on the remaining basis.

Substantiation: Maintain detailed records of business use, including mileage logs and business purpose documentation.

Timing: The vehicle must be placed in service during 2024 to qualify for the 60% bonus depreciation rate.

In summary, bonus depreciation for vehicles in 2024 is 60% of the adjusted basis for qualified property, subject to business use requirements and potential Section 280F limitations for passenger automobiles. Proper substantiation and meeting the “qualified property” requirements are essential for claiming this deduction.

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