The tax code limits depreciation deductions for passenger automobiles, such as cars, light trucks, and light vans. Such vehicles are subject to special depreciation limits, also known as “luxury auto depreciation rules.”
The maximum auto depreciation deductions for new and used passenger autos placed in service in 2023 are:
- Year 1: $12,200 ($20,200 if you claim bonus depreciation)
you need to take $20K of 179 to fully depreciate the vehicle in year 1
if you take only $12,200 of section 179 that leaves $7,800 of an undepreciated basis. Bonus depreciation is limited to 80% of this.
the reason for only 16K of bonus is the 80% limit (applied to the 20K since no 179 elected)
Turbotax does not assume any 179 because it's elective and does not have to be the maximum whereas to not take bonus you must elect out
