Form 4562: Depreciation, Section 179 Limits & Filing Guide

What Is Form 4562 and What Changed for 2025 and 2026

Form 4562, Depreciation and Amortization (Including Information on Listed Property), is the federal schedule where businesses and income-producing property owners recover the cost of assets. You use the form to claim annual deductions for depreciation and amortization, elect under Section 179 to expense qualifying property in the year you place it in service, and report business or investment usage for automobiles and other listed property. You do not use Form 4562 to claim the Section 179D deduction for energy efficient commercial buildings. Instead, you must file Form 7205.

Tax legislation under P.L. 119-21 (the One Big Beautiful Bill Act) introduced major changes to the 2025 form and its depreciation limits:

• 100% Special Depreciation Allowance Reinstated: P.L. 119-21 restored the 100% special (bonus) depreciation allowance for qualified property acquired and placed in service after January 19, 2025, as well as specified fruit and nut plants planted or grafted after that date.
• Pre-January 20, 2025 Phase-Down: Qualified property acquired before January 20, 2025, and placed in service after December 31, 2024, and before January 1, 2026, is limited to a 40% special depreciation allowance (or 60% for property with a long production period and certain aircraft).
• Higher Section 179 Caps: For tax years beginning in 2025, the maximum Section 179 deduction is $2,500,000, with a phaseout threshold starting at $4,000,000 and an SUV limit of $31,300. For tax years beginning in 2026, those limits rise to $2,560,000 maximum deduction, $4,090,000 phaseout threshold, and $32,000 for SUVs.
• Qualified Production Property (Section 168(n)): Nonresidential real property used as an integral part of manufacturing, production, or refining that begins construction after January 19, 2025 (and before January 1, 2029) and is placed in service after July 4, 2025 (and before January 1, 2031) is eligible for a 100% special depreciation allowance.
• Domestic Research and Experimental Costs (Section 174A): For tax years beginning in 2025, domestic research and experimental expenditures can be deducted as a current-year business expense, or you can elect to amortize them over 60 months or more (or 10 years). Foreign research expenditures must be capitalized and amortized ratably over 15 years.
• New Form Lines: The 2025 Form 4562 added lines 19h and 20e for 50-year MACRS property (railroad gradings and tunnel bores), split line 23 into lines 23a and 23b for Section 263A uniform capitalization costs, and added line 24c requiring checkboxes if you own, lease, or charter a depreciated aircraft.

• IRS: Instructions for Form 4562 (2025)
• IRS: Publication 946 (2025), How To Depreciate Property

Who Must File Form 4562 (And Who Is Exempt)

You do not file Form 4562 every year simply because your business owns older depreciable assets. You must complete and attach Form 4562 to your tax return if you are claiming any of the following six items:

• Depreciation for any property placed in service during the 2025 tax year.
• A Section 179 expense deduction for 2025, or a carryover of a disallowed Section 179 deduction from a prior year.
• Depreciation on any vehicle or other listed property, regardless of what year it was placed in service.
• A deduction for any vehicle if that deduction is reported on a form other than Schedule C (Form 1040), Profit or Loss From Business.
• Any depreciation on a corporate income tax return (other than Form 1120-S for S corporations), regardless of when the asset was placed in service.
• Amortization of costs where the amortization period begins during the 2025 tax year.

• IRS: Instructions for Form 4562 (2025)
• IRS: 4562 Depreciation and Amortization OMB No. 1545-0172

Exceptions and Multi-Business Filing Rules

If none of the six triggers above apply, you skip Form 4562 and enter your continuing depreciation or amortization directly on your main tax return. Specifically, you do not file Form 4562 in three situations. First, if you file Schedule C and claim the standard mileage rate or actual vehicle expenses (except depreciation) with no other filing trigger, you report vehicle info in Part IV of Schedule C. Second, if you report continuing amortization (other than research or experimental expenditures) that began before 2025 with no other trigger, it goes directly on your return's Other Deductions or Other Expenses line. Third, if you are an employee deducting job-related vehicle expenses, you must use Form 2106, Employee Business Expenses.

If you run multiple businesses or activities, you must file a separate Form 4562 for each business or activity requiring one. However, the Section 179 dollar limit and business income limit apply to the taxpayer across all activities combined. When filing multiple forms, you complete only one Part I in its entirety on a separate Form 4562 labeled Summary at the top of Part I, and then enter the allocated Section 179 amount on line 12 of each activity's Form 4562.

