2023

Instructions for Form 2106

Employee Business Expenses

Department of the Treasury

Internal Revenue Service

Section references are to the Internal Revenue Code 

unless otherwise noted.

Future Developments

See IRS.gov/Form2106 for the latest developments 

related to Form 2106 and its instructions.

What's New

Standard mileage rate. The 2023 per mile rate for 

business use of your vehicle is 65.5 cents (0.655).

Depreciation limits on vehicles. The depreciation limits 

apply under section 179 and section 280F.

Under section 179. For tax years beginning in 2023, 

the aggregate cost of any section 179 property that a 

taxpayer elects to treat as an expense cannot exceed 

$1,160,000. The $1,160,000 limitation is reduced (but not 

below zero) by the amount by which the cost of section 

179 property placed in service during the 2023 tax year 

exceeds $2,890,000. The cost of any sport utility vehicle 

(SUV) that may be taken into account under section 179 

cannot exceed $28,900. (See Rev. Proc. 2022-38.)

A vehicle subject to section 280F(a) is not considered 

an SUV under section 179. (See section 179.)

A deduction allowed under section 179 may be subject 

to the limitations of section 280F. (See section 280F.)

Under section 280F. The depreciation limitations for 

passenger automobiles acquired after September 27, 

2017, and placed in service during calendar year 2023, for 

which the section 168(k) additional first-year depreciation 

deduction applies, is $20,200 for the 1st tax year, $19,500 

for the 2nd tax year, $11,700 for the 3rd tax year, and 

$6,960 for each succeeding year.

The depreciation limitations for passenger automobiles 

placed in service during calendar year 2023 for which no 

section 168(k) additional first-year depreciation deduction 

applies is $12,200 for the 1st tax year, $19,500 for the 2nd 

tax year, $11,700 for the 3rd tax year, and $6,960 for each 

succeeding year. (See Rev. Proc. 2023-14.)

Note. The section 168(k) additional first-year 

depreciation deduction is sometimes called special 

depreciation allowance.

General Instructions

Purpose of Form

Use Form 2106 if you were an Armed Forces reservist, a 

qualified performing artist, a fee-basis state or local 

government official, or an employee with 

impairment-related work expenses. Employees who do 

not fit into one of the listed categories may not use the 

Form 2106 due to the suspension of miscellaneous 

itemized deductions subject to the 2% floor under section 

67(a). Section 67(g) suspends miscellaneous itemized 

deductions for tax years beginning after December 31, 

2017, and before January 1, 2026. See the flowchart in 

these instructions to find out if you must file this form.

Excess reimbursements. If you are not a member of 

the Armed Forces reserves, a qualified performing artist, a 

fee-basis state or local government official, or an 

employee with impairment-related work expenses, and 

receive reimbursements in excess of your expenses from 

your employer’s nonaccountable plan, the excess 

Who Must File Form 2106

No

Don’t le Form 2106 (see Notes below).

B Did you have job-related business expenses?

Were you reimbursed for any of your business

expenses (count only reimbursements your employer

didn’t include in box 1 of your Form W-2)?

C

File Form 2106.

F

File Form 2106 (see

Notes below).

Notes

• Armed Forces reservists, qualied performing artists, 

fee-basis state or local government ofcials, and 

individuals with disabilities should see the instructions 

for line 10 to nd out where to deduct employee 

expenses.

• Form 2106 may be used only by Armed Forces

reservists, qualied performing artists, fee-basis 

state or local government ofcials, and employees 

with impairment-related work expenses because of 

the suspension of miscellaneous itemized 

deductions subject to the 2% oor under section 

67(a) by section 67(g).

Yes

No

Did you use a vehicle in your job during the 

tax year that you also used for business in a 

prior year?

Is either (1) or (2) true?

1. You owned this vehicle and used the actual

expense method in the rst year you used the

vehicle for business.

2. You used a depreciation method other than

straight line for this vehicle in a prior year.

E

G

Yes

No

No

Don’t le Form 2106.

Are you claiming job-related vehicle,

travel, transportation, meals, or 

entertainment expenses?

D

Yes

Yes

File Form 2106.

Yes

Yes

Yes

No

No

A Were you employed during the tax year as an Armed 

Forces reservist, a qualied performing artist, a fee-basis 

state or local government ofcial, or an individual with a 

disability claiming impairment-related work expenses? 

See the line 10 instructions for denitions.

Are your deductible expenses more than your

reimbursements (count only reimbursements your

employer didn’t include in box 1 of your Form W-2)?

