Inflation adjustments for 2017 issued for employer-provided vehicles

By Sally P. Schreiber, J.D.

The IRS issued the 2017 inflation-adjusted amounts for the maximum vehicle values for purposes of determining the amount that is included in employees’ income for personal use of an employer-provided vehicle (Notice 2017-3).

The limits for passenger vehicles are the same or slightly lower in 2017 than they were in 2016, but the values for vans and trucks increased slightly.

Under Regs. Sec. 1.61-21(d), an employer can use the fleet-average valuation rule to calculate the amount of income an employee must include as taxable income only when the average value of the vehicles in the fleet does not exceed a certain amount, which is adjusted every year according to the consumer price index.

For 2017, those maximum amounts are $21,100 for a passenger automobile (down from $21,200 in 2016) and $23,300 for a truck or van (an increase from $23,100).

Regs. Sec. 1.61-21(e) provides the maximum value of a vehicle for which the cents-per-mile method may be used to calculate taxable personal use of an employer-provided vehicle. For 2017, those amounts are $15,900 for a passenger vehicle (unchanged from 2016) and $17,800 for a truck or van (an increase from $17,700).

Sally P. Schreiber (Sally.Schreiber@aicpa-cima.com) is a JofA senior editor.

SPONSORED QUIZ

How well do you know small business?

There are over 30 million small businesses in the U.S., and many of them are optimistic in their outlook. Are you familiar with the obstacles and opportunities they are facing? Test your small business acumen with this quiz sponsored by Chase Ink®.

SPONSORED REPORT

In focus: Payroll

Providing payroll services that comply with ever-changing regulations and meet evolving employee and employer demands is no easy task. Paychex's Tom Hammond discusses common payroll considerations for CPA firms.