For tax professionals advising clients on the acquisition or leasing of business vehicles, Revenue Procedure 2026-15 is the essential annual guidance that updates depreciation limits and lease inclusion amounts. According to the guidance, "This revenue procedure provides: (1) two tables of limitations on depreciation deductions for owners of passenger automobiles placed in service by the taxpayer during calendar year 2026; and (2) a table of dollar amounts that must be used to determine income inclusions by lessees of passenger automobiles with a lease term beginning in calendar year 2026".

For practitioners applying these rules, it is important to note that "the term ‘passenger automobiles’ includes trucks and vans".

Statutory Background and Inflation Adjustments

The Internal Revenue Code (IRC) mandates the annual publication of these tables. Specifically, "For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year".

To account for economic shifts, Congress requires an annual indexation of these limits. The procedure states that "[f]or passenger automobiles placed in service after 2018, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount that is determined using the automobile component of the Chained Consumer Price Index for All Urban Consumers published by the Department of Labor (C-CPI-U)". For the 2026 calendar year, this calculation results in an "automobile price inflation adjustment for 2026 for passenger automobiles" of 23.468 percent, which is applied to the base limits and rounded to the nearest $100.

Interaction with Section 168(k) Bonus Depreciation

A critical component of advising clients on vehicle purchases is the interaction between IRC § 280F limitations and IRC § 168(k) additional first-year depreciation. The landscape for 2026 includes considerations under recent legislation. As detailed in the procedure, "Section 168(k), as amended by Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (OBBBA), applies to property acquired and placed in service after January 19, 2025". Under this amendment, "Section 168(k)(1)... allows an additional first year depreciation deduction under § 167(a) equal to 100 percent of the property’s adjusted basis".

For property placed in service in 2026 but subject to the pre-OBBBA rules (acquired before January 20, 2025), the applicable bonus percentage phases down to 20 percent.

Regardless of whether the old or new § 168(k) applies, if a vehicle qualifies for bonus depreciation, the statute provides a specific bump to the first-year limit: "For qualified property acquired and placed in service after September 27, 2017, § 168(k)(2)(F)(i) increases the first-year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000".

However, practitioners must remain vigilant regarding exceptions. The § 168(k) additional first-year deduction does not apply in 2026 if the taxpayer: "(1) did not use the passenger automobile during 2026 more than 50 percent for business purposes; (2) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(7) for the class of property that includes passenger automobiles; (3) acquired a used passenger automobile and the acquisition of such property did not meet the acquisition requirements in § 168(k)(2)(E) and § 1.168(k)-2(b)(3)(iii) of the Income Tax Regulations; or (4) acquired the passenger automobile before September 28, 2017".

Depreciation Limitation Tables for 2026

The IRS provides two distinct tables for owners depending on whether the vehicle is subject to the § 168(k) bonus depreciation deduction.

Table 1 is used for passenger automobiles "acquired by the taxpayer after September 27, 2017, and placed in service by the taxpayer during calendar year 2026, for which the § 168(k) additional first year depreciation deduction applies". The procedure notes that these limitations "apply regardless of whether the § 168(k) additional first year depreciation deduction is allowed under former § 168(k) or § 168(k) as amended by the OBBBA".

REV. PROC. 2026-15 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES ACQUIRED AFTER SEPTEMBER 27, 2017, AND PLACED IN SERVICE DURING CALENDAR YEAR 2026, FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES

Tax Year	Amount
1st Tax Year	$20,300
2nd Tax Year	$19,800
3rd Tax Year	$11,900
Each Succeeding Year	$7,160

Table 2 is to be used "for a passenger automobile placed in service by the taxpayer during calendar year 2026 for which no § 168(k) additional first year depreciation deduction applies".

REV. PROC. 2026-15 TABLE 2 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES PLACED IN SERVICE DURING CALENDAR YEAR 2026 FOR WHICH NO § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES

Tax Year	Amount
1st Tax Year	$12,300
2nd Tax Year	$19,800
3rd Tax Year	$11,900
Each Succeeding Year	$7,160

Statutory Authority for Lessee Income Inclusions

For clients leasing passenger automobiles, IRC § 280F(c)(2) "requires a reduction to the amount allowable as a deduction to the lessee of a leased passenger automobile". This rule ensures parity between leasing and purchasing. The text states, "Pursuant to § 280F(c)(3), the reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles".

