IRS Form 4562 is the form you attach to your business return to claim depreciation on tangible assets and amortization on intangibles. For tax years beginning in 2026, the Section 179 immediate-expensing limit is $2,560,000, and 100% bonus depreciation applies to most qualifying property acquired after January 19, 2025.1Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One, Big, Beautiful Bill The form has six parts, and the deductions stack in a specific order: Section 179 first, then bonus depreciation, then regular MACRS on whatever basis is left.
Who Actually Has to File Form 4562
Not every taxpayer claiming depreciation has to attach this form. You must file Form 4562 if any of the following is true:
- You placed depreciable property in service during the current tax year.
- You are electing Section 179 expensing, including a carryover from a prior year.
- You are claiming depreciation on any vehicle or other listed property, regardless of when it was placed in service.
- You are deducting a vehicle on a return other than Schedule C.
- You are claiming any depreciation on a corporate return other than Form 1120-S.
- You began amortizing an intangible during the current tax year.
If your only depreciation or amortization started in a prior year and none of the situations above apply, you report those deductions directly on your return and skip Form 4562 entirely.2Internal Revenue Service. Instructions for Form 4562 (2025)
What to Gather Before You Start
For every asset you plan to deduct, you need three pieces of information: cost basis, date placed in service, and business-use percentage. Cost basis is not just the purchase price. It includes sales tax, freight, installation, and anything else you paid to get the asset ready for use.
Each asset also needs a classification under the Modified Accelerated Cost Recovery System. Five-year property covers computers and certain office equipment. Seven-year property includes office furniture and most machinery. Residential rental property uses a 27.5-year period; commercial buildings recover over 39 years. The class drives every number that follows, so check IRS Publication 946 if you are unsure.3Internal Revenue Service. Publication 946 – How To Depreciate Property
Part I: Section 179 Expensing
Part I is where you elect to write off the full cost of qualifying property in the year it goes into service. For tax years beginning in 2026, the maximum Section 179 deduction is $2,560,000. That limit phases out dollar-for-dollar once your total Section 179 property placed in service for the year exceeds $4,090,000, disappearing entirely at $6,650,000.4Office of the Law Revision Counsel. 26 USC 179 – Election to Expense Certain Depreciable Business Assets
A second cap matters just as much. Your Section 179 deduction cannot exceed your total taxable business income for the year. If it would create or increase a loss, the excess carries forward. Those carryovers are not automatic. You have to claim them on the next year’s Form 4562, and forgetting is one of the most common missed-deduction mistakes.
Vehicle Limits Under Section 179
Passenger vehicles have their own caps that override the general limits. For 2026, the first-year depreciation limit on a passenger automobile is $20,300 if bonus depreciation applies, or $12,300 if it does not.5Internal Revenue Service. Rev. Proc. 2026-15 Those limits include any Section 179, bonus depreciation, and regular MACRS depreciation combined.
Heavier vehicles follow different rules. SUVs and trucks with a gross vehicle weight rating above 6,000 pounds but no more than 14,000 pounds can qualify for Section 179, but a separate cap limits the expensing on those vehicles to $32,000. Vehicles above 14,000 pounds have no special Section 179 cap. In every case, business use must be more than 50%, and the deduction is reduced to match the actual business-use percentage.
Part II: Bonus Depreciation
Part II handles the special depreciation allowance, commonly called bonus depreciation. Under the One, Big, Beautiful Bill signed in 2025, qualifying property acquired after January 19, 2025, is eligible for a permanent 100% first-year deduction. There is no dollar cap, and no business-income limitation. Unlike Section 179, bonus depreciation can create or increase a net operating loss.
Qualifying property includes new and used tangible assets with a MACRS recovery period of 20 years or less, as long as used property was not previously used by the taxpayer or a related party. Acquisition date matters. Property you acquired before January 20, 2025, and placed in service during 2026 follows the older phase-down at a 20% bonus rate. If you have both old-acquisition and new-acquisition assets in the same year, track them separately on Part II.
Electing Out
Bonus depreciation applies automatically unless you affirmatively elect out. The election is made per class of property, not per asset, so skipping bonus depreciation on one piece of seven-year equipment means skipping it on every piece of seven-year equipment placed in service that year. The election is irrevocable once made on a timely filed return. Some filers elect out to spread deductions across multiple years instead of front-loading them.
Qualified Improvement Property
Interior improvements to a nonresidential building qualify for bonus depreciation as Qualified Improvement Property, provided they are made after the building was originally placed in service. New flooring, updated lighting, and reconfigured walls qualify. Enlargements to the structure, elevators, escalators, and changes to the internal structural framework do not. Roofing and windows are also excluded. QIP has a 15-year MACRS recovery period, which keeps it under the 20-year threshold for bonus depreciation. Improvements to leased commercial spaces qualify as long as the lease is not between related parties.
Part III: Regular MACRS Depreciation
Whatever depreciable basis remains after Section 179 and bonus depreciation runs through the standard MACRS calculation in Part III.
GDS Versus ADS
MACRS has two subsystems. The General Depreciation System is the default and uses the 200% declining balance method for most property, front-loading larger deductions into the early years. The Alternative Depreciation System uses straight-line depreciation over longer recovery periods and is mandatory for certain property, including tangible property used predominantly outside the United States, tax-exempt bond-financed property, and any listed property where business use drops to 50% or below. Some taxpayers voluntarily elect ADS for steadier deductions or to qualify for other tax benefits.