For rules covering employer reporting of reimbursed

expenses, see the instructions for line 7.

Don’t le Form 2106.

No

Don’t le Form 2106.

Jan 26, 2024 Cat. No. 64188V
reimbursements should be included as wages on your 

Form W-2 and your income tax return.

Recordkeeping

You can't deduct expenses for travel (including meals 

unless you used the standard meal allowance), gifts, or 

use of a car or other listed property unless you keep 

records to prove the time, place, business purpose, 

business relationship (for gifts), and amounts of these 

expenses. Generally, you must also have receipts for all 

lodging expenses (regardless of the amount) and any 

other expense of $75 or more. See section 274(d) and 

Regulations sections 1.274-5 and 1.274-5T.

Additional Information

For more details about employee business expenses, see 

the following.

• Pub. 463, Travel, Gift, and Car Expenses.

• Pub. 529, Miscellaneous Deductions.

• Pub. 587, Business Use of Your Home.

• Pub. 946, How To Depreciate Property.

Specific Instructions

Part I—Employee Business Expenses 

and Reimbursements

Fill in all of Part I if you were reimbursed for employee 

business expenses. If you weren't reimbursed for your 

expenses, complete steps 1 and 3 only.

Step 1—Enter Your Expenses

Line 1. If you were a rural mail carrier, you can treat the 

amount of qualified reimbursement you received as the 

amount of your allowable expense. Because the qualified 

reimbursement is treated as paid under an accountable 

plan, your employer shouldn't include the amount of 

reimbursement in your income.

You were a rural mail carrier if you were an employee of 

the United States Postal Service (USPS) who performed 

services involving the collection and delivery of mail on a 

rural route.

Qualified reimbursements. These are the amounts 

paid by the USPS as an equipment maintenance 

allowance under a collective bargaining agreement 

between the USPS and the National Rural Letter Carriers' 

Association, but only if such amounts don't exceed the 

amount that would have been paid under the 1991 

collective bargaining agreement (adjusted for changes in 

the Consumer Price Index since 1991 as detailed in 

section 162(o)(3)).

If you were a rural mail carrier, do not use Form 

2106. Your employer should not include the 

amount of reimbursement in your income.

Line 2. The expenses of commuting to and from work 

aren't deductible. See the line 15 instructions for the 

definition of commuting.

Line 3. Enter lodging and transportation expenses 

connected with overnight travel away from your tax home 

(defined next). Don't include expenses for meals. For 

more details, including limits, see Pub. 463.

CAUTION

!

Tax home. Generally, your tax home is your regular or 

main place of business or post of duty regardless of where 

you maintain your family home. If you don't have a regular 

or main place of business because of the nature of your 

work, then your tax home may be the place where you 

regularly live. If you don't have a regular or a main place of 

business or post of duty and there is no place where you 

regularly live, you are considered an itinerant (a transient) 

and your tax home is wherever you work. As an itinerant, 

you are never away from home and can't claim a travel 

expense deduction. For more details on the definition of a 

tax home, see Pub. 463.

Generally, you can't deduct any expenses for travel 

away from your tax home for any period of temporary 

employment of more than 1 year. However, this 1-year rule 

doesn't apply for a temporary period in which you were a 

federal employee certified by the Attorney General (or 

designee) as traveling in temporary duty status for the 

U.S. Government to investigate or prosecute a federal 

crime (or to provide support services for the investigation 

or prosecution of a federal crime).

Incidental expenses. The term “incidental expenses” 

means fees and tips given to porters, baggage carriers, 

hotel staff, and staff on ships.

Incidental expenses don't include expenses for laundry, 

cleaning and pressing of clothing, lodging taxes, costs of 

telegrams or telephone calls, transportation between 

places of lodging or business and places where meals are 

taken, or the mailing cost of filing travel vouchers and 

paying employer-sponsored charge card billings.

You can use an optional method (instead of actual cost) 

for deducting incidental expenses only. The amount of the 

deduction is $5 a day. You can use this method only if you 

didn't pay or incur any meal expenses. You can't use this 

method on any day you use the standard meal allowance 

(defined later in the instructions for line 5).

Line 4. Enter other job-related expenses not listed on any 

other line of this form. Include expenses for business gifts, 

education (tuition, fees, and books), trade publications, 

etc. For details, including limits, see Pub. 463 and Pub. 

529.

If you are deducting depreciation or claiming a section 

179 deduction, see Form 4562, Depreciation and 

Amortization, to figure the depreciation and section 179 

deduction to enter on Form 2106,

line 4.

