MACRS (Modified Accelerated Cost Recovery System)

MACRS, or Modified Accelerated Cost Recovery System, is a system for calculating asset depreciation in the United States. Under MACRS, deductions are typically greater in the early stages of an asset’s lifespan, and decrease as time passes. This distinguishes MACRS from other depreciation systems, such as straight-line depreciation, where the cost of the asset is spread out more evenly over its useful life. 

In some circumstances, business drivers can claim accelerated depreciation using MACRS on their personal vehicle, and deduct this amount from their personal taxes. However, drivers that do this cannot participate in FAVR programs, accountable allowances, and Standard Rate CPM programs using that vehicle.

Moving forward, if they wish to participate in one of these reimbursement programs, they will need to do so using a different vehicle. 

For more information on MACRS and car allowances, consult IRS Publication 463. 

To read more about how FAVR reimbursement programs work, consult this guide that includes information about how FAVR compares to other options, calculating FAVR, mileage tracking, and more. If you’re curious about how FAVR could work for your business, consider speaking with a Cardata expert to learn even more details.