Free depreciation calculator
Enter the asset cost, salvage value, and useful life — this depreciation calculator returns annual depreciation under the straight-line method plus IRS MACRS class reference, updated live, as you type.
On this page10 sections
| Year | Depreciation | Accumulated | Book value |
|---|---|---|---|
| 1 | $1,800 | $1,800 | $8,200 |
| 2 | $1,800 | $3,600 | $6,400 |
| 3 | $1,800 | $5,400 | $4,600 |
| 4 | $1,800 | $7,200 | $2,800 |
| 5 | $1,800 | $9,000 | $1,000 |
For illustration only. Tax depreciation (MACRS/Section 179) differs from book depreciation. Consult your accountant.
Results are estimates. Consult a professional.
How the depreciation calculator works
Depreciation allocates the cost of a long-lived asset across its useful life, matching the expense to the periods in which the asset generates revenue. The IRS, GAAP, and IFRS each recognize several methods — straight-line, declining balance, and sum-of-years-digits are the most common. The choice of method affects reported earnings, tax liability, and cash flow.
For U.S. tax purposes, most assets are depreciated under MACRS (Modified Accelerated Cost Recovery System), which uses a 200% declining balance rate in early years before switching to straight-line. Section 179 allows immediate expensing of qualifying assets up to $1.16 million (2024 limit), and bonus depreciation allows first-year deduction of a percentage of remaining cost.
Worked example: $25,000 machine, 5-year life
A business purchases manufacturing equipment for $25,000 with an estimated salvage value of $2,500 and a useful life of 5 years. The depreciable base is $22,500.
Annual straight-line depreciation by asset cost and useful life
The table shows annual straight-line depreciation for common asset costs and useful life classes under IRS MACRS. Values assume zero salvage value, as MACRS ignores salvage value. Life classes shown correspond to IRS MACRS property classes: 3-year (tractors), 5-year (computers, vehicles), 7-year (office furniture, machinery), 10-year (assets without a specific class), 15-year (land improvements), and 27.5-year (residential rental property).
| Asset Cost | 3 yr | 5 yr | 7 yr | 10 yr | 15 yr | 27.5 yr |
|---|---|---|---|---|---|---|
| $10,000 | $3,333 | $2,000 | $1,429 | $1,000 | $667 | $364 |
| $25,000 | $8,333 | $5,000 | $3,571 | $2,500 | $1,667 | $909 |
| $50,000 | $16,667 | $10,000 | $7,143 | $5,000 | $3,333 | $1,818 |
| $100,000 | $33,333 | $20,000 | $14,286 | $10,000 | $6,667 | $3,636 |
Source: IRS Publication 946; MACRS life classes; zero salvage value assumed
Tips for choosing a depreciation method
The depreciation method you choose for tax purposes can differ from the one used for financial reporting (book depreciation). Accelerated methods reduce taxable income now but also reduce future deductions — the benefit is the time value of money, not a permanent tax reduction.
- Use Section 179 for equipment you need to expense immediately — the 2024 limit is $1.16 million for qualifying business property, giving you a full deduction in the year of purchase.
- Apply bonus depreciation for large acquisitions — bonus depreciation (60% in 2024, phasing down) lets you deduct a large percentage of cost in year 1 for assets not covered by Section 179.
- Match book and tax depreciation where possible for small businesses — maintaining two sets of depreciation schedules adds accounting complexity; consult a CPA on whether the tax savings justify it.
- Track asset disposal dates carefully — selling a depreciated asset before the end of its useful life may trigger depreciation recapture (ordinary income tax on prior deductions), not just capital gains.
- Use the 27.5-year class consistently for residential rental — mixing property classes for a rental portfolio triggers IRS scrutiny; document every asset and its class when you place it in service.
Accuracy and limitations
This calculator uses generalized straight-line, declining balance, and sum-of-years-digits formulas. Actual MACRS deductions depend on the asset's placed-in-service date, the applicable half-year or mid-quarter convention, bonus depreciation elections, and Section 179 limits — all of which can alter first-year deductions significantly from the straight-line benchmark.
This calculator is for educational and planning purposes only and does not constitute tax or financial advice. Not financial advice — depreciation rules change frequently via tax legislation; Section 179 limits, bonus depreciation phase-downs, and MACRS class lives should always be verified against current IRS guidance. Consult a CPA or tax professional before filing Form 4562 or making depreciation method elections.
Depreciation terms defined
About this depreciation calculator
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