Calculate vehicle depreciation by year with luxury auto limits, Section 179 for SUVs, and trade-in/resale value projections.
This tool builds a year-by-year depreciation schedule for a vehicle using straight-line or accelerated methods, then checks the result against IRS luxury automobile limits under Section 280F, which cap the annual deduction for passenger cars regardless of what the raw schedule computes. It separately models Section 179 first-year expensing for SUVs and trucks over 6,000 lbs GVWR, which follow different rules than cars. Alongside the tax depreciation schedule it projects trade-in/resale value, which is not the same figure - a vehicle can be fully depreciated for tax purposes while still holding real market value, and users often conflate the two.
A concrete input and expected output from the current implementation.
Input
Purchase price $40,000, estimated resale value $10,000 after 5 years, straight-line method, 100% business use
Expected output
Annual depreciation $6,000. Book value: Year 1 $34,000, Year 2 $28,000, Year 3 $22,000, Year 4 $16,000, Year 5 $10,000.
Straight-line depreciation spreads the $30,000 loss in value ($40,000 minus $10,000 salvage) evenly across 5 years at $6,000 per year, reducing book value by that amount each year until it reaches the $10,000 salvage floor.
The schedule runs as straight-line (equal annual amounts) or an accelerated/MACRS-style pattern (larger deductions in early years) depending on the method selected. For passenger automobiles used in business, the tool applies the Section 280F luxury auto limits, which cap the deductible amount in each year no matter how much the underlying formula would otherwise allow.
Vehicles rated above 6,000 lbs gross vehicle weight rating (GVWR) - many SUVs and trucks - are exempt from the passenger-auto luxury limits and instead fall under a separate Section 179 SUV cap that allows a much larger portion of the cost to be expensed in the first year, subject to that cap and the taxpayer's business income limit.
Only if you enter a business-use percentage as an input. Left unspecified, the schedule generally assumes 100% business use. If your actual business use is lower, you need to prorate the deduction yourself using your logged business-use percentage before filing.
Heavy SUVs get a separate, higher Section 179 dollar cap than passenger cars, but it's still a cap, not unlimited expensing - and the deduction can never exceed the business's net taxable income for the year. Both limits apply even though luxury auto limits under Section 280F don't.
The example and behavioral notes were checked against the browser implementation. Standards and primary references below define the relevant format, formula, or platform behavior.
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