Depreciation can be one of the most valuable deductions available to a business, but only if it is reported correctly. IRS Form 4562 is the form used to claim depreciation and amortization, make a Section 179 election, and report business use of vehicles and other listed property.
If you bought equipment, furniture, machinery, software, a vehicle, or certain other business assets, Form 4562 may directly affect how much you can deduct this year and in future years.
This guide explains what Form 4562 does, who generally files it, how each part works, what changed for 2026, and the most common errors that create lost deductions or filing problems.
What Is Form 4562?
Form 4562, Depreciation and Amortization (Including Information on Listed Property), is attached to a federal income tax return. It is used to:
- claim depreciation and amortization deductions
- elect to expense qualifying property under Section 179
- claim special depreciation allowance, often called bonus depreciation
- report business and investment use of automobiles and other listed property
It is not a standalone filing. It is generally attached to the return where the related income and deductions are reported, such as Schedule C, Schedule E, Form 1065, Form 1120-S, or Form 1120.
Who Generally Needs to File Form 4562?
Under the IRS instructions, Form 4562 is generally filed if you are claiming any of the following for the year:
- depreciation for property placed in service during the current tax year
- a Section 179 expense deduction, including a carryover from a prior year
- depreciation on any vehicle or other listed property, regardless of when it was placed in service
- a deduction for any vehicle reported on a form other than Schedule C
- amortization of costs that begin during the current tax year
- any depreciation on a corporate income tax return other than Form 1120-S
That means Form 4562 is often required in the first year an asset is placed in service, and it can also continue to be required in later years for listed property or in other situations specifically identified by the IRS.
What Depreciation Means for Tax Purposes
When a business buys property that will benefit the business over more than one year, the IRS usually does not allow the full cost to be deducted immediately as a regular expense. Instead, the cost is generally recovered over time through depreciation.
Amortization is similar, but it generally applies to certain intangible costs or rights rather than physical property.
Property That Is Commonly Depreciated
- machinery and equipment
- office furniture and fixtures
- business vehicles
- computers and certain technology assets
- buildings and improvements, subject to the applicable rules
Property That Is Not Depreciated
- land
- inventory held for sale
- personal-use property
- assets already fully deducted
MACRS, ADS, and the Basic Depreciation Systems
Most business property is depreciated under MACRS, the Modified Accelerated Cost Recovery System.
MACRS has two main systems:
General Depreciation System (GDS)
GDS is the default system for most business property. It usually produces faster deductions.
Alternative Depreciation System (ADS)
ADS generally uses longer recovery periods and may be required in certain situations, including some property used predominantly outside
the United States and some listed property that is not used more than 50% in a qualified business use.
Common recovery periods often include:
- 5-year property for many vehicles, computers, and similar assets
- 7-year property for office furniture and equipment
- 15-year property for certain land improvements and qualified improvement property
- 27.5-year property for residential rental buildings
- 39-year property for nonresidential real property
- 50-year property for certain railroad grading and tunnel bore property reflected on the current form structure
Section 179 Deduction for 2026
Section 179 allows a taxpayer to elect to expense all or part of the cost of qualifying property in the year it is placed in service, instead of recovering that cost only through regular depreciation.
For tax years beginning in 2026, the IRS states:
- the maximum Section 179 deduction is $2,560,000
- the deduction begins to phase out when the cost of Section 179 property placed in service exceeds $4,090,000
- the cost of any sport utility vehicle that may be taken into account under Section 179 is capped at $32,000
Property That May Qualify for Section 179
Depending on the facts, qualifying property can include:
- machinery and equipment
- certain furniture and fixtures
- certain off-the-shelf software
- certain improvements to nonresidential real property that meet the statute
Section 179 Limits That Still Matter
Even when property qualifies, Section 179 has important limitations:
- the deduction is limited by taxable income from the active conduct of a trade or business
- the annual dollar limit can be reduced by too much qualifying property placed in service during the year
- special limits apply to certain vehicles
- if business use drops below the required threshold, recapture rules may apply
Bonus Depreciation for 2026
Bonus depreciation is the additional first-year depreciation deduction under Section 168(k).
