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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Department of the Treasury
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Internal Revenue Service
2023

Instructions for Form 2106

Employee Business Expenses

Section references are to the Internal Revenue Code                                                                                                                                                                                                                                                                                                                                                                                                   The depreciation limitations for passenger automobiles 
unless otherwise noted.                                                                                                                                                                                                                                                                                                                                                                                                                               placed in service during calendar year 2023 for which no 
                                                                                                                                                                                                                                                                                                                                                                                                                                                      section 168(k) additional first-year depreciation deduction 
Future Developments                                                                                                                                                                                                                                                                                                                                                                                                                                   applies is $12,200 for the 1st tax year, $19,500 for the 2nd 
See IRS.gov/Form2106 for the latest developments                                                                                                                                                                                                                                                                                                                                                                                                      tax year, $11,700 for the 3rd tax year, and $6,960 for each 
related to Form 2106 and its instructions.                                                                                                                                                                                                                                                                                                                                                                                                            succeeding year. (See Rev. Proc. 2023-14.)

What's New                                                                                                                                                                                                                                                                                                                                                                                                                                            Note. The section 168(k) additional first-year 
                                                                                                                                                                                                                                                                                                                                                                                                                                                      depreciation deduction is sometimes called special 
Standard mileage rate.                                                                                                                                        The 2023 per mile rate for                                                                                                                                                                                                                                                              depreciation allowance.
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.                                                                                                                                                                                                                                                                                                                                                                                                             General Instructions

Under section 179.                                                                                                            For tax years beginning in 2023,                                                                                                                                                                                                                                                                                        Purpose of Form
the aggregate cost of any section 179 property that a 
                                                                                                                                                                                                                                                                                                                                                                                                                                                      Use Form 2106 if you were an Armed Forces reservist, a 
taxpayer elects to treat as an expense cannot exceed 
                                                                                                                                                                                                                                                                                                                                                                                                                                                      qualified performing artist, a fee-basis state or local 
$1,160,000. The $1,160,000 limitation is reduced (but not 
                                                                                                                                                                                                                                                                                                                                                                                                                                                      government official, or an employee with 
below zero) by the amount by which the cost of section 
                                                                                                                                                                                                                                                                                                                                                                                                                                                      impairment-related work expenses. Employees who do 
179 property placed in service during the 2023 tax year 
                                                                                                                                                                                                                                                                                                                                                                                                                                                      not fit into one of the listed categories may not use the 
exceeds $2,890,000. The cost of any sport utility vehicle 
                                                                                                                                                                                                                                                                                                                                                                                                                                                      Form 2106 due to the suspension of miscellaneous 
(SUV) that may be taken into account under section 179 
                                                                                                                                                                                                                                                                                                                                                                                                                                                      itemized deductions subject to the 2% floor under section 
cannot exceed $28,900. (See Rev. Proc. 2022-38.)
                                                                                                                                                                                                                                                                                                                                                                                                                                                      67(a). Section 67(g) suspends miscellaneous itemized 
A vehicle subject to section 280F(a) is not considered                                                                                                                                                                                                                                                                                                                                                                                                deductions for tax years beginning after December 31, 
an SUV under section 179. (See section 179.)                                                                                                                                                                                                                                                                                                                                                                                                          2017, and before January 1, 2026. See the flowchart in 
A deduction allowed under section 179 may be subject                                                                                                                                                                                                                                                                                                                                                                                                  these instructions to find out if you must file this form.
to the limitations of section 280F. (See section 280F.)
                                                                                                                                                                                                                                                                                                                                                                                                                                                      Excess reimbursements.     If you are not a member of 
Under section 280F.                                                                                                                      The depreciation limitations for                                                                                                                                                                                                                                                                             the Armed Forces reserves, a qualified performing artist, a 
passenger automobiles acquired after September 27,                                                                                                                                                                                                                                                                                                                                                                                                    fee-basis state or local government official, or an 
2017, and placed in service during calendar year 2023, for                                                                                                                                                                                                                                                                                                                                                                                            employee with impairment-related work expenses, and 
which the section 168(k) additional first-year depreciation                                                                                                                                                                                                                                                                                                                                                                                           receive reimbursements in excess of your expenses from 
deduction applies, is $20,200 for the 1st tax year, $19,500                                                                                                                                                                                                                                                                                                                                                                                           your employer’s nonaccountable plan, the excess 
for the 2nd tax year, $11,700 for the 3rd tax year, and 
$6,960 for each succeeding year.

