Notice 2016-12: Employer-provided vehicles; 2016 valuation of employee’s personal use

Notice 2016-12: Employer-provided vehicles

Notice 2016-12—which appears in Internal Revenue Bulletin 2016-6 (dated Monday, February 8, 2016)—provides the maximum value of a vehicle first provided by an employer in 2016 for which the employee’s personal use can be valued using the vehicle cents-per-mile method or the fleet-average valuation method.

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Background

The value of an employee’s personal use of an employer-provided vehicle is gross income to the employee, and generally must be reported as wages on Form W-2. 

There are several methods available to determine the value of this use. However, the cents-per-mile method and the fleet-average valuation method are permitted only for vehicles up to a certain fair market value when they are first made available to an employee. These limitations are adjusted annually for inflation.

Previously, the IRS provided the maximum vehicle values in an annual revenue procedure. Because the guidance for calculating and applying these maximum vehicle values is provided by regulation, and does not change from year to year, the IRS in 2013 began to publish these vehicle values in an annual notice.

Maximum vehicle values

Notice 2016-12—published in the Internal Revenue Bulletin [PDF 152 KB]—provides that the maximum value of an employer-provided vehicle first made available to employees for personal use in calendar year 2016 for which the vehicle cents-per-mile valuation rule provided under Reg. section 1.61-21(e) may be applicable is:

  • $15,900 for a passenger automobile
  • $17,700 for a truck or van

The maximum value of an employer-provided vehicle first made available to employees for personal use in calendar year 2016 for which the fleet-average valuation rule provided under Reg. section 1.61–21(d) may be applicable is:

  • $21,200 for a passenger automobile
  • $23,100 for a truck or van

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