Don't include on line 4 any educator expenses you 

deducted on Schedule 1 (Form 1040), line 11.

You may be able to take a credit for your 

educational expenses instead of a deduction. See 

Form 8863, Education Credits, for details.

Don't include expenses for meals, taxes, or interest on 

line 4. See the Schedule A (Itemized Deductions) for your 

return to see whether you can deduct taxes or interest 

expenses.

Note. If line 4 is your only entry, don't complete Form 

2106 unless you are claiming:

• Performing-arts-related business expenses as a 

qualified performing artist,

TIP

2 Instructions for Form 2106 (2023)
• Expenses for performing your job as a fee-basis state or 

local government official, or

• Impairment-related work expenses as an individual with 

a disability.

Note. No deduction is allowed for certain entertainment 

expenses, membership dues, and facilities used in 

connection with these activities for amounts paid or 

incurred after 2017. See section 274.

Line 5. Enter your allowable meals expense. Include 

meals while away from your tax home overnight and other 

business meals.

Standard meal allowance. Instead of actual cost, you 

may be able to claim the standard meal allowance for your 

daily meals and incidental expenses (M&IE) while away 

from your tax home overnight. Under this method, instead 

of keeping records of your actual meal expenses, you 

deduct a specified amount, depending on where you 

travel. However, you must still keep records to prove the 

time, place, and business purpose of your travel.

The standard meal allowance is the federal M&IE rate. 

You can find the rates that applied during 2023 on the 

Internet at GSA.gov/perdiem. At the Per Diem Overview 

page, select “2023” for the rates in effect for the period 

January 1, 2023–September 30, 2023. Select “Fiscal Year 

2024” for the period October 1, 2023–December 31, 2023. 

However, you can apply the rates in effect before October 

1, 2023, for expenses of all travel within the United States 

for 2023 instead of the updated rates. For the period 

October 1, 2023–December 31, 2023, you must 

consistently use either the rates for the first 9 months of 

2023 or the updated rates.

The Department of Defense sets rates for Alaska, 

Hawaii, and U.S. associated territories. See travel.dod.mil/

Travel-Transportation-Rates/Per-Diem/Per-Diem-RateLookup/.

The State Department sets foreign rates. See 

aoprals.state.gov/web920/per_diem.asp.

See Pub. 463 for details on how to figure your 

deduction using the standard meal allowance, including 

special rules for partial days of travel and transportation 

workers.

Step 2—Enter Reimbursements Received From 

Your Employer for Expenses Listed in Step 1

Line 7. Enter reimbursements received from your 

employer (or third party) for expenses shown in Step 1 

that weren't reported to you in box 1 of your Form W-2. 

This includes reimbursements reported under code “L” in 

box 12 of Form W-2. Amounts reported under code “L” are 

reimbursements you received for business expenses that 

weren't included as wages on Form W-2 because the 

expenses met specific IRS substantiation requirements.

Generally, when your employer pays for your expenses, 

the payments shouldn't be included in box 1 of your Form 

W-2 if, within a reasonable period of time, you:

• Accounted to your employer for the expenses; and

• Were required to return, and did return, any payment 

not spent (or considered not spent) for business 

expenses.

If these payments were incorrectly included in box 1, 

ask your employer for a corrected Form W-2.

Accounting to your employer. This means that you 

gave your employer documentary evidence in the form of 

a statement of expense, account book, diary, log, 

statement of expenses, trip sheets, or similar statement to 

verify the amount, time, place, and business purpose of 

each expense. You are also treated as having accounted 

for your expenses if either of the following applies.

• Your employer gave you a fixed travel allowance that is 

similar in form to the per diem allowance specified by the 

federal government and you verified the time, place, and 

business purpose of the travel for that day.

• Your employer reimbursed you for vehicle expenses at 

the standard mileage rate or according to a flat rate or 

stated schedule, and you verified the date of each trip, 

mileage, and business purpose of the vehicle use.

See Pub. 463 for more details.

Allocating your reimbursement. If your employer 

paid you a single amount that covers meals as well as 

other business expenses, you must allocate the 

reimbursement so that you know how much to enter in 

column A and column B of line 7. Use the following 

worksheet to figure this allocation.

Reimbursement Allocation Worksheet

(keep for your records)

1. Enter the total amount of reimbursements 

your employer gave you that weren't 

reported to you

in box 1 of Form W-2 ..............

2. Enter the total amount of your expenses for 

the periods covered by this 

reimbursement ..................

3. Enter the part of the amount on line 2 that 

was your total expense for meals ......