Who Must File Form 2106
A Were you employed during the tax year as an Armed Forces reservist, a qualied performing artist, a fee-basis 
disabilitystateSee theor locallineclaiming10governmentinstructionsimpairment-relatedofcial,for denitions.or anworkindividualexpenses? with a                No                                                 Don’t le Form 2106 (see                                                           Notes below).
               Yes
B Did you have job-related business expenses?                                                                                      No                                         Don’t le Form 2106.
               Yes
                                                                                                                                                                                          D                                                                                                                                                                                                    Yes
C                                                                                                                                                   No                                                            entertainmentAretravel,youtransportation,claimingexpenses?job-relatedmeals,vehicle,or 
  Weredidn’texpensesyouincludeYes reimbursed(countin boxonly1reimbursementsforofanyyourofFormyourW-2)?businessyour employer                                                                                                                                                                  No                                                                                            FileNotes Formbelow).2106 (see
E                                                                                                                             No                                                                                                        Don’t le Form 2106.
  taxpriorDidyearyouyear?usethatayouvehiclealsoinusedyourforjobbusinessduring thein a 
                                                                                                                                                                                                                                                                                                             No
                                                                              F Forreimbursementsexpenses,Areemployerrulesyour deductiblecoveringdidn’tsee theinclude(countemployerinstructionsexpensesonlyin boxreimbursementsreportingmore1foroflineyourthanof7.FormreimbursedyouryourW-2)?                           Don’t le Form 2106.
               Yes
G Is either (1) or (2) true?                                                                                                       No                                                     Yes                                                       Notes
  expensevehicle1. Youformethodownedbusiness.thisin thevehiclerst yearandyouusedusedthetheactual                                                             File Form 2106. 
  straight2. Youlineusedforathisdepreciationvehicle in amethodprior year.other than                                                                                                                                                                 forfee-basisindividualsexpenses.• Armedline 10Forcesstatetowithndordisabilitiesoutreservists,localwheregovernmenttoshouldqualieddeductseeperformingofcials,employeethe instructionsandartists, 
               Yes                                                                                                                                                                                                                                  •reservists,Form 2106qualiedmay beperformingused onlyartists,by Armedfee-basisForces

             File Form 2106.                                                                                                                                                                                                                        thewithstatedeductions67(a)suspensionimpairment-relatedbyor localsectionsubjectgovernmentof67(g).miscellaneousto theworkofcials,2%expensesooritemizedandunderemployeesbecausesection of 

Jan 26, 2024                                                                                                                                                                                                                                                                                                                                                                                                       Cat. No. 64188V