For eligible property acquired after January 19, 2025, IRS guidance states that the law provides a permanent 100% additional first-year depreciation deduction.
That is a major change from the older scheduled phase-down rules that had applied under prior law.
What Property Can Qualify for Bonus Depreciation
In general, bonus depreciation may apply to eligible depreciable property that meets the statutory requirements. IRS guidance also reflects
that both new property and certain used property can qualify if the acquisition rules are satisfied.
How Section 179 and Bonus Depreciation Work Together
When both rules may apply, the usual sequence is:
- apply any Section 179 election first
- apply bonus depreciation to remaining eligible basis
- compute regular MACRS depreciation on any remaining basis
That order matters because each step changes the remaining depreciable basis.
What Changed on Form 4562
The IRS instructions for the current revision explain several important points that affect how taxpayers read the form today.
New 50-Year Property Lines
The IRS instructions note that lines 19h and 20e were added to report MACRS depreciation for 50-year property. Line 19h is used for GDS reporting, and line 20e is used for ADS reporting.
Uniform Capitalization Reporting
The current instructions also separate certain capitalization amounts in Part IV. If Section 263A applies, the instructions should be followed carefully when completing the summary lines.
Line-by-Line Overview of Form 4562
Form 4562 is divided into six parts.
Part I — Election To Expense Certain Property Under Section 179
Part I is where the Section 179 deduction is computed.
It includes:
- the annual deduction limit
- the phaseout calculation
- elected costs for qualifying property
- listed property amounts carried from Part V
- prior-year carryovers
- the business income limitation
- the deduction allowed for the year and any carryforward
If listed property is involved, Part V may need to be completed before finalizing the Section 179 calculation.
Part II — Special Depreciation Allowance and Other Depreciation
Part II is used for bonus depreciation and certain other depreciation not figured in Part III.
This is where many taxpayers report bonus depreciation for qualifying property that is not listed property.
Part III — MACRS Depreciation
Part III covers regular MACRS depreciation.
This section includes:
- depreciation for prior-year MACRS property
- GDS assets placed in service during the current year
- ADS assets placed in service during the current year
Taxpayers must use the correct recovery period, convention, and method for each class of property.
Part IV — Summary
Part IV totals the deductions from the earlier sections and carries them to the return.
The summary lines should be reviewed carefully because they bring together Section 179, bonus depreciation, MACRS depreciation, listed property depreciation, and amortization.
Part V — Listed Property
Part V is one of the most sensitive sections on the form.
Listed property includes automobiles and certain other property the IRS treats as requiring more detailed substantiation.
This section generally requires:
- date placed in service
- cost or other basis
- business-use percentage
- recovery period
- method and convention
- current-year depreciation
- mileage and use information for vehicles when required
- answers about evidence and personal use
If listed property is not used more than 50% in a qualified business use, accelerated depreciation may no longer be available and ADS straight-line treatment may apply instead.
Part VI — Amortization
Part VI is used for amortization that begins during the year.
It typically includes:
- description of the cost
- date amortization begins
- amortizable amount
- applicable Code section
- amortization period or percentage
- current-year amortization deduction
The IRS instructions also state that if you are only reporting amortization of costs from prior years, and you are not otherwise required to file
Form 4562, you may report that amortization directly on the return rather than filing Form 4562 solely for that purpose.
Listed Property Rules Every Business Owner Should Understand
Listed property rules can create both deduction opportunities and audit risk.
Vehicles Require Strong Records
Vehicle deductions are one of the most common areas where documentation becomes the deciding factor. Business miles, commuting miles, personal miles, and total miles must be supportable.
Written records kept at or near the time of use are far stronger than reconstructed logs created after the fact.
Business-Use Percentage Changes the Result
When a vehicle or other listed asset is partly personal and partly business, only the business-use portion is depreciable.
If qualified business use is 50% or less, the depreciation method can change and prior benefits may need to be recaptured.
Passenger Automobile Limits Still Apply
Passenger automobiles remain subject to annual depreciation caps.