4. Divide line 3 by line 2.

Enter the result as a decimal (rounded to 

three places) ...................

.

5. Multiply line 1 by line 4. Enter the result here 

and

in column B, line 7 ...............

6. Subtract line 5 from line 1. Enter the result 

here and

in column A, line 7 ...............

Step 3—Figure Expenses To Deduct

Line 9. Generally, you can deduct only 50% of your 

business meal expenses, including meals incurred while 

away from home on business. Meals that are not 

separately stated from entertainment are generally 

nondeductible.

Line 10. If you are one of the individuals discussed 

below, special rules apply to deducting your employee 

business expenses.

Armed Forces reservist (member of a reserve 

component). You are a member of a reserve component 

of the Armed Forces of the United States if you are in the 

Army, Navy, Marine Corps, Air Force, or Coast Guard 

Reserve; the Army National Guard of the United States; 

Instructions for Form 2106 (2023) 3
the Air National Guard of the United States; or the 

Reserve Corps of the Public Health Service.

If you qualify, complete Form 2106 and include the part 

of the line 10 amount attributable to the expenses for 

travel more than 100 miles away from home in connection 

with your performance of services as a member of the 

reserves on Schedule 1 (Form 1040), line 12, and attach 

Form 2106 to your return. The amount of expenses you 

can deduct on Schedule 1 (Form 1040), line 12, is limited 

to the regular federal per diem rate (for lodging, meals, 

and incidental expenses) and the standard mileage rate 

(for car expenses), plus any parking fees, ferry fees, and 

tolls. These reserve-related travel expenses are 

deductible whether or not you itemize deductions. See 

Pub. 463 for additional details on how to report these 

expenses.

Fee-basis state or local government official. You 

are a qualifying fee-basis official if you are employed by a 

state or political subdivision of a state and are 

compensated, in whole or in part, on a fee basis.

If you qualify, include the part of the line 10 amount 

attributable to the expenses you paid or incurred for 

services performed in that job in the total on Schedule 1 

(Form 1040), line 12, and attach Form 2106 to your return. 

These employee business expenses are deductible 

whether or not you itemize deductions.

Qualified performing artist. You are a qualified 

performing artist if you:

1. Performed services in the performing arts as an 

employee for at least two employers during the tax year,

2. Received from at least two of those employers 

wages of $200 or more per employer,

3. Had allowable business expenses attributable to the 

performing arts of more than 10% of gross income from 

the performing arts, and

4. Had adjusted gross income of $16,000 or less 

before deducting expenses as a performing artist.

In addition, if you are married, you must file a joint return 

unless you lived apart from your spouse for all of 2023. If 

you file a joint return, you must figure requirements (1), 

(2), and (3) separately for both you and your spouse. 

However, requirement (4) applies to the combined 

adjusted gross income of both you and your spouse.

If you meet all the requirements for a qualified 

performing artist, include the part of the line 10 amount 

attributable to performing-arts-related expenses in the 

total on Schedule 1 (Form 1040), line 12, and attach Form 

2106 to your return. Your performing-arts-related business 

expenses are deductible whether or not you itemize 

deductions.

Disabled employee with impairment-related work 

expenses. Impairment-related work expenses are the 

allowable expenses of an individual with physical or 

mental disabilities for attendant care at his or her place of 

employment. They also include other expenses in 

connection with the place of employment that enable the 

employee to work. See Pub. 463 for more details.

If you qualify, enter the part of the line 10 amount 

attributable to impairment-related work expenses on 

Schedule A (Form 1040), line 16 (or Schedule A (Form 

1040-NR), line 7).

Part II—Vehicle Expenses

There are two methods for figuring vehicle expenses—the 

standard mileage rate and the actual expense method. 

You can use the standard mileage rate for 2023 only if:

• You owned the vehicle and used the standard mileage 

rate for the first year you placed the vehicle in service, or

• You leased the vehicle and are using the standard 

mileage rate for the entire lease period (except the period, 

if any, before 1998).

You can't use actual expenses for a leased vehicle if 

you previously used the standard mileage rate for that 

vehicle.

If you have the option of using either the standard 

mileage rate or actual expense method, you should figure 

your expenses both ways to find the method most 

beneficial to you. But when completing Form 2106, fill in 

only the sections that apply to the method you choose.

If you were a rural mail carrier and received an 

equipment maintenance allowance, see the line 1 

instructions.

For more information on the standard mileage rate and 

actual expenses, see Pub. 463.

