Publication 463 (2025), Travel, Gift, and Car Expenses

Special depreciation allowance. P.L.119-21 (July 4, 2025), commonly known as the One Big Beautiful Bill Act (OBBBA), made several amendments to Code section 168(k) to provide taxpayers with a permanent 100% additional first-year depreciation deduction for qualified property acquired and placed in service, and specified plants planted or grafted, after January 19, 2025. Specifically, OBBBA replaced the annual phasedown of the applicable percentage for the Code section 168(k) additional first-year depreciation deduction with a permanent 100% additional first-year depreciation deduction for qualified property acquired, or specified plants planted or grafted, after January 19, 2025. Additionally, OBBBA amended Code section 168(k) to allow taxpayers to elect to deduct 40% (60% for certain property having longer production periods or certain aircraft), instead of 100%, additional first-year depreciation for qualified property placed in service, or specified plants planted or grafted, during the first-tax year ending after January 19, 2025. The amendments generally apply to property acquired, or specified plants planted or grafted, after January 19, 2025. See Notice 2026-11.For 2025, the first-year special (“bonus”) depreciation allowance on qualified property (including cars, trucks, and vans) is 100% for qualified property acquired and placed in service after January 19, 2025. However, the special depreciation allowance remains 40% for qualified property placed in service during 2025 that is acquired after September 27, 2017, and before January 20, 2025. Special depreciation allowance is explained in chapter 4.

Standard mileage rate. For 2025, the standard mileage rate for the cost of operating your car for business use is 70 cents ($0.70) per mile. Car expenses and use of the standard mileage rate are explained in chapter 4.

Depreciation limits on cars, trucks, and vans. The depreciation limitations for passenger automobiles acquired after September 27, 2017, and placed in service during calendar year 2025, for which the Code section 168(k) additional first-year depreciation deduction applies are first tax year, $20,200; second tax year, $19,600; third tax year, $11,800; and each succeeding year, $7,060. See Revenue Procedure 2025-16, Table 1. Depreciation limits are explained in chapter 4.The depreciation limitations for passenger automobiles placed in service during calendar year 2025 for which no Code section 168(k) additional first-year depreciation deduction applies are first tax year, $12,200; second tax year, $19,600; third tax year, $11,800; and each succeeding year, $7,060. See Revenue Procedure 2025-16, Table 2.

Section 179 deduction. For tax years beginning in 2025, the aggregate cost of any Code section 179 property that a taxpayer elects to treat as an expense cannot exceed $2,500,000 and the cost of any sport utility vehicle that may be taken into account under Code section 179 cannot exceed $31,300. The $2,500,000 limitation is reduced (but not below zero) by the amount by which the cost of Code section 179 property placed in service during the 2025 tax year exceeds $4,000,000. (See Revenue Procedure 2025-32.)