IRS Annual Lease Value Table: Lookup, Proration, and W-2 Reporting

The IRS annual lease value table, published in Publication 15-B, converts a company vehicle’s fair market value into a flat yearly dollar figure that stands in for the cost of a full year of personal use.¹ You find the row that contains the vehicle’s FMV, read across to the annual lease value, and then adjust that figure for how much of your driving was personal, whether you had the car all year, whether the employer paid for gas, and whether you reimbursed the company for anything. The result is the taxable fringe benefit that lands on your W-2.

The Table

Below is the table as published in Publication 15-B for 2026.¹

Vehicle FMV	Annual Lease Value
$0 – $999	$600
$1,000 – $1,999	$850
$2,000 – $2,999	$1,100
$3,000 – $3,999	$1,350
$4,000 – $4,999	$1,600
$5,000 – $5,999	$1,850
$6,000 – $6,999	$2,100
$7,000 – $7,999	$2,350
$8,000 – $8,999	$2,600
$9,000 – $9,999	$2,850
$10,000 – $10,999	$3,100
$11,000 – $11,999	$3,350
$12,000 – $12,999	$3,600
$13,000 – $13,999	$3,850
$14,000 – $14,999	$4,100
$15,000 – $15,999	$4,350
$16,000 – $16,999	$4,600
$17,000 – $17,999	$4,850
$18,000 – $18,999	$5,100
$19,000 – $19,999	$5,350
$20,000 – $20,999	$5,600
$21,000 – $21,999	$5,850
$22,000 – $22,999	$6,100
$23,000 – $23,999	$6,350
$24,000 – $24,999	$6,600
$25,000 – $25,999	$6,850
$26,000 – $27,999	$7,250
$28,000 – $29,999	$7,750
$30,000 – $31,999	$8,250
$32,000 – $33,999	$8,750
$34,000 – $35,999	$9,250
$36,000 – $37,999	$9,750
$38,000 – $39,999	$10,250
$40,000 – $41,999	$10,750
$42,000 – $43,999	$11,250
$44,000 – $45,999	$11,750
$46,000 – $47,999	$12,250
$48,000 – $49,999	$12,750
$50,000 – $51,999	$13,250
$52,000 – $53,999	$13,750
$54,000 – $55,999	$14,250
$56,000 – $57,999	$14,750
$58,000 – $59,999	$15,250

The table stops at $59,999. For anything above that, the annual lease value is calculated with a formula rather than looked up: 25% of the vehicle’s FMV plus $500. A company SUV with an FMV of $72,000 has an annual lease value of $18,500 (0.25 × $72,000 + $500).¹

Whatever the row or the formula produces, that number assumes the vehicle was available to you for the entire calendar year and used 100% for personal driving. Real life almost never matches that assumption, which is what the rest of the calculation is for.

Finding the FMV That Goes Into the Table

Everything flows from one number: the vehicle’s fair market value on the date it was first made available to any employee for personal use. FMV is what a buyer would pay a third party in a normal transaction, and it includes sales tax and title fees.¹

The IRS gives employers safe-harbor shortcuts so no formal appraisal is needed:

If the employer bought the car at arm’s length, the purchase price (with sales tax and title fees) counts as FMV. This shortcut isn’t available if the employer manufactured the vehicle itself.
If the employer leased the car, it can use the manufacturer’s invoice price plus 4%, the MSRP minus 8% (including sales tax and title), or the retail value from a nationally recognized pricing source such as NADA.

Whichever benchmark the employer picks, it has to be reasonable for the specific vehicle.¹

Walking the Lookup Through to a Taxable Number

Suppose your employer provides a sedan with an FMV of $38,500 on the day you receive it, and over the year you drive 18,000 miles, of which 7,200 are personal.

Read the Table

An FMV of $38,500 falls in the $38,000–$39,999 row, so the annual lease value is $10,250. That is the starting figure.

Prorate for Partial-Year Availability

If you had the car all 365 days, use the full annual lease value. If you got it partway through the year, multiply by days available divided by 365. A March 15 start date gives 292 days: $10,250 × (292 ÷ 365) = $8,200.²

This proration formula only applies when the vehicle was available for at least 30 consecutive days. For shorter stretches, the employer uses a daily lease value instead, computed as the annual lease value times 4, divided by 365.

Reduce by Business-Use Percentage

The table value represents 100% personal use, so the employer scales it down by the share of miles driven for business. In the example, 10,800 of 18,000 miles were business, so business use is 60% and personal use is 40%. The taxable portion of the lease value is 40% of $10,250, or $4,100.¹

The business-use percentage has to be backed by a contemporaneous mileage log showing the date of each trip, miles driven, and business purpose. A log filled in near the time of each trip meets the “timely kept” standard; a reconstruction from memory does not.³

Add Employer-Paid Fuel

The annual lease value covers insurance and maintenance but not fuel. If the employer pays for gas that you burn on personal trips, that fuel value gets added on top. The employer can use actual cost or a simplified rate of 5.5 cents per personal mile.¹ In the example, 7,200 personal miles at 5.5 cents adds $396.

Subtract Any Employee Reimbursements

Payments you make to your employer for personal use of the vehicle reduce the taxable benefit dollar for dollar. If you pay the company $100 a month, that’s $1,200 for the year. The final taxable fringe benefit is $4,100 + $396 − $1,200 = $3,296.

Rules That Change the Number Over Time

The lease value pulled from the table is not a one-time lookup. Three rules govern how it is maintained:

The annual lease value set in the first year stays fixed for four full calendar years. On January 1 of the fifth year, the employer redetermines FMV and pulls a new lease value from the table. Because the car has depreciated, the new figure is usually lower.
Once the employer picks the annual lease value method for a particular vehicle, it must keep using that method for every year the vehicle is provided to any employee. Switching mid-stream to a different valuation method isn’t allowed.
The 30-day availability threshold is what separates the annual/prorated calculation from the daily lease value calculation.

If your employer has been using the same lease value on the same vehicle for six years without a reset, someone missed the required recalculation and the taxable amount on your W-2 may be too high.¹

Fleet-Average Option for 20 or More Vehicles

Employers with 20 or more vehicles can average the FMV across the qualifying fleet and apply a single annual lease value to the group rather than looking up each car. For vehicles first made available in 2026, each car in the fleet must have an FMV of $61,700 or less.⁴ Anything above that cap has to be valued on its own.

Where the Number Ends Up on Your W-2

The final taxable value is treated as supplemental wages.⁵ It shows up in Box 1 (Wages), Box 3 (Social Security Wages), and Box 5 (Medicare Wages) of your W-2. Employers may also report it separately in Box 14, which is optional but useful for spotting the fringe benefit amount.¹

Social Security tax applies to the first $184,500 in combined wages for 2026.⁶ Medicare tax has no cap and applies to the full benefit.

Employers can elect not to withhold federal income tax on the vehicle benefit, but they still have to withhold Social Security and Medicare. If your employer makes that election, it must notify you in writing by January 31 of the year or within 30 days after the vehicle is first provided, whichever is later.⁷ When no income tax is withheld, the benefit still appears on your W-2 and you owe the income tax when you file. If you haven’t adjusted your withholding or made estimated payments, that bill arrives in April.

1
Internal Revenue Service. Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits
2
eCFR. 26 CFR 1.61-21 – Taxation of Fringe Benefits
3
Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
4
Internal Revenue Service. 2026 Standard Mileage Rates
5
eCFR. 26 CFR 31.3402(g)-1 – Supplemental Wage Payments
6
Social Security Administration. Contribution and Benefit Base
7
Internal Revenue Service. Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits