Form 4562: Depreciation and Amortization Guide

Form 4562, Depreciation and Amortization, is where businesses claim depreciation on new assets, elect Section 179 expensing, report vehicles and other listed property, and start amortizing intangible costs. You file it in the year you place business property in service, and every year you claim deductions on a vehicle. With 100% bonus depreciation restored for property acquired after January 19, 2025, the form is again the place where many small businesses write off equipment in full.

If you want the concepts first, our guides to calculating depreciation and Section 179 vs bonus depreciation cover them. This post focuses on the form: who files it, what goes in each part, current limits, and a worked example. It is general information, not tax advice; confirm your situation with a tax professional.

Who must file Form 4562

The IRS Form 4562 page and its instructions say to file if you are claiming any of the following:

• Depreciation for property placed in service during the tax year.
• A Section 179 expense deduction, including a carryover from a previous 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.
• Any depreciation on a corporate income tax return other than Form 1120-S.
• Amortization of costs that begins during the tax year.

File a separate Form 4562 for each business or activity on your return. Employees deducting vehicle expenses use Form 2106 instead.

Current limits at a glance

Item	Tax year 2025	Tax year 2026
Section 179 maximum deduction	$2,500,000	$2,560,000
Section 179 phase-out begins (total purchases)	$4,000,000	$4,090,000
Bonus depreciation, property acquired after Jan 19, 2025	100% (or elect 40%)	100%
Bonus depreciation, property acquired before Jan 20, 2025	40%	Phase-down continues
Section 179 cap for heavy SUVs	$31,300	Indexed for inflation; see below

The 2025 figures come from the 2025 Form 4562 instructions; the 2026 Section 179 amounts are from Rev. Proc. 2025-32. Heavy vehicles have their own rules, covered in our guide to the 6,000 lb vehicle deduction. The 2025 law also created a 100% allowance for qualified production property (certain manufacturing buildings) and new Section 174A, which again lets businesses deduct domestic research and experimental costs currently.

Form 4562 part by part

Part	What it covers	Typical small business use
Part I	Section 179 election, business income limit, carryovers	Expensing a laptop, camera or machinery
Part II	Special (bonus) depreciation and other depreciation	100% bonus on equipment
Part III	MACRS depreciation for assets placed in service this year and earlier years	Spreading cost over 5, 7 or 39 years
Part IV	Summary that totals Parts I to III and V	Amount carried to Schedule C line 13
Part V	Listed property: vehicles and certain other property	Business car or truck, mileage and use percentage
Part VI	Amortization	Startup costs, goodwill, organization costs

Part I: Section 179

You list each asset you elect to expense and its cost. The total cannot exceed the dollar limit or your business taxable income; any excess carries forward. The property must be used more than 50% for business. Section 179 is an election, so you choose which assets and how much.

Parts II and III: bonus and MACRS

Bonus depreciation applies by default to qualified property with a recovery period of 20 years or less. If you elect out for a class, those assets use regular MACRS in Part III, where you enter the recovery period, convention (half-year, mid-quarter or mid-month) and method. Watch the mid-quarter rule: if more than 40% of the depreciable basis of property placed in service during the year (excluding real property) is placed in service in the last three months, the mid-quarter convention generally applies to all of it.

Part V: listed property and vehicles

For each vehicle you report the date placed in service, business-use percentage, cost, method and the mileage breakdown. You also answer questions about written evidence of business use, which is why a mileage log is essential. Passenger automobiles are subject to annual dollar caps; for a car acquired after September 27, 2017 and placed in service in 2025, the first-year limit with bonus depreciation is $20,200. If you use the standard mileage rate, you do not claim depreciation separately; see standard mileage vs actual expenses.

Part VI: amortization

Intangibles such as business startup costs (up to $5,000 deducted immediately, the rest over 180 months), organization costs and purchased goodwill are amortized here, each with its Code section. Our post on amortization vs depreciation explains the difference.