• IRS: Instructions for Form 4562 (2025)
• IRS: 4562 Depreciation and Amortization OMB No. 1545-0172

Form 4562 Due Date and Election Deadlines

Form 4562 (Attachment Sequence No. 179) is filed together with your federal income tax return, so its due date is your tax return's due date. Key elections on the form follow strict timing rules:

• Section 179 Election (Part I): File Form 4562 with either your original return for the year the property was placed in service (whether or not filed on time) or on an amended return filed within the time prescribed by law (generally 3 years from the original return filing date or 2 years from paying the tax, whichever is later). You can revoke a Section 179 election on a timely amended return without IRS approval, and once made, the revocation is irrevocable.
• Electing Out of the Special Depreciation Allowance (Part II): Attach a statement to your timely filed return indicating the class of property for which you are electing out. If you timely filed without making the election, you can file an amended return within 6 months of the return's due date (excluding extensions) and write Filed pursuant to section 301.9100-2 on the amended return.
• Qualified Production Property Designation (Part II): Attach an election and designation statement to your timely filed return for the year the property is placed in service, following section 7.02 of Notice 2026-16.
• General Asset Account Election (Part III, Line 18): Check the box on line 18 on a return filed no later than the due date for the tax year you placed the assets in service.
• Excluding Property from MACRS (Part II, Line 15): Make the election by the return due date, or on an amended return within 6 months of the due date (excluding extensions) with Filed pursuant to section 301.9100-2 written on the election statement.

• IRS: Instructions for Form 4562 (2025)
• IRS: Publication 946 (2025), How To Depreciate Property

How the Six Parts of Form 4562 Work (And Completion Order)

Do not fill out Form 4562 in numerical order if you have vehicles or other listed property. The note at the top of Form 4562 requires you to complete Part V before you complete Part I. In addition, cost recovery for any single asset follows a strict sequence: start with your business/investment cost basis, subtract any Section 179 deduction first, compute your special depreciation allowance on the remaining basis second, and figure regular MACRS depreciation on the remaining depreciable basis third.

• Part V, Listed Property (Lines 24a to 41): Complete first if you have passenger autos (6,000 lbs or less), other transportation property lending itself to personal use, or entertainment property. Property used more than 50% in a qualified business use goes on line 26, where it qualifies for the special allowance (line 25) and Section 179 expensing (column (i)). Property used 50% or less in a qualified business use goes on line 27, must use straight-line over its ADS recovery period (5 years for autos and computers), and gets no Section 179 or bonus depreciation. Line 28 carries to line 21, and line 29 carries to line 7.
• Part I, Section 179 Expense Election (Lines 1 to 13): Available to active trades or businesses (estates and trusts cannot make this election). Lines 1 to 5 figure your dollar limit ($2,500,000 max for 2025, reduced dollar-for-dollar above $4,000,000). Enter non-listed property on line 6, listed property from line 29 on line 7, prior-year carryovers on line 10, and apply the taxable business income cap on line 11. Disallowed deductions due to the income cap carry forward to 2026 on line 13.
• Part II, Special Depreciation Allowance and Other Depreciation (Lines 14 to 16): Excludes listed property. Line 14 reports the first-year special allowance (100% for qualified property acquired and placed in service after Jan. 19, 2025, or 40%/60% for earlier acquisitions placed in service in 2025, plus qualified production property). Line 15 covers non-MACRS elections like unit-of-production. Line 16 covers ACRS property, income forecast property, and 36-month computer software.
• Part III, MACRS Depreciation (Lines 17 to 20e): Excludes listed property. Section A (line 17) reports current-year MACRS deductions for assets placed in service before 2025. Section B (lines 19a to 19j) reports 2025 General Depreciation System (GDS) assets. Section C (lines 20a to 20e) reports 2025 Alternative Depreciation System (ADS) assets.
• Part IV, Summary (Lines 21 to 23b): Line 21 brings in listed property depreciation from line 28. Line 22 totals deductions to carry to your tax return (partnerships and S corporations exclude line 12 Section 179 from line 22 because it passes through on Schedule K-1). Lines 23a and 23b report current-year Part III basis from Section 263A capitalized interest and other costs.
• Part VI, Amortization (Lines 42 to 44): Line 42 reports amortization beginning in 2025, such as Section 195 startup costs, Section 248/709 organizational costs, 15-year (180-month) Section 197 intangibles, and elected domestic or mandatory 15-year foreign research and experimental expenditures under Sections 174 and 174A. Line 43 reports prior-year amortization, and line 44 totals column (f).