Section A—General Information

If you used two vehicles for business during the year, use 

a separate column in Sections A, C, and D for each 

vehicle. If you used more than two vehicles, complete and 

attach a second Form 2106, page 2.

Line 11. Date placed in service is generally the date you 

first start using your vehicle. However, if you first start 

using your vehicle for personal use and later convert it to 

business use, the vehicle is treated as placed in service 

on the date you start using it for business.

Line 12. Enter the total number of miles you drove each 

vehicle during 2023.

Change from personal to business use. If you 

converted your vehicle during the year from personal to 

business use (or vice versa) and you don't have mileage 

records for the time before the change to business use, 

enter the total number of miles driven after the change to 

business use.

Line 13. Don't include commuting miles on this line; 

commuting miles aren't considered business miles. See 

the line 15 instructions for the definition of commuting.

Line 14. Divide line 13 by line 12 to figure your business 

use percentage.

Change from personal to business use. If you 

entered on line 12 the total number of miles driven after 

the change to business use, multiply the percentage you 

figured by the number of months you drove the vehicle for 

business and divide the result by 12.

Line 15. Enter your average daily round-trip commuting 

distance. If you went to more than one work location, 

figure the average.

4 Instructions for Form 2106 (2023)
Commuting. Generally, commuting is travel between 

your home and a work location. However, travel that meets 

any of the following conditions isn't commuting.

• You have at least one regular work location away from 

your home and the travel is to a temporary work location in 

the same trade or business, regardless of the distance. 

Generally, a temporary work location is one where your 

employment is expected to last 1 year or less. See Pub. 

463 for more details.

• The travel is to a temporary work location outside the 

metropolitan area where you live and normally work.

• Your home is your principal place of business under 

section 280A(c)(1)(A) (for purposes of deducting 

expenses for business use of your home) and the travel is 

to another work location in the same trade or business, 

regardless of whether that location is regular or temporary 

and regardless of distance.

Line 16. If you don't know the total actual miles you used 

your vehicle for commuting during the year, figure the 

amount to enter on line 16 by multiplying the number of 

days during the year that you used each vehicle for 

commuting by the average daily round-trip commuting 

distance in miles. However, if you converted your vehicle 

during the year from personal to business use (or vice 

versa), enter your commuting miles only for the period you 

drove your vehicle for business.

Section B—Standard Mileage Rate

You may be able to use the standard mileage rate instead 

of actual expenses to figure the deductible costs of 

operating a passenger vehicle, including a van, an SUV, a 

pickup, or a panel truck.

If you want to use the standard mileage rate for a 

vehicle you own, you must do so in the first year you place 

your vehicle in service. In later years, you can deduct 

actual expenses instead, but you must use straight line 

depreciation.

If you lease your vehicle, you can use the standard 

mileage rate, but only if you use the rate for the entire 

lease period (except for the period, if any, before January 

1, 1998).

If you use more than two vehicles, complete and attach 

a second Form 2106, page 2, providing the information 

requested in lines 11 through 22. Be sure to include the 

amount from line 22 of both pages in the total on Form 

2106, line 1. You may not use the standard mileage rate to 

compute the deductible expenses of five or more vehicles 

you own or lease simultaneously (such as in fleet 

operations).

You can also deduct state and local personal property 

taxes. Enter these taxes on Schedule A (Form 1040), 

line 5c. (Personal property taxes aren't deductible on Form 

1040-NR.)

If you are claiming the standard mileage rate for 

mileage driven in more than one business activity, you 

must figure the deduction for each business on a separate 

form or schedule (for example, Form 2106; Schedule C 

(Form 1040), Profit or Loss From Business; Schedule E 

(Form 1040), Supplemental Income and Loss; or 

Schedule F (Form 1040), Profit or Loss From Farming).

Section C—Actual Expenses

Line 23. Enter your total annual expenses for gasoline, 

oil, repairs, insurance, tires, license plates, and similar 

items. Don't include state and local personal property 

taxes or interest expense you paid. Deduct state and local 

personal property taxes on Schedule A (Form 1040), 

line 5c. Employees can't deduct car loan interest.

Line 24a. If, during 2023, you rented or leased a vehicle 

instead of using your own vehicle, enter the cost of 

renting. Also, include on this line any temporary rentals, 

such as when your car was being repaired, except for 

amounts included on line 3.

