Calculate depreciation using 6 methods: straight-line, double declining, sum-of-years, units of production, MACRS 5-year, and MACRS 7-year with full schedules.
Depreciation allocates the cost of a tangible asset over its useful life, reflecting the gradual consumption of economic value. It's simultaneously a key accounting concept (matching expenses to revenue periods), a tax strategy (accelerating deductions reduces taxable income), and a management tool (tracking asset values for replacement planning). Every business with fixed assets needs to calculate depreciation accurately.
This calculator supports six depreciation methods. Straight-line is the simplest and most common for financial reporting. Double declining balance and sum-of-years' digits are accelerated methods that front-load expenses. Units of production ties depreciation to actual usage. MACRS (Modified Accelerated Cost Recovery System) is the mandatory U.S. tax depreciation system — 5-year MACRS covers vehicles and computers, while 7-year covers equipment and furniture.
The choice of method significantly impacts reported profits and tax liability. Accelerated methods reduce taxable income in early years (time value of money benefit) but increase it later. This calculator lets you compare methods side-by-side and generates complete schedules for financial reporting, tax returns, and asset management.
Whether you're filing taxes, preparing financial statements, or planning equipment replacements, this calculator gives you the exact depreciation schedule under any method — with side-by-side comparisons to help you choose the approach that best serves your financial goals. Keep these notes focused on your operational context. Tie the context to the calculator’s intended domain. Use this clarification to avoid ambiguous interpretation.
Straight-Line: Annual = (Cost − Salvage) ÷ Life DDB: Annual = Book Value × (2 ÷ Life), floor at salvage SYD: Annual = (Cost − Salvage) × (Remaining ÷ ΣYears) Units: Annual = (Cost − Salvage) × (Used ÷ Total Units) MACRS 5-yr: 20%, 32%, 19.2%, 11.52%, 11.52%, 5.76% MACRS 7-yr: 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, 8.92%, 8.93%, 4.46%
Result: $6,429/year straight-line — $45,000 total over 7 years
Depreciable base = $50,000 − $5,000 = $45,000. Straight-line: $45,000 ÷ 7 = $6,429/year. DDB year 1 would be $14,286 (28.6% of cost). MACRS 7-year year 1 would be $7,145 (14.29%). Method choice significantly affects year-1 tax savings.
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In the U.S., you must use MACRS for federal tax purposes. MACRS prescribes specific recovery periods (5, 7, 15, 27.5, 39 years) and methods. You can also take Section 179 deductions or 100% bonus depreciation on qualifying assets.
Section 179 allows businesses to deduct the full cost of qualifying assets in the year of purchase (up to $1.16M in 2024), rather than depreciating over time. It's a powerful tax benefit for small businesses buying equipment, vehicles, or software.
MACRS assumes all assets are placed in service at the midpoint of the year, regardless of actual purchase date. This means year-1 depreciation is half of the normal first-year rate. That's why MACRS 5-year actually spans 6 calendar years.
No. Land is not depreciable because it does not wear out or become obsolete. When purchasing real estate, you must allocate the price between land (not depreciable) and the building (depreciable over 27.5 or 39 years).
You compare the selling price to the book value (cost minus accumulated depreciation). If you sell above book value, you recognize a gain (subject to depreciation recapture tax). Below book value = a deductible loss.
Tax methods (MACRS, Section 179) maximize early deductions to reduce current taxes. Book methods (usually straight-line) spread costs evenly for smoother reported earnings. The difference creates a "deferred tax liability" on the balance sheet.