Conventions
MACRS requires a convention that determines how much depreciation you can claim in the first and last years of the recovery period. Three exist:
- The half-year convention treats all property as placed in service at the midpoint of the year, regardless of the actual date. This is the default for most personal property.
- The mid-quarter convention replaces the half-year convention when more than 40% of the total depreciable basis placed in service during the year was placed in service in the last three months. The rule prevents taxpayers from bunching December purchases to claim a half-year of depreciation on assets used for only a few weeks.6eCFR. 26 CFR 1.168(d)-1 – Applicable Conventions Half-Year and Mid-Quarter Conventions
- The mid-month convention applies to residential rental and nonresidential real property, treating the asset as placed in service at the midpoint of the month.
The actual depreciation percentage for each year comes from tables in Publication 946. You pick the table based on property class, method, and convention, then apply the percentage to the remaining basis after Section 179 and bonus depreciation.
Part V: Listed Property
Part V requires separate, detailed reporting for listed property: passenger automobiles, property used for entertainment or recreation, and certain transportation property. Computers and peripheral equipment used to be listed property, but after 2017 they are treated as regular depreciable assets without the extra reporting burden.
The core rule is the more-than-50% business-use test. If you use a listed asset more than 50% for business, you can claim accelerated MACRS depreciation and Section 179 expensing. If business use falls to 50% or below in any year, you lose accelerated depreciation, switch to straight-line under ADS for the remaining recovery period, and recapture the excess depreciation you claimed in prior years when business use was higher.7Internal Revenue Service. Instructions for Form 4562 – Depreciation and Amortization
Part V asks for date placed in service, business-use percentage, cost, depreciation method, and the depreciation claimed. For vehicles, you also report total mileage, business mileage, and commuting mileage. Keep a contemporaneous log. Reconstructing these records after the fact is exactly the kind of evidence gap that causes problems in an audit.
Part VI: Amortization
Part VI covers intangibles, which are expensed through amortization rather than depreciation. The main category is Section 197 intangibles: goodwill, trademarks, trade names, customer lists, patents, covenants not to compete, and franchises. These are amortized on a straight-line basis over 15 years (180 months), starting with the month of acquisition.8Office of the Law Revision Counsel. 26 USC 197 – Amortization of Goodwill and Certain Other Intangibles You cannot accelerate the deduction, even if the intangible loses value faster than the 15-year schedule suggests.
Startup and Organizational Costs
Startup costs and organizational expenses have their own rules. You can deduct up to $5,000 in startup costs immediately in the year the business begins operations. That $5,000 allowance phases out dollar-for-dollar when total startup costs exceed $50,000, disappearing at $55,000. Anything beyond the immediate deduction is amortized over 180 months starting with the month the business opens. Organizational costs for corporations and partnerships follow the same structure.
For each amortizable asset, Part VI wants the description, the date amortization began, the total cost, the applicable Code section, the amortization period, and the current-year deduction. If you are only reporting amortization that began in a prior year and have no other reason to file Form 4562, you can skip the form and report the deduction directly on the “Other Deductions” line of your return.
Part IV: Totaling the Form
Part IV pulls the totals from every other section into a single figure. Line 22 adds the Section 179 deduction from Part I, the special depreciation allowance from Part II, MACRS depreciation from Part III, listed property depreciation from Part V, and amortization from Part VI.9Internal Revenue Service. Form 4562 – Depreciation and Amortization (2025)
That single number transfers to your main return. Sole proprietors carry it to Schedule C. Corporations use Form 1120, and partnerships use Form 1065. Attach the completed Form 4562 to whichever return you file.
Fixing Depreciation Errors From Prior Years
If you used the wrong method, wrong recovery period, or wrong convention in a prior year, the fix is not an amended return. The IRS treats depreciation errors as accounting method changes and requires Form 3115, Application for Change in Accounting Method. Filing Form 3115 triggers a Section 481(a) adjustment that corrects all prior-year errors in a single calculation, as though you had used the correct method from the beginning.10Internal Revenue Service. Rev. Proc. 2024-23
Many depreciation corrections qualify for automatic consent, meaning you do not need advance IRS approval. You file Form 3115 with your current-year return and send a copy to the IRS’s national office. If the adjustment is a net positive amount (you underclaimed depreciation in prior years), you generally take the entire catch-up deduction in the year of change. If you overclaimed, the payback is typically spread over four years. Catching underclaimed depreciation years later is one of the more straightforward ways to recover money you left on the table.
A Few Boundaries Worth Knowing
Form 4562 handles the deduction side of depreciation. Selling or otherwise disposing of a depreciated asset is a separate event with recapture rules reported on Form 4797, and depreciation “allowed or allowable” is used in the calculation — if you could have claimed depreciation but did not, the recapture still assumes you did.11Internal Revenue Service. Publication 544 – Sales and Other Dispositions of Assets
Your federal Form 4562 deductions may not carry to your state return without adjustment. Several states have decoupled from federal bonus depreciation, requiring you to add back the federal deduction and use slower state methods. Section 179 limits also vary by state. Check your state’s current conformity rules before assuming your federal depreciation applies dollar-for-dollar, because the gap can create an unexpectedly large state tax bill.