Line 24b. If you leased a vehicle for a term of 30 days or 

more, you may have to reduce your deduction for vehicle 

lease payments by an amount called the inclusion 

amount. You may have an inclusion amount for a 

passenger automobile if:

Passenger Automobiles (Including Trucks and Vans)

The lease term began in:

And the vehicle's fair market 

value on the first day of the 

lease exceeded:

2023 ............... $ 60,000 (See Rev. Proc. 2023-14)

2022 ............... $ 56,000 (See Rev. Proc. 2022-17)

2021 ............... $ 51,000 (See Rev. Proc. 2021-31)

2020 ............... $ 50,000 (See Rev. Proc. 2020-37)

2019 ............... $ 50,000 (See Rev. Proc. 2019-26)

See Pub. 463 for leases beginning before 2019.

See Pub. 463 to figure the inclusion amount.

Line 25. If during 2023 your employer provided a vehicle 

for your business use and included 100% of its annual 

lease value in box 1 of your Form W-2, enter this amount 

on line 25. If less than 100% of the annual lease value was 

included in box 1 of your Form W-2, skip line 25.

Line 28. If you completed Section D, enter the amount 

from line 38. If you used Form 4562 to figure your 

depreciation deduction, enter the total of the following 

amounts.

• Depreciation allocable to your vehicle(s) (from Form 

4562, line 28).

• Any section 179 deduction allocable to your vehicle(s) 

(from Form 4562, line 29).

Section D—Depreciation of Vehicles

Depreciation is an amount you can deduct to recover the 

cost or other basis of your vehicle over a certain number 

of years. In some cases, you can claim a special 

depreciation allowance or elect to expense, under section 

179, part of the cost of your vehicle in the year of 

purchase. For details, see Pub. 463.

Line 30. Enter the vehicle's actual cost or other basis. 

Don't reduce your basis by any prior year's depreciation. 

However, you must reduce your basis by any deductible 

casualty loss, deduction for clean-fuel vehicle, gas guzzler 

tax, alternative motor vehicle credit, or qualified plug-in 

electric vehicle credit you claimed. Increase your basis by 

any sales tax paid (unless you deducted sales taxes in the 

Instructions for Form 2106 (2023) 5
year you purchased your vehicle) and any substantial 

improvements to your vehicle.

If you traded in your vehicle, the special rules for 

determining depreciation when you trade in one vehicle 

for another vehicle no longer apply.

If you converted the vehicle from personal use to 

business use, your basis for depreciation is the smaller of 

the vehicle's adjusted basis or its fair market value on the 

date of conversion.

Line 31. Enter the amount of any section 179 deduction 

and, if applicable, any special depreciation allowance 

claimed for this year.

Section 179 deduction. If 2023 is the first year your 

vehicle was placed in service and the percentage on 

line 14 is more than 50%, you can elect to deduct as an 

expense a portion of the cost (subject to a yearly limit). 

This cost is sometimes referred to as the “Section 179 

basis.” To figure this section 179 deduction, multiply the 

part of the cost of the vehicle that you choose to expense 

by the percentage on line 14. The total of your 

depreciation and section 179 deduction generally can't be 

more than the percentage on line 14 multiplied by the 

applicable limit explained in the line 36 instructions. Your 

section 179 deduction for the year can't be more than the 

income from your job and any other active trade or 

business on your Form 1040 or 1040-SR.

If you are claiming a section 179 deduction on 

other property, or you placed more than 

$2,890,000 of section 179 property in service 

during the year, use Form 4562 to figure your section 179 

deduction. Enter the amount of the section 179 deduction 

allocable to your vehicle from Form 4562, line 12, on Form 

2106, line 31.

Example.

Section 179 basis ....................... $25,000

Limit on depreciation and section 179 

deduction ............................. $20,200*

Smaller of:

Section 179 basis, or limit on 

depreciation ........................... $20,200

Percentage on line 14 ................... × 0.75

Section 179 deduction ................... $15,150

* $12,200 if electing out of special depreciation allowance or not 

qualified property. 

Limit for sport utility and certain other vehicles. 

For sport utility and certain other vehicles placed in 

service in 2023, the portion of the vehicle's cost taken into 

account in figuring your section 179 deduction is limited to 

$28,900. This rule applies to any 4-wheeled vehicle 

primarily designed or used to carry passengers over 

public streets, roads, or highways that isn't subject to any 

of the passenger automobile limits explained in the line 36 

instructions and is rated at no more than 14,000 pounds 

gross vehicle weight. However, the $28,900 limit doesn't 

apply to any vehicle:

CAUTION

!