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reimbursements should be included as wages on your Tax home. Generally, your tax home is your regular or
Form W-2 and your income tax return. main place of business or post of duty regardless of where
you maintain your family home. If you don't have a regular
Recordkeeping or main place of business because of the nature of your
You can't deduct expenses for travel (including meals work, then your tax home may be the place where you
unless you used the standard meal allowance), gifts, or regularly live. If you don't have a regular or a main place of
use of a car or other listed property unless you keep business or post of duty and there is no place where you
records to prove the time, place, business purpose, regularly live, you are considered an itinerant (a transient)
business relationship (for gifts), and amounts of these and your tax home is wherever you work. As an itinerant,
expenses. Generally, you must also have receipts for all you are never away from home and can't claim a travel
lodging expenses (regardless of the amount) and any expense deduction. For more details on the definition of a
other expense of $75 or more. See section 274(d) and tax home, see Pub. 463.
Regulations sections 1.274-5 and 1.274-5T. Generally, you can't deduct any expenses for travel
away from your tax home for any period of temporary
Additional Information
employment of more than 1 year. However, this 1-year rule
For more details about employee business expenses, see doesn't apply for a temporary period in which you were a
the following. federal employee certified by the Attorney General (or
• Pub. 463, Travel, Gift, and Car Expenses. designee) as traveling in temporary duty status for the
• Pub. 529, Miscellaneous Deductions. U.S. Government to investigate or prosecute a federal
• Pub. 587, Business Use of Your Home. crime (or to provide support services for the investigation
• Pub. 946, How To Depreciate Property. or prosecution of a federal crime).
Incidental expenses. The term “incidental expenses”
Specific Instructions means fees and tips given to porters, baggage carriers,
hotel staff, and staff on ships.
Part I—Employee Business Expenses Incidental expenses don't include expenses for laundry,
and Reimbursements cleaning and pressing of clothing, lodging taxes, costs of
telegrams or telephone calls, transportation between
Fill in all of Part I if you were reimbursed for employee
places of lodging or business and places where meals are
business expenses. If you weren't reimbursed for your
taken, or the mailing cost of filing travel vouchers and
expenses, complete steps 1 and 3 only.
paying employer-sponsored charge card billings.
Step 1—Enter Your Expenses You can use an optional method (instead of actual cost)
for deducting incidental expenses only. The amount of the
Line 1. If you were a rural mail carrier, you can treat the deduction is $5 a day. You can use this method only if you
amount of qualified reimbursement you received as the didn't pay or incur any meal expenses. You can't use this
amount of your allowable expense. Because the qualified method on any day you use the standard meal allowance
reimbursement is treated as paid under an accountable (defined later in the instructions for line 5).
plan, your employer shouldn't include the amount of
reimbursement in your income. Line 4. Enter other job-related expenses not listed on any
You were a rural mail carrier if you were an employee of other line of this form. Include expenses for business gifts,
the United States Postal Service (USPS) who performed education (tuition, fees, and books), trade publications,
services involving the collection and delivery of mail on a etc. For details, including limits, see Pub. 463 and Pub.
rural route. 529.
Qualified reimbursements. These are the amounts If you are deducting depreciation or claiming a section
paid by the USPS as an equipment maintenance 179 deduction, see Form 4562, Depreciation and
allowance under a collective bargaining agreement Amortization, to figure the depreciation and section 179
between the USPS and the National Rural Letter Carriers' deduction to enter on Form 2106,
Association, but only if such amounts don't exceed the line 4.
amount that would have been paid under the 1991 Don't include on line 4 any educator expenses you
collective bargaining agreement (adjusted for changes in deducted on Schedule 1 (Form 1040), line 11.
the Consumer Price Index since 1991 as detailed in
You may be able to take a credit for your
section 162(o)(3)).
TIP educational expenses instead of a deduction. See
If you were a rural mail carrier, do not use Form Form 8863, Education Credits, for details.
! 2106. Your employer should not include the Don't include expenses for meals, taxes, or interest on
CAUTION amount of reimbursement in your income.
line 4. See the Schedule A (Itemized Deductions) for your
Line 2. The expenses of commuting to and from work return to see whether you can deduct taxes or interest
aren't deductible. See the line 15 instructions for the expenses.
definition of commuting.
Note. If line 4 is your only entry, don't complete Form
Line 3. Enter lodging and transportation expenses 2106 unless you are claiming:
connected with overnight travel away from your tax home • Performing-arts-related business expenses as a
(defined next). Don't include expenses for meals. For qualified performing artist,
more details, including limits, see Pub. 463.

