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Maximum Vehicle Values for Personal-Use Vehicles Are Issued

By Sally P. Schreiber, J.D.

Please note: This item is from our archives and was published in 2016. It is provided for historical reference. The content may be out of date and links may no longer function.

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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 of 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).

—Sally P. Schreiber (sschreiber@aicpa.org) is a Tax Adviser senior editor.