From a compliance standpoint, "Under § 1.280F-7(a), this reduction is accomplished by requiring the lessee to include in gross income an amount determined by applying a formula to a dollar amount obtained from a table". The IRS supplies Table 3 to fulfill this requirement.

Income Inclusion Table for 2026 Leases

Table 3 "provides the dollar amount used by lessees of passenger automobiles with a lease term beginning in 2026 to determine the income inclusion amount for those passenger automobiles," based on the vehicle’s fair market value.

REV. PROC. 2026-15 TABLE 3 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2026

Fair Market Value Over	Fair Market Value Not Over	1st Tax Year During Lease	2nd Tax Year During Lease	3rd Tax Year During Lease	4th Tax Year During Lease	5th Tax Year During Lease & Later
$62,000	$64,000	8	15	21	25	27
64,000	66,000	19	38	56	66	76
66,000	68,000	29	62	91	108	123
68,000	70,000	40	86	125	149	172
70,000	72,000	51	109	160	191	220
72,000	74,000	61	133	195	232	268
74,000	76,000	72	156	230	274	316
76,000	78,000	83	179	265	316	364
78,000	80,000	93	203	299	358	412
80,000	85,000	112	244	360	431	496
85,000	90,000	139	302	447	535	617
90,000	95,000	166	361	534	639	737
95,000	100,000	192	420	621	743	858
100,000	110,000	232	507	752	900	1,038
110,000	120,000	286	624	926	1,108	1,279
120,000	130,000	339	742	1,099	1,317	1,520
130,000	140,000	392	859	1,273	1,526	1,760
140,000	150,000	446	976	1,447	1,734	2,001
150,000	160,000	499	1,093	1,621	1,943	2,242
160,000	170,000	553	1,210	1,795	2,151	2,483
170,000	180,000	606	1,328	1,968	2,360	2,723
180,000	190,000	659	1,445	2,142	2,569	2,964
190,000	200,000	713	1,562	2,316	2,777	3,205
200,000	210,000	766	1,679	2,490	2,986	3,445
210,000	220,000	820	1,796	2,664	3,194	3,686
220,000	230,000	873	1,913	2,838	3,403	3,927
230,000	240,000	926	2,031	3,012	3,610	4,168
240,000	250,000	980	2,148	3,185	3,820	4,408
250,000	260,000	1,033	2,265	3,360	4,027	4,650
260,000	270,000	1,086	2,382	3,534	4,236	4,890
270,000	280,000	1,140	2,499	3,708	4,444	5,131
280,000	290,000	1,193	2,617	3,881	4,653	5,372
290,000	300,000	1,247	2,733	4,056	4,862	5,612
300,000	310,000	1,300	2,851	4,229	5,070	5,854
310,000	320,000	1,353	2,968	4,403	5,279	6,094
320,000	330,000	1,407	3,085	4,577	5,487	6,335
330,000	340,000	1,460	3,202	4,751	5,696	6,576
340,000	350,000	1,514	3,319	4,925	5,904	6,817
350,000	360,000	1,567	3,437	5,098	6,113	7,057
360,000	370,000	1,620	3,554	5,273	6,321	7,298
370,000	380,000	1,674	3,671	5,446	6,530	7,539
380,000	390,000	1,727	3,788	5,621	6,738	7,779
390,000	400,000	1,781	3,905	5,794	6,947	8,020
400,000	410,000	1,834	4,022	5,969	7,155	8,261
410,000	420,000	1,887	4,140	6,142	7,364	8,501
420,000	430,000	1,941	4,257	6,316	7,572	8,742
430,000	440,000	1,994	4,374	6,490	7,781	8,983
440,000	450,000	2,047	4,491	6,664	7,990	9,223
450,000	460,000	2,101	4,608	6,838	8,198	9,464
460,000	470,000	2,154	4,726	7,011	8,407	9,705
470,000	480,000	2,208	4,843	7,185	8,615	9,946
480,000	490,000	2,261	4,960	7,359	8,824	10,186
490,000	500,000	2,314	5,077	7,533	9,033	10,427
500,000	and over	2,368	5,194	7,707	9,241	10,668

Practitioners should ensure they review the specific acquisition requirements found in § 168(k)(2)(E) and § 1.168(k)-2(b)(3)(iii), along with the date property is placed in service to accurately advise on depreciation and inclusions for 2026.

Prepared with assistance from NotebookLM.