IRS Issues Maximum Vehicle Values for 2016 for Personal-Use Vehicles

By Sally P. Schreiber, J.D.

The IRS issued the 2016 inflation-adjusted amounts for the maximum vehicle values for purposes of determining the amount that is included in employees' income for personal use of an employer-provided vehicle (Notice 2016-12). The limits for passenger vehicles are lower in 2016 than they were in 2015, but the values for vans and trucks increased slightly.

Under Regs. Sec. 1.61-21(d), an employer can use the fleet-average valuation rule to calculate the amount of income an employee must include as taxable income only when the average value of the vehicles in the fleet does not exceed a certain amount, which is adjusted every year according to the consumer price index. For 2016, those maximum amounts are $21,200 for a passenger automobile (down from $21,300 in 2015) and $23,100 for a truck or van (an increase from $22,900).

Regs. Sec. 1.61-21(e) provides the maximum value of a vehicle for which the cents-per-mile method may be used to calculate taxable personal use of an employer-provided vehicle. For 2016, those amounts are $15,900 for a passenger vehicle (down from $16,000) and $17,700 for a truck or van (an increase from $17,500).

Newsletter Articles

SPONSORED REPORT

Keeping client information safe in an age of scams and security threats

A look at the Dirty Dozen tax scams and ways to protect taxpayer information.

PRACTICE MANAGEMENT

Tax software survey

Results of the annual survey are in, as more than 3,800 CPA tax preparers tell how their return preparation software worked for them during this year’s busy season.