• IRS: Instructions for Form 4562 (2025)
• IRS: 4562 Depreciation and Amortization OMB No. 1545-0172

Worked Example: Sequential Basis Reduction and Cross-Form Flow

Here is a worked calculation designed by our team using Table A (200% declining balance, half-year convention). The business scenario is invented.

Suppose an active sole proprietor filing Schedule C has $150,000 in tentative taxable business income in 2025 and places two assets in service in May 2025. The first asset is a 4,500-pound passenger automobile acquired and placed in service in May 2025 for $40,000, driven 8,000 business miles out of 10,000 total miles (80% qualified business use) with a written log. The owner elects out of the special depreciation allowance, so the 2025 Table 2 limit is $12,200 at 100% use ($9,760 at 80% use). The second asset is 7-year office furniture acquired January 10, 2025 (before January 20, 2025, making it eligible for the 40% special allowance) and placed in service in May 2025 for $100,000 at 100% business use, on which the owner elects $50,000 of Section 179 expensing.

• Step 1, Part V First (Passenger Auto): Multiply $40,000 cost by 80% business use for a $32,000 basis on line 26, column (e). The owner elects $9,760 of Section 179 in line 26, column (i), leaving $0 regular depreciation in column (h). Line 29 equals $9,760 and carries to Part I, line 7.
• Step 2, Part I (Section 179): Total Section 179 property placed in service on line 2 is $132,000 ($100,000 furniture + $32,000 auto basis), below the $4,000,000 threshold, so line 5 is $2,500,000. Enter $50,000 on line 6, column (c) and $9,760 on line 7. Line 8 total elected cost is $59,760, which is under the $150,000 income limit on line 11, giving a line 12 deduction of $59,760.
• Step 3, Part II (40% Special Allowance): Reduce the $100,000 furniture basis by the $50,000 Section 179 deduction first, leaving $50,000. Multiply $50,000 by 40% to get the $20,000 special depreciation allowance on line 14.
• Step 4, Part III (7-Year MACRS GDS): Reduce the $50,000 remaining basis by the $20,000 special allowance, leaving $30,000 on line 19c, column (c). Multiply $30,000 by 14.29% (the Year 1 rate for 7-year 200% DB half-year convention in Table A) to get $4,287 on line 19c, column (g).
• Step 5, Part IV (Summary): Add line 12 ($59,760) + line 14 ($20,000) + line 19c ($4,287) + line 21 ($0) for a total deduction of $84,047 on line 22, which carries to Schedule C.

• IRS: Instructions for Form 4562 (2025)
• IRS: Publication 946 (2025), How To Depreciate Property

Common Errors to Avoid on Form 4562

Filing mistakes on Form 4562 can trigger adjustments or require filing Form 3115 to change an impermissible accounting method. Watch out for these six official cautions and prohibitions:

• Attempting to Depreciate Land: Land cannot be depreciated. You must separate the cost of land from the cost of buildings and improvements before calculating basis.
• Failing to Reduce Depreciable Basis Sequentially: If you elect a Section 179 expense deduction or claim a special depreciation allowance, you must subtract those amounts from your cost basis before figuring regular MACRS depreciation or amortization.
• Exceeding Depreciable Basis Across Tax Years: Prior years' depreciation combined with the current year's depreciation can never exceed the property's depreciable basis.
• Estates or Trusts Claiming Section 179: An estate or trust cannot make the Section 179 election to expense property in Part I.
• Claiming Accelerated Deductions on Listed Property Used 50% or Less for Business: Listed property used 50% or less in a qualified business use does not qualify for the Section 179 expense deduction or the special depreciation allowance, and must be depreciated using the straight-line method over its ADS recovery period.
• Claiming Section 179D on Form 4562: Do not use Form 4562 to claim the deduction for energy efficient commercial buildings under Section 179D. You must file Form 7205 instead.

• IRS: Instructions for Form 4562 (2025)
• IRS: Publication 946 (2025), How To Depreciate Property

Flat-Price Business Tax Filing and Depreciation Tracking

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• IRS: Instructions for Form 4562 (2025)
• IRS: Publication 946 (2025), How To Depreciate Property