Depreciation Calculator

What is a depreciation calculator?

A depreciation calculator spreads the cost of a business asset over the years it is used. For your books it applies a method you choose (straight-line, declining balance, sum-of-years’-digits or units of production); for a US federal return it applies MACRS, the IRS system of recovery periods and percentage tables, with Section 179 and bonus depreciation first.

The two schedules differ on purpose. Book depreciation under FASB ASC 360 follows the pattern in which the asset is used up, over the useful life you estimate, down to its salvage value. Tax depreciation under IRC 168 follows statute: fixed recovery periods, no salvage value and, in 2026, an immediate write-off for most new equipment. The gap between them is a timing difference, not an error.

How do you calculate straight-line depreciation?

Subtract the salvage value from the cost and divide by the useful life. A $10,000 asset with a $1,000 salvage value and a five-year life depreciates $9,000 ÷ 5 = $1,800 a year, leaving $1,000 of book value after year 5; these are the calculator’s defaults.

If the asset arrives part-way through the year, enter the months in service: with 6 months, year 1 is $900 and a sixth, stub year takes the last $900.

Straight-line suits assets that wear evenly: buildings, furniture, most office equipment. It is the method most small businesses use for their books because it is easy to audit and explain.

How does double declining balance depreciation work?

Declining balance charges a fixed rate on the book value that is left, so the charge is largest in year 1. Double declining balance uses twice the straight-line rate: 2 ÷ 5 years = 40%. A $10,000 computer with no salvage value depreciates $4,000, then $2,400, then $1,440.

In year 4 straight-line on what is left ($2,160 over 2 years = $1,080) is more than 40% of $2,160 ($864), so the schedule switches and finishes with $1,080 in years 4 and 5.

The 150% version uses 1.5 ÷ life. Sum-of-years’-digits is another accelerated pattern: for five years the fractions are 5/15, 4/15 … 1/15, so $9,000 of depreciable base gives $3,000, $2,400, $1,800, $1,200 and $600. Units of production ties the charge to output instead of time, which fits machines whose wear follows use.

How does MACRS depreciation work in 2026?

The Modified Accelerated Cost Recovery System assigns each asset a recovery period (Pub 946 Appendix B): 5 years for cars, computers and light trucks, 7 years for office furniture and most machinery, 15 years for land improvements, 27.5 years for residential rental buildings and 39 years for nonresidential buildings.

Personal property uses 200% declining balance switching to straight-line (150% for 15- and 20-year property) and, by default, the half-year convention, which is why 5-year property is deducted over six tax years: 20%, 32%, 19.2%, 11.52%, 11.52% and 5.76%.

If more than 40% of the year’s personal-property basis was placed in service in the last quarter, the mid-quarter convention is required (IRC 168(d)(3)). Enter that last-quarter basis in Advanced and the calculator applies the test, then asks which quarter this asset went into service, because the quarter picks the table: for 7-year property, year 1 is 25.00% in the first quarter, 17.85% in the second, 10.71% in the third and 3.57% in the fourth. When the last-quarter basis is the whole year’s, the asset can only be a fourth-quarter one and the page uses that column itself: a $10,000 5-year asset placed in service in the fourth quarter gets 5% ($500) in year 1 instead of 20%. Real property always uses straight-line with the mid-month convention, so the month matters: a $275,000 rental building placed in service in July deducts $4,584.25 in year 1 and $9,999.00 in a full year.

Section 179 or bonus depreciation: which applies in 2026?

Section 179 lets you elect to expense qualifying property in the year it is placed in service. For tax years beginning in 2026 the limit is $2,560,000, reduced dollar for dollar once the Section 179 property you place in service in the year exceeds $4,090,000, so it disappears at $6,650,000 (Rev. Proc. 2025-32).

It cannot exceed your taxable business income, a limit this calculator does not see. Bonus depreciation (the special depreciation allowance of IRC 168(k)) is applied after Section 179 to the basis that is left. The One Big Beautiful Bill Act (P.L. 119-21) restored it to 100% for qualified property acquired after 19 January 2025, and it applies automatically unless you elect out for a class of property. Property acquired before 20 January 2025 but placed in service in 2026 keeps the old phase-down rate of 20%. With 100% bonus, a $48,000 machine is fully deducted in 2026; elect out and the 7-year table gives $6,859.20 in year 1 and $11,755.20 in year 2.

Passenger cars are capped by IRC 280F whichever way you go. For a car placed in service in 2026 the caps are $20,300 in year 1 with bonus ($12,300 without), $19,800 in year 2, $11,900 in year 3 and $7,160 a year after that (Rev. Proc. 2026-15). This calculator does not recommend an election; it shows each choice’s schedule.

What doesn't this depreciation calculator do?

It does not model the Alternative Depreciation System, the business-income limit on Section 179, the $32,000 Section 179 limit for heavy SUVs, listed-property business-use tests, short tax years, dispositions and recapture, or state rules (many states do not follow federal bonus depreciation). Car resale value, sometimes also called car depreciation, is a market question this page does not answer.

The figures are estimates for planning; your return is prepared from Form 4562 and its instructions.