For passenger automobiles placed in service in calendar year 2026, the IRS tables provide these limits:
If Section 168(k) additional first-year depreciation applies:
- Year 1: $20,300
- Year 2: $19,800
- Year 3: $11,900
- Each later year: $7,160
If Section 168(k) additional first-year depreciation does not apply:
- Year 1: $12,300
- Year 2: $19,800
- Year 3: $11,900
- Each later year: $7,160
These limits can materially reduce the first-year deduction for passenger vehicles even when the vehicle otherwise qualifies for Section 179 or bonus depreciation.
Common Mistakes on Form 4562
1. Using the Wrong Property Class
An incorrect recovery period can distort the deduction for years. Always match the property to the proper IRS class life and recovery period.
2. Applying Section 179 and Bonus Depreciation in the Wrong Order
Section 179 is figured first. Bonus depreciation is applied after that. Regular depreciation is figured last.
3. Missing the 40% Mid-Quarter Convention Test
If more than 40% of the basis of MACRS property placed in service during the year is placed in service in the last three months of the tax year, the mid-quarter convention may apply instead of the half-year convention.
4. Poor Mileage and Use Documentation
Vehicle deductions often fail because records are incomplete, inconsistent, or created too late.
5. Assuming Federal and State Depreciation Rules Always Match
Many states do not fully conform to federal depreciation rules. A federal deduction does not automatically mean the same deduction is available on the state return.
6. Filing Based on Old Bonus Depreciation Rules
Older articles often reflect the scheduled phase-down rules. Current IRS guidance should be checked before relying on prior-year content.
When Form 4562 Is Filed
Form 4562 is filed with the return for the tax year in which the deduction is claimed.
For many taxpayers, that means filing it with the return due on the normal annual due date, including extensions if applicable.
If depreciation was missed in a prior year, the fix is not always as simple as entering the deduction on the current return. Depending on the facts, correction may involve an amended return or an accounting method change.
Records You Should Keep
Good records make Form 4562 easier to prepare and easier to defend.
Keep:
- purchase documents and invoices
- settlement statements or other basis records
- depreciation schedules
- prior-year returns and prior-year Forms 4562
- mileage logs and supporting vehicle records
- documents showing the date property was placed in service
- records of any sale, trade-in, conversion to personal use, or disposition
Related Tax Forms Often Connected to Form 4562
- Form 4797 for sales of business property and depreciation recapture
- Form 3115 when a depreciation method or prior-year treatment must be corrected through an accounting method change
- Publication 946 for broader IRS depreciation guidance
- Form 7205 for the energy efficient commercial buildings deduction under Section 179D, which is not claimed on Form 4562
Conclusion
Form 4562 is where some of the most important fixed-asset tax decisions are reported. It determines whether you recover cost gradually, expense it immediately under Section 179, claim bonus depreciation, or report detailed vehicle use for listed property.
For 2026, the form remains especially important because the Section 179 limits increased, 100% bonus depreciation applies to eligible property acquired after January 19, 2025, and the passenger automobile limits continue to restrict deductions for many vehicles.
Accurate classification, correct sequencing, and strong documentation are what turn Form 4562 from a compliance task into a valuable tax planning tool.
Frequently Asked Questions
Do I always need to file Form 4562 if I am still depreciating older assets?
Not always. The IRS instructions require Form 4562 in specific situations, including current-year property placed in service, Section 179 deductions, depreciation on listed property, certain vehicle deductions, amortization beginning during the year, and depreciation on certain corporate returns.
What is the Section 179 limit for 2026?
For tax years beginning in 2026, the maximum Section 179 deduction is $2,560,000, and the phaseout begins when the cost of Section 179 property placed in service exceeds $4,090,000.
Is bonus depreciation 100% in 2026?
Under current IRS guidance, a permanent 100% additional first-year depreciation deduction applies to eligible property acquired after January 19, 2025.
Can I write off the full cost of a vehicle in the first year?
Sometimes, but passenger automobile depreciation limits can significantly cap the first-year deduction even when the vehicle otherwise qualifies for accelerated write-offs.
What happens if business use of listed property drops?
If qualified business use falls to 50% or less, accelerated depreciation may no longer be allowed and recapture rules may apply.
