**Standard depreciation schedule**: Year 1: -20-30%, Year 2: -15-18%, Year 3: -12-15%, Year 4: -10-12%, Year 5: -8-10%.

After 5 years: **average 60% value lost**. **Example**: $40,000 new car → Year 1 $30,000 (25% loss), Year 3 $22,000 (45% loss), Year 5 $16,000 (60% loss). **Best resale brands (2025 KBB data)**: Toyota 56% after 5 years (44% depreciation), Honda 54%, Subaru 53%, Lexus 52%, Porsche 51%. **Worst depreciation**: Luxury sedans -65-70% in 5 years (BMW, Mercedes S-Class, Audi A6), Electric vehicles -50-60% (except Tesla 48%), Full-size sedans (Nissan Maxima, Chevy Impala). **Best categories**: Trucks/SUVs -40-45%, Sports cars (Corvette, Wrangler) -35-40%, Hybrids (Prius) -42-48%.

**New car total cost** ($40,000 purchase): Year 0-5 depreciation -$24,000 (60%), Annual cost $4,800/year. **Used 3-year-old** ($22,000 purchase, $18,000 remaining depreciation): Year 0-5 depreciation -$11,000 (50% of remaining), Annual cost $2,200/year. **Savings**: $2,600/year buying used vs new. **Sweet spot**: 3-5 years old cars - past steepest depreciation, still reliable, certified pre-owned warranties available, 40-50% off new price. **2025 market factors**: Used car prices normalized (2021-2023 were inflated), interest rates 7-9% favor buying vs leasing, EV depreciation accelerating (battery tech improving), shortage of affordable new cars (under $30k). **Best strategy**: Buy 3-year-old Toyota/Honda/Subaru with under 40k miles, drive 7-10 years, sell before major repairs.

**Mileage depreciation impact**: Under 12,000 miles/year - normal depreciation, 12,000-15,000 miles/year - additional -5% value, 15,000-20,000 miles/year - additional -10-15%, Over 20,000 miles/year - additional -20-25%. **Example**: 5-year-old car worth $20,000 at 60k miles.

At 75k miles = $19,000 (-5%), At 90k miles = $17,000 (-15%), At 100k+ miles = $15,000 (-25%). **Optimal selling times**: Before 60,000 miles - before major depreciation hit, Before 100,000 miles - psychological barrier, buyers pay premium under 100k.

After warranty expires (3yr/36k or 5yr/60k) - repair costs increase value loss.

Before expensive maintenance (timing belt at 90-120k costs $800-$1,500). **Best strategy**: Sell at 5-7 years or 60-80k miles, before repairs exceed value, maximize depreciation curve.

**EV depreciation (2020-2025 models)**: Average -50-60% in 5 years vs -45% gas cars. **Reasons**: Battery degradation concerns (8-year warranties help), rapid tech improvements (newer EVs better range), federal tax credit changes (new vs used incentives), charging infrastructure expanding, range anxiety decreasing. **Tesla exception**: Model 3/Y depreciate -42-48% (better than average), brand loyalty strong, over-the-air updates, supercharger network. **Other EVs**: Chevy Bolt -58%, Nissan Leaf -62%, Ford Mustang Mach-E -52%, Rivian R1T -45% (new data). **2025 outlook**: EV depreciation improving as tech matures, battery warranties reducing risk, charging networks expanding, gas prices volatile. **Best EV strategy**: Lease don't buy (captures $7,500 credit + avoids depreciation), or buy used 3-year-old EV at 50% discount.

**Depreciation killers**: Aftermarket modifications -15-30% (lowered suspension, loud exhausts, body kits reduce buyer pool), Accident history -10-25% (even repaired, Carfax record), Unusual colors -5-15% (yellow, orange, purple vs white/black/silver), Smoker vehicle -5-10%, High performance mods void warranties. **Depreciation helpers**: Maintained service records +5-10%, One-owner vehicle +3-5%, Garage-kept +2-5%, Popular options (sunroof, heated seats, navigation). **Market timing**: Sell convertibles in spring/summer +10%, Sell 4WD/AWD before winter +8%, Avoid selling after model refresh -15%, Trade-in at dealership -15-20% vs private sale. **Best practices**: Keep original parts if modifying, maintain all service records, avoid smoking, repaint wild colors to neutral before selling, fix minor cosmetic issues (dents, scratches cost $500, lose $2,000 value).

**IRS Section 179 deduction (2025)**: Immediate expensing up to $1,220,000 for vehicles over 6,000 lbs GVWR (SUVs, trucks), $28,900 max for cars under 6,000 lbs. **Bonus depreciation**: 60% in year 1 (2025 rate, phasing out), applies to new and used vehicles. **MACRS depreciation** (if not Section 179): Year 1 20%, Year 2 32%, Year 3 19.2%, Year 4 11.52%, Year 5-6 remaining. **Example business vehicle** ($50,000 SUV, 100% business use): Section 179 deduct $50,000 in year 1, or MACRS: Year 1 $10,000, Year 2 $16,000, Year 3 $9,600. **Actual expense vs standard mileage**: Actual (depreciation + gas + insurance + maintenance), Standard $0.67/mile (2025), choose higher. **Best tax strategy**: Buy used heavy SUV (Suburban, Yukon) over 6,000 lbs, 100% business use, Section 179 full deduction year 1, sell after 3-5 years, repeat.