Luxury Vehicle Depreciation Caps, Truck and Van Limits, and First Year Bonus Amounts For 2004

The luxury auto cap figures for 2004 are slightly lower than they were in 2003. The following breaks down the 2004 dollar caps over four separate deductions.

Regular Limits
For automobiles first placed in service in calendar year 2004, the annual dollar maximum depreciation amounts are:

Non-electric:

• 1st Tax Year: $2,960

• 2nd Tax Year: $4,800

• 3rd Tax Year: $2,850

• Each Later Year: $1,675

Electric:

• 1st Tax Year: $8,880

• 2nd Tax Year: $14,300

• 3rd Tax Year: $8,550

• Each Later Year: $5,125

Trucks and Vans
Trucks and vans are defined as passenger automobiles built on a truck chassis, including minivans and sport utility vehicles built on a truck chassis. However, vehicles that weigh more than 6,000 pounds are not considered "passenger automobiles" subject to any of the auto depreciation caps, whether they are classified as sedans, wagons, trucks, vans or sport utility vehicles.

• 1st Tax Year: $3,260

• 2nd Tax Year: $5,300

• 3rd Tax Year: $3,150

• Each Later Year: $1,875

Bonus Depreciation
First year depreciation for passenger vehicles with a 50 percent allowance increases the first year depreciation by $7,650 for a total of $10,610 ($10,910 for light trucks and vans). The 50 percent bonus limitation for electrical vehicles for the first year is $31,830. Depreciation limits for subsequent tax years remain the same as under the regular deprecation limits as noted above.

In order to qualify for the 50 percent bonus depreciation, the property must be acquired after May 5, 2003 and before January 1, 2005. Also, the original use of the property must start with the taxpayer. 

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