2 Instructions for Form 2106 (2023)

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• Expenses for performing your job as a fee-basis state or If these payments were incorrectly included in box 1,
local government official, or ask your employer for a corrected Form W-2.
• Impairment-related work expenses as an individual with Accounting to your employer. This means that you
a disability. gave your employer documentary evidence in the form of
a statement of expense, account book, diary, log,
Note. No deduction is allowed for certain entertainment statement of expenses, trip sheets, or similar statement to
expenses, membership dues, and facilities used in verify the amount, time, place, and business purpose of
connection with these activities for amounts paid or each expense. You are also treated as having accounted
incurred after 2017. See section 274. for your expenses if either of the following applies.
Line 5. Enter your allowable meals expense. Include • Your employer gave you a fixed travel allowance that is
meals while away from your tax home overnight and other similar in form to the per diem allowance specified by the
business meals. federal government and you verified the time, place, and
Standard meal allowance. Instead of actual cost, you business purpose of the travel for that day.
may be able to claim the standard meal allowance for your • Your employer reimbursed you for vehicle expenses at
daily meals and incidental expenses (M&IE) while away the standard mileage rate or according to a flat rate or
from your tax home overnight. Under this method, instead stated schedule, and you verified the date of each trip,
of keeping records of your actual meal expenses, you mileage, and business purpose of the vehicle use.
deduct a specified amount, depending on where you See Pub. 463 for more details.
travel. However, you must still keep records to prove the Allocating your reimbursement. If your employer
time, place, and business purpose of your travel. paid you a single amount that covers meals as well as
The standard meal allowance is the federal M&IE rate. other business expenses, you must allocate the
You can find the rates that applied during 2023 on the reimbursement so that you know how much to enter in
Internet at GSA.gov/perdiem. At the Per Diem Overview column A and column B of line 7. Use the following
page, select “2023” for the rates in effect for the period worksheet to figure this allocation.
January 1, 2023–September 30, 2023. Select “Fiscal Year
2024” for the period October 1, 2023–December 31, 2023. Reimbursement Allocation Worksheet
However, you can apply the rates in effect before October (keep for your records)
1, 2023, for expenses of all travel within the United States
for 2023 instead of the updated rates. For the period 1. Enter the total amount of reimbursements
October 1, 2023–December 31, 2023, you must your employer gave you that weren't
reported to you
consistently use either the rates for the first 9 months of in box 1 of Form W-2 . . . . . . . . . . . . . .
2023 or the updated rates.
2. Enter the total amount of your expenses for
The Department of Defense sets rates for Alaska,
the periods covered by this
Hawaii, and U.S. associated territories. See travel.dod.mil/ reimbursement . . . . . . . . . . . . . . . . . .
Travel-Transportation-Rates/Per-Diem/Per-Diem-Rate-
Lookup/. 3. Enter the part of the amount on line 2 that
was your total expense for meals . . . . . .
The State Department sets foreign rates. See
aoprals.state.gov/web920/per_diem.asp. 4. Divide line 3 by line 2.
Enter the result as a decimal (rounded to
See Pub. 463 for details on how to figure your . . . . . . . . . . . . . . . . . . . .
three places)
deduction using the standard meal allowance, including
special rules for partial days of travel and transportation 5. Multiply line 1 by line 4. Enter the result here
workers. and
in column B, line 7 . . . . . . . . . . . . . . .
Step 2—Enter Reimbursements Received From 6. Subtract line 5 from line 1. Enter the result
Your Employer for Expenses Listed in Step 1 here and
in column A, line 7 . . . . . . . . . . . . . . .
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. Step 3—Figure Expenses To Deduct
This includes reimbursements reported under code “L” in Line 9. Generally, you can deduct only 50% of your
box 12 of Form W-2. Amounts reported under code “L” are business meal expenses, including meals incurred while
reimbursements you received for business expenses that away from home on business. Meals that are not
weren't included as wages on Form W-2 because the separately stated from entertainment are generally
expenses met specific IRS substantiation requirements. nondeductible.
Generally, when your employer pays for your expenses, Line 10. If you are one of the individuals discussed
the payments shouldn't be included in box 1 of your Form below, special rules apply to deducting your employee
W-2 if, within a reasonable period of time, you: business expenses.
• Accounted to your employer for the expenses; and
Armed Forces reservist (member of a reserve
• Were required to return, and did return, any payment
component). You are a member of a reserve component
not spent (or considered not spent) for business
of the Armed Forces of the United States if you are in the
expenses.
Army, Navy, Marine Corps, Air Force, or Coast Guard
Reserve; the Army National Guard of the United States;