• Designed to have a seating capacity of more than nine 

persons behind the driver's seat;

• Equipped with a cargo area of at least 6 feet in interior 

length that is an open area or is designed for use as an 

open area but is enclosed by a cap and isn't readily 

accessible directly from the passenger compartment; or

• That has an integral enclosure, fully enclosing the driver 

compartment and load carrying device, doesn't have 

seating rearward of the driver's seat, and has no body 

section protruding more than 30 inches ahead of the 

leading edge of the windshield.

Special depreciation allowance. The special 

depreciation allowance applies only for the first year a 

vehicle is placed in service. See section 168(k) and 

Revenue Procedure 2023 -14. For 2023, your total section 

179 deduction, special depreciation allowance, and 

regular depreciation deduction can't be more than 

$20,200 for passenger automobiles, multiplied by your 

business use percentage on line 14. See the line 36 

instructions for depreciation limits. You can't recover the 

amount by which your depreciation deduction exceeds the 

depreciation limits for the year placed in service until after 

the end of the recovery period for your vehicle.

Use the following worksheet to figure the amount of the 

special depreciation allowance.

Worksheet for the Special Depreciation Allowance

(keep for your records)

1. Enter the total amount from Form 2106, 

line 30 ........................

2. Multiply line 1 by the percentage on Form 

2106, line 14, and enter the result ......

3. Enter any section 179 deduction .......

4. Subtract line 3 from line 2 ............

5. Multiply the applicable limit explained in the 

line 36 instructions by the percentage on 

Form 2106, line 14, and enter the result . .

6. Subtract line 3 from line 5 ............

7. Enter the smaller of line 4 or line 6. Add the 

result to any section 179 deduction (line 3 

above) and enter the total on Form 2106, 

line 31 ........................

Election out. You can elect not to claim the special 

depreciation allowance for your vehicle. If you make this 

election, it applies to all property in the same class placed 

in service during the year.

To make the election, attach a statement to your timely 

filed return (including extensions) indicating that you are 

electing not to claim the special depreciation allowance 

and the class of property for which you are making the 

election.

Line 32. To figure the basis for depreciation, multiply 

line 30 by the percentage on line 14. From that result, 

subtract the total amount of any section 179 deduction 

and special depreciation allowance claimed this year (see 

line 31) or any section 179 deduction and special 

6 Instructions for Form 2106 (2023)
depreciation allowance claimed in any previous year for 

this vehicle.

Line 33. If you used the standard mileage rate in the first 

year the vehicle was placed in service and now elect to 

use the actual expense method, you must use the straight 

line method of depreciation for the vehicle's estimated 

useful life. Otherwise, use the Depreciation Method and 

Percentage Chart, later, to find the depreciation method 

and percentage to enter on line 33.

To use the chart, first find the date you placed the 

vehicle in service (line 11). Then, select the depreciation 

method and percentage from column (a), (b), or (c). For 

example, if you placed a car in service on July 1, 2023, 

and you use the method in column (a), enter “200 DB 

20%” on line 33.

For vehicles placed in service before 2023, use the 

same method you used on last year's return unless a 

decline in your business use requires a change to the 

straight line method. For vehicles placed in service during 

2023, select the depreciation method and percentage 

after reading the explanation for each column.

Column (a)—200% declining balance method. You 

can use column (a) only if the business use percentage on 

line 14 is more than 50%. Of the three depreciation 

methods, the 200% declining balance method may give 

you the largest depreciation deduction for the first 3 years 

(after considering the depreciation limit for your vehicle). 

See the depreciation limit tables, later.

Column (b)—150% declining balance method. You 

can use column (b) only if the business use percentage on 

line 14 is more than 50%. The 150% declining balance 

method may give you a smaller depreciation deduction 

than in column (a) for the first 3 years. However, you won't 

have a “depreciation adjustment” on this vehicle for the 

Alternative Minimum Tax. This may result in a smaller tax 

liability if you must file Form 6251, Alternative Minimum 

Tax—Individuals.

Column (c)—straight line method. You must use 

column (c) if the business use percentage on line 14 is 

50% or less. The method for these vehicles is the straight 

line method over 5 years. The use of this column is 

optional for these vehicles if the business use percentage 

on line 14 is more than 50%.

Note. If your vehicle was used more than 50% for 

business in the year it was placed in service and used 

50% or less in a later year, part of the depreciation, 

section 179 deduction, and special depreciation 

allowance previously claimed may have to be added back 

to your income in the later year. Figure the amount to be 

included in income in Part IV of Form 4797, Sales of 

Business Property.

More information. For more information on 

depreciating your vehicle, see Pub. 463.

