Based on inflation factors now available, the annual "luxury vehicle" depreciation caps for use in connection with vehicles first placed in service in calendar year 2017 can be projected. Most caps remain the same as for 2016. Also, as computed by Wolters Kluwer, the projected maximum fair market values (FMVs) to be used in 2017 are available for use in the cents-per-mile method for determining the fringe benefit value of the personal use of employer-provided vehicles. Those values have also held steady or, for trucks and vans, have gone up slightly from 2016 amounts.
Computations under Internal Revenue Code Sec. 280F call for use of the "new cars" and "new trucks" components of the October 2016 Consumer Price Index, Urban (CPI-U) that were released by the Bureau of Labor Statistics on November 17, 2016.
2017 vehicle depreciation caps
The projected luxury auto depreciation limits under Code Sec. 280F for passenger automobiles placed in service in 2017 are:
- $3,160 for the first year, the same as for 2016 ($11,160 for 2017, same as for 2016, if bonus depreciation is elected);
- $5,100 for the second tax year, the same as for 2016;
- $3,050 for the third tax year, the same as for 2016; and
- $1,875 for each tax year thereafter, the same as for 2016.
Trucks and vans
The projected maximum depreciation limits under Code Sec. 280F for trucks and vans first placed in service during the 2017 calendar year are:
- $3,560 for 2017, the same as for 2016 ($11,560 for 2017, same as for 2016, if bonus depreciation is elected);
- $5,700 for the second tax year, the same as for 2016;
- $3,450 for the third tax year, up $100 from 2016; and
- $2,075 for each tax year thereafter, same as for 2016.
One permitted method that an employer can use to value the personal use of an employer-provided automobile is the standard mileage allowance rate, which for 2016 is 54 cents-per-mile for business-related travel (the 2017 mileage rate is expected to be announced sometime in mid-December 2016), but only if the vehicle’s FMV does not exceed certain amounts. The maximum FMVs for use of the vehicle cents-per-mile valuation rule in 2017, as projected, will be:
- $15,900 for a passenger automobile (same as for 2016);
- $17,800 for a truck or van, which includes minivans and SUVs built on a truck chassis (up from $17,700 in 2016); and
- $21,100 for a fleet passenger automobile (down from $21,200 for 2016) and $23,300 for a fleet truck or van (up from $23,100 for 2016).
Please contact your Grossman St. Amour CPAs tax professional with questions at 315.422.1391 or www.gsacpas.com.