Instructions for Form 2106 (2023) 3

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the Air National Guard of the United States; or the Schedule A (Form 1040), line 16 (or Schedule A (Form
Reserve Corps of the Public Health Service. 1040-NR), line 7).
If you qualify, complete Form 2106 and include the part
Part II—Vehicle Expenses
of the line 10 amount attributable to the expenses for
travel more than 100 miles away from home in connection There are two methods for figuring vehicle expenses—the
with your performance of services as a member of the standard mileage rate and the actual expense method.
reserves on Schedule 1 (Form 1040), line 12, and attach You can use the standard mileage rate for 2023 only if:
Form 2106 to your return. The amount of expenses you
can deduct on Schedule 1 (Form 1040), line 12, is limited • You owned the vehicle and used the standard mileage
rate for the first year you placed the vehicle in service, or
to the regular federal per diem rate (for lodging, meals,
and incidental expenses) and the standard mileage rate • You leased the vehicle and are using the standard
mileage rate for the entire lease period (except the period,
(for car expenses), plus any parking fees, ferry fees, and
if any, before 1998).
tolls. These reserve-related travel expenses are
deductible whether or not you itemize deductions. See You can't use actual expenses for a leased vehicle if
Pub. 463 for additional details on how to report these you previously used the standard mileage rate for that
expenses. vehicle.
Fee-basis state or local government official. You
are a qualifying fee-basis official if you are employed by a If you have the option of using either the standard
state or political subdivision of a state and are mileage rate or actual expense method, you should figure
compensated, in whole or in part, on a fee basis. your expenses both ways to find the method most
If you qualify, include the part of the line 10 amount beneficial to you. But when completing Form 2106, fill in
attributable to the expenses you paid or incurred for only the sections that apply to the method you choose.
services performed in that job in the total on Schedule 1
If you were a rural mail carrier and received an
(Form 1040), line 12, and attach Form 2106 to your return.
equipment maintenance allowance, see the line 1
These employee business expenses are deductible
instructions.
whether or not you itemize deductions.
Qualified performing artist. You are a qualified For more information on the standard mileage rate and
performing artist if you: actual expenses, see Pub. 463.
1. Performed services in the performing arts as an
employee for at least two employers during the tax year, Section A—General Information
2. Received from at least two of those employers If you used two vehicles for business during the year, use
wages of $200 or more per employer, a separate column in Sections A, C, and D for each
vehicle. If you used more than two vehicles, complete and
3. Had allowable business expenses attributable to the
attach a second Form 2106, page 2.
performing arts of more than 10% of gross income from
the performing arts, and Line 11. Date placed in service is generally the date you
4. Had adjusted gross income of $16,000 or less first start using your vehicle. However, if you first start
before deducting expenses as a performing artist. using your vehicle for personal use and later convert it to
business use, the vehicle is treated as placed in service
In addition, if you are married, you must file a joint return on the date you start using it for business.
unless you lived apart from your spouse for all of 2023. If
you file a joint return, you must figure requirements (1), Line 12. Enter the total number of miles you drove each
(2), and (3) separately for both you and your spouse. vehicle during 2023.
However, requirement (4) applies to the combined Change from personal to business use. If you
adjusted gross income of both you and your spouse. converted your vehicle during the year from personal to
business use (or vice versa) and you don't have mileage
If you meet all the requirements for a qualified records for the time before the change to business use,
performing artist, include the part of the line 10 amount enter the total number of miles driven after the change to
attributable to performing-arts-related expenses in the business use.
total on Schedule 1 (Form 1040), line 12, and attach Form
2106 to your return. Your performing-arts-related business Line 13. Don't include commuting miles on this line;
expenses are deductible whether or not you itemize commuting miles aren't considered business miles. See
deductions. the line 15 instructions for the definition of commuting.
Disabled employee with impairment-related work Line 14. Divide line 13 by line 12 to figure your business
expenses. Impairment-related work expenses are the use percentage.
allowable expenses of an individual with physical or Change from personal to business use. If you
mental disabilities for attendant care at his or her place of entered on line 12 the total number of miles driven after
employment. They also include other expenses in the change to business use, multiply the percentage you
connection with the place of employment that enable the figured by the number of months you drove the vehicle for
employee to work. See Pub. 463 for more details. business and divide the result by 12.
If you qualify, enter the part of the line 10 amount
attributable to impairment-related work expenses on 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)