Step by step: filling out Form 4562

1. List every asset bought this year with date placed in service, cost and business-use percentage. A fixed asset register makes this quick.
2. Decide per asset: Section 179, bonus depreciation, or regular MACRS.
3. Complete Part I for Section 179 elections and check the business income limit.
4. Enter bonus depreciation in Part II and remaining MACRS in Part III.
5. Complete Part V for any vehicle, every year.
6. Enter new amortization in Part VI.
7. Carry the Part IV total to Schedule C line 13 (or the equivalent line on your entity return).

Worked example

Illustrative figures. A video production freelancer filing Schedule C buys three items in 2026, all after January 19, 2025 and used 100% for business except the car:

Asset	Cost	Treatment	2026 deduction
Camera and lenses	$12,000	Section 179 (Part I)	$12,000
Editing workstation	$4,500	100% bonus (Part II)	$4,500
Office furniture	$2,000	Elect out of bonus; 7-year MACRS half-year (Part III)	$286
Car, 70% business use	$38,000	Listed property (Part V), subject to the passenger auto cap	Limited by annual cap x 70%

The first three lines alone deduct $16,786 in year one, which reduces both income tax and the self-employment tax on Schedule SE. Why elect out for the furniture? Some owners prefer to keep deductions for future years when they expect to be in a higher bracket.

Choosing between the three methods for each asset

A simple way to decide on Form 4562 is to ask three questions per asset. Is the business profitable enough this year to use a large deduction? If not, Section 179 may be limited and bonus or regular MACRS may be better. Will the asset stay above 50% business use for its whole recovery period? If you are unsure, avoid Section 179, because recapture applies if use drops. Do you expect higher income in later years? If so, slower MACRS depreciation can save deductions for when they are worth more. Whatever you choose, record the reasoning in your files; the elections are made on the return, and changing them later can be difficult.

Common Form 4562 mistakes

• Expensing improvements to a home office as equipment. Building improvements usually follow real property rules; home office depreciation belongs on Form 8829.
• Taking Section 179 on a loss year. The business income limit pushes it into a carryover; bonus may be better.
• No mileage records. Without written evidence, vehicle deductions can be disallowed in full.
• Ignoring state rules. Many states do not follow federal bonus depreciation, so your state return may need a separate schedule.
• Forgetting recapture. Selling expensed equipment usually produces ordinary income on Form 4797.
• Depreciating supplies. Items under the de minimis safe harbor (generally $2,500 per invoice or item for businesses without audited financial statements) can be expensed directly if you make the election.

State conformity and the second set of numbers

Form 4562 is a federal form, but many states attach their own version or require an addback. Several states have long decoupled from federal bonus depreciation, and some cap Section 179 at a lower amount than the federal limit. The practical effect is that a laptop fully expensed federally in 2026 may be depreciated over five years on your state return, so you need to track two basis figures for the same asset. Good tax software does this automatically, but if you prepare returns by hand, keep a column for state depreciation in your asset register.

Fixing depreciation mistakes

Errors on Form 4562 fall into two categories, and the fix differs:

Mistake	Typical fix
Math or posting error in one year	Amended return for that year
Forgot to make a Section 179 election	Generally can be made on an amended return for that year
Used an impermissible method for two or more years (for example, never depreciated an asset)	Often an accounting method change using Form 3115, catching up the missed depreciation in the current year
Claimed bonus on property that did not qualify	Amend, or method change if repeated; get professional help

The method-change route can be valuable: if you own a rental or home office and never claimed depreciation, Form 3115 can let you deduct the missed amount in one year rather than filing several amended returns. It is technical, so this is a job for a tax professional.

Keep the paper trail

Depreciation is recalculated when you sell, so keep purchase invoices, receipts and placed-in-service dates for the life of the asset plus the audit period. The rules on how long to keep invoices apply to purchase documents too. If you buy a lot of equipment toward year end, our year-end tax planning checklist shows how to time purchases.

Bigger deductions are only half the story; steady income is the other. Bill clients promptly with our free invoice generator, with no sign-up needed, and download each invoice as a PDF so your income and asset records live side by side.