If you placed other business property in service in 

the same year you placed your vehicle in service 

or you used your vehicle mainly within an Indian 

reservation, you may not be able to use the chart. See 

Pub. 946 to figure your depreciation.

Line 34. If you sold or exchanged your vehicle during the 

year, use the following instructions to figure the amount to 

enter on line 34.

If your vehicle was placed in service:

1. Before 2018, enter the result of multiplying line 32 

by the percentage on line 33;

CAUTION

!

Depreciation Method and Percentage Chart—Line 33

Date Placed in Service (a)1(b)1(c)

Oct. 1 – Dec. 31, 2023 200 DB 5.0% 150 DB 3.75% SL 2.5%

Jan. 1 – Sept. 30, 2023 200 DB 20.0 150 DB 15.0 SL 10.0

Oct. 1 – Dec. 31, 2022 200 DB 38.0 150 DB 28.88 SL 20.0

Jan. 1 – Sept. 30, 2022 200 DB 32.0 150 DB 25.5 SL 20.0

Oct. 1 – Dec. 31, 2021 200 DB 22.8 150 DB 20.21 SL 20.0

Jan. 1 – Sept. 30, 2021 200 DB 19.2 150 DB 17.85 SL 20.0

Oct. 1 – Dec. 31, 2020 200 DB 13.68 150 DB 16.4 SL 20.0

Jan. 1 – Sept. 30, 2020 200 DB 11.52 150 DB 16.66 SL 20.0

Oct. 1 – Dec. 31, 2019 200 DB 10.94 150 DB 16.41 SL 20.0

Jan. 1 – Sept. 30, 2019 200 DB 11.52 150 DB 16.66 SL 20.0

Oct. 1 – Dec. 31, 2018 200 DB 9.58 150 DB 14.35 SL 17.5

Jan. 1 – Sept. 30, 2018 200 DB 5.76 150 DB 8.33 SL 10.0

Prior to 20182

1

 You can use this column only if the business use of your car is more than 50%.

2

 If your car was subject to the maximum limits for depreciation and you have unrecovered basis in the car, you can continue to claim depreciation. 

See Pub. 463 for more information.

Instructions for Form 2106 (2023) 7
2. After 2017, from January 1 through September 30, 

enter the amount figured by multiplying the result in (1) by 

50%; or

3. After 2017, from October 1 through December 31, 

enter the amount figured by multiplying the result in (1) by 

the percentage shown below for the month you disposed 

of the vehicle.

Month of Disposal Percentage

Jan., Feb., March ............... 12.5%

April, May, June ................ 37.5%

July, Aug., Sept. ................ 62.5%

Oct., Nov., Dec. ................ 87.5%

Line 36. See the tables shown here to determine the 

depreciation limitation for passenger automobiles placed 

in service in 2023. See the tables in Pub. 463 to determine 

the depreciation limitation for passenger automobiles 

placed in service before 2023.

• A passenger automobile is a 4-wheeled vehicle 

manufactured primarily for use on public roads that is 

rated at 6,000 pounds unloaded gross vehicle weight or 

less. Certain vehicles, such as ambulances, hearses, and 

taxicabs, aren't considered passenger automobiles and 

aren't subject to the line 36 limits. See Pub. 463 for more 

details.

• A truck or van is a passenger automobile that is 

classified by the manufacturer as a truck or van, and that 

is rated at 6,000 pounds gross vehicle weight or less.

If your vehicle isn't subject to any of the line 36 limits, 

skip lines 36 and 37, and enter the amount from line 35 on 

line 38.

Rev. Proc. 2023-14 Table 1: Depreciation 

Limitations for Passenger Automobiles Acquired 

After September 27, 2017, and Placed in Service 

During Calendar Year 2023, for Which the Section 

168(k) Additional First-Year Depreciation 

Deduction Applies

Tax Year Amount

1st Tax Year $ 20,200

2nd Tax Year $ 19,500

3rd Tax Year $ 11,700

Each Succeeding Year $ 6,960

Rev. Proc. 2023-14 Table 2: Depreciation 

Limitations for Passenger Automobiles Placed in 

Service During Calendar Year 2023 for Which No 

Section 168(k) Additional First-Year Depreciation 

Deduction Applies

Tax Year Amount

1st Tax Year $ 12,200

2nd Tax Year $ 19,500

3rd Tax Year $ 11,700

Each Succeeding Year $ 6,960

Paperwork Reduction Act Notice. For the Paperwork 

Reduction Act Notice, see your tax return instructions.

8 Instructions for Form 2106 (2023)