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Commuting. Generally, commuting is travel between Section C—Actual Expenses
your home and a work location. However, travel that meets
any of the following conditions isn't commuting. Line 23. Enter your total annual expenses for gasoline,
• You have at least one regular work location away from oil, repairs, insurance, tires, license plates, and similar
your home and the travel is to a temporary work location in items. Don't include state and local personal property
the same trade or business, regardless of the distance. taxes or interest expense you paid. Deduct state and local
Generally, a temporary work location is one where your personal property taxes on Schedule A (Form 1040),
employment is expected to last 1 year or less. See Pub. line 5c. Employees can't deduct car loan interest.
463 for more details. Line 24a. If, during 2023, you rented or leased a vehicle
• The travel is to a temporary work location outside the instead of using your own vehicle, enter the cost of
metropolitan area where you live and normally work. renting. Also, include on this line any temporary rentals,
• Your home is your principal place of business under such as when your car was being repaired, except for
section 280A(c)(1)(A) (for purposes of deducting amounts included on line 3.
expenses for business use of your home) and the travel is
Line 24b. If you leased a vehicle for a term of 30 days or
to another work location in the same trade or business,
more, you may have to reduce your deduction for vehicle
regardless of whether that location is regular or temporary
lease payments by an amount called the inclusion
and regardless of distance.
amount. You may have an inclusion amount for a
Line 16. If you don't know the total actual miles you used passenger automobile if:
your vehicle for commuting during the year, figure the
Passenger Automobiles (Including Trucks and Vans)
amount to enter on line 16 by multiplying the number of
days during the year that you used each vehicle for And the vehicle's fair market
commuting by the average daily round-trip commuting value on the first day of the
distance in miles. However, if you converted your vehicle The lease term began in: lease exceeded:
during the year from personal to business use (or vice 2023. . . . . . . . . . . . . . . $ 60,000 (See Rev. Proc. 2023-14)
versa), enter your commuting miles only for the period you
drove your vehicle for business. 2022. . . . . . . . . . . . . . . $ 56,000 (See Rev. Proc. 2022-17)
2021. . . . . . . . . . . . . . . $ 51,000 (See Rev. Proc. 2021-31)
Section B—Standard Mileage Rate 2020. . . . . . . . . . . . . . . $ 50,000 (See Rev. Proc. 2020-37)
You may be able to use the standard mileage rate instead 2019. . . . . . . . . . . . . . . $ 50,000 (See Rev. Proc. 2019-26)
of actual expenses to figure the deductible costs of See Pub. 463 for leases beginning before 2019.
operating a passenger vehicle, including a van, an SUV, a
pickup, or a panel truck. See Pub. 463 to figure the inclusion amount.
If you want to use the standard mileage rate for a Line 25. If during 2023 your employer provided a vehicle
vehicle you own, you must do so in the first year you place for your business use and included 100% of its annual
your vehicle in service. In later years, you can deduct lease value in box 1 of your Form W-2, enter this amount
actual expenses instead, but you must use straight line on line 25. If less than 100% of the annual lease value was
depreciation. included in box 1 of your Form W-2, skip line 25.
If you lease your vehicle, you can use the standard Line 28. If you completed Section D, enter the amount
mileage rate, but only if you use the rate for the entire from line 38. If you used Form 4562 to figure your
lease period (except for the period, if any, before January depreciation deduction, enter the total of the following
1, 1998). amounts.
• Depreciation allocable to your vehicle(s) (from Form
If you use more than two vehicles, complete and attach 4562, line 28).
a second Form 2106, page 2, providing the information • Any section 179 deduction allocable to your vehicle(s)
requested in lines 11 through 22. Be sure to include the (from Form 4562, line 29).
amount from line 22 of both pages in the total on Form
2106, line 1. You may not use the standard mileage rate to Section D—Depreciation of Vehicles
compute the deductible expenses of five or more vehicles Depreciation is an amount you can deduct to recover the
you own or lease simultaneously (such as in fleet cost or other basis of your vehicle over a certain number
operations). of years. In some cases, you can claim a special
depreciation allowance or elect to expense, under section
You can also deduct state and local personal property 179, part of the cost of your vehicle in the year of
taxes. Enter these taxes on Schedule A (Form 1040), purchase. For details, see Pub. 463.
line 5c. (Personal property taxes aren't deductible on Form
1040-NR.) Line 30. Enter the vehicle's actual cost or other basis.
Don't reduce your basis by any prior year's depreciation.
If you are claiming the standard mileage rate for However, you must reduce your basis by any deductible
mileage driven in more than one business activity, you casualty loss, deduction for clean-fuel vehicle, gas guzzler
must figure the deduction for each business on a separate tax, alternative motor vehicle credit, or qualified plug-in
form or schedule (for example, Form 2106; Schedule C electric vehicle credit you claimed. Increase your basis by
(Form 1040), Profit or Loss From Business; Schedule E any sales tax paid (unless you deducted sales taxes in the
(Form 1040), Supplemental Income and Loss; or
Schedule F (Form 1040), Profit or Loss From Farming).

