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

TECHNOLOGY

2018 tax software survey

Among CPA tax preparers, tax return preparation software generates often extensive and ardent discussion. To get through the rigors of tax season, they depend on their tax preparation software. Here’s how they rate the leading professional products.

DEDUCTIONS

Understanding the new Sec. 199A business income deduction

The new deduction allows certain business owners to keep pace with the significant corporate tax cut provided by the Tax Cuts and Jobs Act.