Vehicle Depreciation Calculator
- Value lost
- Value left
About $4,450.36 a year on average. This is market value, not the depreciation you deduct on a tax return.
How the vehicle depreciation calculation works
Each year the vehicle loses a share of its current value
At 15% a year, a $40,000 vehicle is worth $34,000 after year 1 and $28,900 after year 2.
Value after n years = price × (1 − rate)^n
$40,000 × 0.85^5 = $17,748.21 after five years.
Depreciation is the price minus today's value
$40,000 − $17,748.21 = $22,251.79 lost over five years.
Set the rate from real prices
Compare used listings for the same model at different ages. New vehicles usually lose the most in the first years.
Worked example. A $40,000 vehicle losing 15% of its value each year is worth about $17,748.21 after 5 years, a total depreciation of $22,251.79.
Vehicle Depreciation FAQ
How do you calculate vehicle depreciation?
Multiply the price by (1 − yearly rate) once for each year. At 15% a year, a $40,000 vehicle is worth $40,000 × 0.85^5 = $17,748.21 after five years.
How much does a car depreciate per year?
It depends on the make, mileage and condition. Check used prices for the same model a few years old and set the yearly rate to match.
What is a realistic car depreciation rate?
There is no single official rate. Find two used listings for the same model, trim and mileage band at different ages, and work out the yearly percentage between them. Enter that as the rate here. Run a higher and a lower rate to see the range.
Is this the same as depreciation for taxes?
No. Tax depreciation on a business vehicle follows IRS rules (MACRS, Section 179, bonus depreciation and yearly caps for passenger cars), not market value. This calculator shows market value only. See IRS Publication 946 and Publication 463.
Can I deduct vehicle depreciation for my business?
If you use the actual expense method, yes, in proportion to business use. If you use the standard mileage rate, depreciation is already built into that rate: for 2025 the rate is 70 cents a mile, of which 33 cents counts as depreciation (IRS Publication 463). You can't deduct depreciation separately in a year you use the standard mileage rate.
How much car depreciation can I deduct in the first year?
For a passenger car, truck or van placed in service in 2025, the IRS caps depreciation at $20,200 in year 1 if bonus depreciation applies ($12,200 without it), $19,600 in year 2, $11,800 in year 3 and $7,060 for each later year (Revenue Procedure 2025-16, shown in Publication 463). The caps are scaled down if business use is under 100%.
Does the 6,000 lb rule let me deduct a heavy SUV or truck?
The yearly caps apply to passenger automobiles rated at 6,000 pounds or less gross vehicle weight. A heavier vehicle is not capped that way, but for tax years beginning in 2025 the Section 179 deduction for a heavy SUV (over 6,000 and up to 14,000 lb) is limited to $31,300 ($32,000 for tax years beginning in 2026, Rev. Proc. 2025-32). Some vehicles, such as those with a cargo bed at least 6 feet long, are exempt from that SUV limit (IRS Publication 946).
Is bonus depreciation 100% for vehicles in 2025?
The One Big Beautiful Bill Act restored 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. For passenger cars the first-year cap above still applies. You must use the vehicle more than 50% for business to claim either Section 179 or bonus depreciation. Check Publication 946 or ask a tax adviser.
Sources: IRS Publication 946: How to Depreciate Property · IRS Publication 463: Travel, Gift, and Car Expenses (2025 limits and mileage rate) · IRS: Standard mileage rates