Instructions for Form 2106 (2023) 5

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year you purchased your vehicle) and any substantial • Designed to have a seating capacity of more than nine
improvements to your vehicle. persons behind the driver's seat;
If you traded in your vehicle, the special rules for • Equipped with a cargo area of at least 6 feet in interior
determining depreciation when you trade in one vehicle length that is an open area or is designed for use as an
for another vehicle no longer apply. open area but is enclosed by a cap and isn't readily
accessible directly from the passenger compartment; or
If you converted the vehicle from personal use to
• That has an integral enclosure, fully enclosing the driver
business use, your basis for depreciation is the smaller of
compartment and load carrying device, doesn't have
the vehicle's adjusted basis or its fair market value on the
seating rearward of the driver's seat, and has no body
date of conversion.
section protruding more than 30 inches ahead of the
Line 31. Enter the amount of any section 179 deduction leading edge of the windshield.
and, if applicable, any special depreciation allowance Special depreciation allowance. The special
claimed for this year. depreciation allowance applies only for the first year a
Section 179 deduction. If 2023 is the first year your vehicle is placed in service. See section 168(k) and
vehicle was placed in service and the percentage on Revenue Procedure 2023 -14. For 2023, your total section
line 14 is more than 50%, you can elect to deduct as an 179 deduction, special depreciation allowance, and
expense a portion of the cost (subject to a yearly limit). regular depreciation deduction can't be more than
This cost is sometimes referred to as the “Section 179 $20,200 for passenger automobiles, multiplied by your
basis.” To figure this section 179 deduction, multiply the business use percentage on line 14. See the line 36
part of the cost of the vehicle that you choose to expense instructions for depreciation limits. You can't recover the
by the percentage on line 14. The total of your amount by which your depreciation deduction exceeds the
depreciation and section 179 deduction generally can't be depreciation limits for the year placed in service until after
more than the percentage on line 14 multiplied by the the end of the recovery period for your vehicle.
applicable limit explained in the line 36 instructions. Your
Use the following worksheet to figure the amount of the
section 179 deduction for the year can't be more than the
special depreciation allowance.
income from your job and any other active trade or
business on your Form 1040 or 1040-SR.
Worksheet for the Special Depreciation Allowance
If you are claiming a section 179 deduction on (keep for your records)
! other property, or you placed more than
CAUTION $2,890,000 of section 179 property in service 1. Enter the total amount from Form 2106,
during the year, use Form 4562 to figure your section 179 line 30 . . . . . . . . . . . . . . . . . . . . . . . .
deduction. Enter the amount of the section 179 deduction 2. Multiply line 1 by the percentage on Form
allocable to your vehicle from Form 4562, line 12, on Form 2106, line 14, and enter the result . . . . . .
2106, line 31.
3. Enter any section 179 deduction . . . . . . .
Example.
4. Subtract line 3 from line 2 . . . . . . . . . . . .
Section 179 basis . . . . . . . . . . . . . . . . . . . . . . . $25,000
5. Multiply the applicable limit explained in the
Limit on depreciation and section 179 line 36 instructions by the percentage on
deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,200* Form 2106, line 14, and enter the result . .
Smaller of: 6. Subtract line 3 from line 5 . . . . . . . . . . . .
Section 179 basis, or limit on 7. Enter the smaller of line 4 or line 6. Add the
depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,200 result to any section 179 deduction (line 3
above) and enter the total on Form 2106,
Percentage on line 14 . . . . . . . . . . . . . . . . . . . × 0.75 line 31 . . . . . . . . . . . . . . . . . . . . . . . .
Section 179 deduction . . . . . . . . . . . . . . . . . . . $15,150
* $12,200 if electing out of special depreciation allowance or not Election out. You can elect not to claim the special
qualified property. 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.
Limit for sport utility and certain other vehicles. To make the election, attach a statement to your timely
For sport utility and certain other vehicles placed in filed return (including extensions) indicating that you are
service in 2023, the portion of the vehicle's cost taken into electing not to claim the special depreciation allowance
account in figuring your section 179 deduction is limited to and the class of property for which you are making the
$28,900. This rule applies to any 4-wheeled vehicle election.
primarily designed or used to carry passengers over
public streets, roads, or highways that isn't subject to any Line 32. To figure the basis for depreciation, multiply
of the passenger automobile limits explained in the line 36 line 30 by the percentage on line 14. From that result,
instructions and is rated at no more than 14,000 pounds subtract the total amount of any section 179 deduction
gross vehicle weight. However, the $28,900 limit doesn't and special depreciation allowance claimed this year (see
apply to any vehicle: line 31) or any section 179 deduction and special

6 Instructions for Form 2106 (2023)

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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.

depreciation allowance claimed in any previous year for Alternative Minimum Tax. This may result in a smaller tax
this vehicle. liability if you must file Form 6251, Alternative Minimum
Tax—Individuals.
Line 33. If you used the standard mileage rate in the first
year the vehicle was placed in service and now elect to Column (c)—straight line method. You must use
use the actual expense method, you must use the straight column (c) if the business use percentage on line 14 is
line method of depreciation for the vehicle's estimated 50% or less. The method for these vehicles is the straight
useful life. Otherwise, use the Depreciation Method and line method over 5 years. The use of this column is
Percentage Chart, later, to find the depreciation method optional for these vehicles if the business use percentage
and percentage to enter on line 33. on line 14 is more than 50%.

