Depreciation Calculator
Build a depreciation schedule for any business asset with four methods, including the IRS MACRS tables for US tax returns.
Depreciation schedule
| Year | Depreciation | Accumulated | Book value |
|---|---|---|---|
| 1 | $9,000.00 | $9,000.00 | $41,000.00 |
| 2 | $9,000.00 | $18,000.00 | $32,000.00 |
| 3 | $9,000.00 | $27,000.00 | $23,000.00 |
| 4 | $9,000.00 | $36,000.00 | $14,000.00 |
| 5 | $9,000.00 | $45,000.00 | $5,000.00 |
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Depreciation spreads the cost of a business asset, such as a vehicle, machine, computer or building improvement, over the years it is used. The method you choose changes how much expense you record each year. This calculator builds a complete schedule with straight-line, double-declining balance, sum-of-the-years’ digits or MACRS, the IRS system used on US tax returns.
How to use the depreciation calculator
- Enter the asset’s cost: the purchase price plus delivery, installation and setup.
- Enter the salvage value: what you expect it to be worth at the end. MACRS ignores it.
- Choose the useful life, or the MACRS class for tax.
- Choose the method.
The results show the year 1 depreciation, the total depreciation and a full schedule with the yearly expense, accumulated depreciation and book value.
Depreciation formulas
Straight-line: the same amount each year.
annual depreciation = (cost − salvage) ÷ useful lifeDouble-declining balance: twice the straight-line rate, applied to the remaining book value. The calculator switches to straight-line when that gives a larger amount, and never goes below salvage.
depreciation = book value × 2 ÷ useful lifeSum-of-the-years’ digits: a declining fraction of the depreciable amount.
depreciation = (cost − salvage) × remaining life ÷ (1 + 2 + … + life)MACRS: the cost is multiplied by the IRS percentage for each year (general depreciation system, half-year convention).
Worked example
A machine costs $50,000, with a $5,000 salvage value and a 5-year life:
| Year | Straight-line | Double-declining | Sum-of-years | MACRS 5-year |
|---|---|---|---|---|
| 1 | $9,000 | $20,000 | $15,000 | $10,000 |
| 2 | $9,000 | $12,000 | $12,000 | $16,000 |
| 3 | $9,000 | $7,200 | $9,000 | $9,600 |
| 4 | $9,000 | $4,320 | $6,000 | $5,760 |
| 5 | $9,000 | $1,480 | $3,000 | $5,760 |
| 6 | — | — | — | $2,880 |
| Total | $45,000 | $45,000 | $45,000 | $50,000 |
All three book methods depreciate the same $45,000 (cost minus salvage), just at different speeds. MACRS depreciates the full $50,000 over six tax years, because of the half-year convention.
Choosing a method
- Straight-line is simple and predictable, and is the most common for financial statements.
- Double-declining balance front-loads the expense, which matches assets such as vehicles and electronics that lose value fastest when new.
- Sum-of-the-years’ digits is also accelerated, but less aggressive than double-declining.
- MACRS is required for most US business property on tax returns. Common classes: computers and cars are 5-year, office furniture is 7-year, and land improvements are 15-year.
Common mistakes
- Leaving setup costs out of the cost basis. Delivery and installation are part of the asset’s cost.
- Depreciating land. Land isn’t depreciated. Split the purchase price of property between land and building.
- Using MACRS tables for financial statements. MACRS is a tax system. Your books usually use straight-line.
- Ignoring first-year expensing. Section 179 and bonus depreciation can change your tax result a lot. Check the current-year limits.
To see what an asset purchase earns relative to its cost, use the ROI calculator. For a vehicle financed with a loan, the car loan calculator shows the payment.
Frequently asked questions
Which depreciation method should I use?
For financial statements, straight-line is the most common because it spreads cost evenly. Accelerated methods such as double-declining balance suit assets that lose value quickly. For US tax returns, most business property uses MACRS.
Why does MACRS have one more year than the asset's class?
Because of the half-year convention. MACRS assumes the asset was placed in service in the middle of the first year, so only half a year's depreciation is taken in year 1 and the remaining half year falls in the year after the class life ends.
Does salvage value matter for MACRS?
No. MACRS depreciates the full cost basis to zero, so salvage value is ignored. Straight-line, declining balance and sum-of-the-years' digits stop at the salvage value.
Can I deduct the whole cost in the first year?
In the US, Section 179 expensing and bonus depreciation may let you deduct much or all of an asset's cost in the year you buy it, subject to limits that change by year. This calculator shows regular depreciation; check current IRS rules or a tax professional for first-year expensing.