To use the chart, first find the date you placed the Note. If your vehicle was used more than 50% for
vehicle in service (line 11). Then, select the depreciation business in the year it was placed in service and used
method and percentage from column (a), (b), or (c). For 50% or less in a later year, part of the depreciation,
example, if you placed a car in service on July 1, 2023, section 179 deduction, and special depreciation
and you use the method in column (a), enter “200 DB allowance previously claimed may have to be added back
20%” on line 33. to your income in the later year. Figure the amount to be
For vehicles placed in service before 2023, use the included in income in Part IV of Form 4797, Sales of
same method you used on last year's return unless a Business Property.
decline in your business use requires a change to the More information. For more information on
straight line method. For vehicles placed in service during depreciating your vehicle, see Pub. 463.
2023, select the depreciation method and percentage
If you placed other business property in service in
after reading the explanation for each column.
the same year you placed your vehicle in service
Column (a)—200% declining balance method. You CAUTION! or you used your vehicle mainly within an Indian
can use column (a) only if the business use percentage on reservation, you may not be able to use the chart. See
line 14 is more than 50%. Of the three depreciation Pub. 946 to figure your depreciation.
methods, the 200% declining balance method may give
you the largest depreciation deduction for the first 3 years Line 34. If you sold or exchanged your vehicle during the
(after considering the depreciation limit for your vehicle). year, use the following instructions to figure the amount to
See the depreciation limit tables, later. enter on line 34.
Column (b)—150% declining balance method. You If your vehicle was placed in service:
can use column (b) only if the business use percentage on
line 14 is more than 50%. The 150% declining balance 1. Before 2018, enter the result of multiplying line 32
method may give you a smaller depreciation deduction by the percentage on line 33;
than in column (a) for the first 3 years. However, you won't
have a “depreciation adjustment” on this vehicle for the

Instructions for Form 2106 (2023) 7

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2. After 2017, from January 1 through September 30, Rev. Proc. 2023-14 Table 1: Depreciation
enter the amount figured by multiplying the result in (1) by Limitations for Passenger Automobiles Acquired
50%; or After September 27, 2017, and Placed in Service
3. After 2017, from October 1 through December 31, During Calendar Year 2023, for Which the Section
enter the amount figured by multiplying the result in (1) by
168(k) Additional First-Year Depreciation
the percentage shown below for the month you disposed
of the vehicle. Deduction Applies

Month of Disposal Percentage Tax Year Amount
Jan., Feb., March . . . . . . . . . . . . . . . 12.5% 1st Tax Year $ 20,200
2nd Tax Year $ 19,500
April, May, June . . . . . . . . . . . . . . . . 37.5%
3rd Tax Year $ 11,700
July, Aug., Sept. . . . . . . . . . . . . . . . . 62.5%
Each Succeeding Year $ 6,960
Oct., Nov., Dec. . . . . . . . . . . . . . . . . 87.5%

Rev. Proc. 2023-14 Table 2: Depreciation
Line 36. See the tables shown here to determine the Limitations for Passenger Automobiles Placed in
depreciation limitation for passenger automobiles placed Service During Calendar Year 2023 for Which No
in service in 2023. See the tables in Pub. 463 to determine Section 168(k) Additional First-Year Depreciation
the depreciation limitation for passenger automobiles Deduction Applies
placed in service before 2023.
• A passenger automobile is a 4-wheeled vehicle
Tax Year Amount
manufactured primarily for use on public roads that is
rated at 6,000 pounds unloaded gross vehicle weight or 1st Tax Year $ 12,200
less. Certain vehicles, such as ambulances, hearses, and 2nd Tax Year $ 19,500
taxicabs, aren't considered passenger automobiles and
3rd Tax Year $ 11,700
aren't subject to the line 36 limits. See Pub. 463 for more
details. Each Succeeding Year $ 6,960
• A truck or van is a passenger automobile that is
classified by the manufacturer as a truck or van, and that Paperwork Reduction Act Notice. For the Paperwork
is rated at 6,000 pounds gross vehicle weight or less. Reduction Act Notice, see your tax return instructions.
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.

8 Instructions for Form 2106 (2023)

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