Depreciation Calculator

Calculate asset depreciation using straight-line, double declining balance, or MACRS methods. View a year-by-year depreciation schedule.

Asset Information

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Estimated value at end of useful life

Enter your asset details and click Calculate to see the depreciation schedule.

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Pro Tip

For tax purposes, Section 179 expensing or bonus depreciation may allow you to deduct the entire cost of the asset in the first year, which is often more beneficial than standard MACRS depreciation.

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Understanding Depreciation Methods

Depreciation allocates the cost of a tangible asset over its useful life. It represents the decline in value due to wear, obsolescence, or age, and is a non-cash expense that reduces taxable income.

Straight-line depreciation spreads the cost evenly over the useful life. It is the simplest method and is used in GAAP financial reporting. The formula is (Cost - Salvage Value) / Useful Life.

Double declining balance (DDB) is an accelerated method that front-loads more depreciation in earlier years. The rate is 2/useful life, applied to the declining book value. This method provides larger tax deductions in the early years of asset ownership.

MACRS (Modified Accelerated Cost Recovery System) is required for U.S. tax purposes. It uses prescribed recovery periods (e.g., 5 years for vehicles, 7 years for office equipment, 27.5 years for residential rental property) and applies a half-year convention in the first and last year.

Depreciation Formulas

Straight-Line: D = (Cost - Salvage) / Life
DDB: D = Book Value × (2 / Life)

Where:

D = Annual depreciation expense

Cost = Original purchase price of the asset

Salvage = Estimated value at end of useful life

Life = Useful life in years

Book Value = Cost minus accumulated depreciation

Example

Equipment costing $50,000, salvage $5,000, 7-year life:

  • • Straight-line: ($50,000 - $5,000) / 7 = $6,428.57/year
  • • DDB Year 1: $50,000 x (2/7) = $14,285.71
  • • DDB Year 2: $35,714.29 x (2/7) = $10,204.08
  • • MACRS 7-year: Year 1 = $50,000 x 14.29% = $7,145

Frequently Asked Questions

Which depreciation method should I use?
For tax purposes, most businesses must use MACRS. For financial reporting (GAAP/IFRS), straight-line is most common due to its simplicity and even expense recognition. Accelerated methods like DDB can be used if an asset loses value faster in early years.
What is salvage value?
Salvage value (or residual value) is the estimated amount the asset will be worth at the end of its useful life. For MACRS, salvage value is assumed to be zero. For straight-line and DDB, you subtract salvage value from cost to get the depreciable basis.
What is the MACRS half-year convention?
Under the half-year convention, all assets are treated as if they were placed in service at the midpoint of the year, regardless of actual purchase date. This means you get half a year of depreciation in the first year and the remaining half in the year after the recovery period ends.
Can I switch depreciation methods?
DDB often switches to straight-line in later years when straight-line produces a larger deduction. This is done automatically in most MACRS tables. However, you generally cannot change the depreciation method for tax purposes without IRS permission.
What is Section 179 and how does it differ from depreciation?
Section 179 allows you to deduct the full cost of qualifying assets (up to $1,160,000 for 2024) in the year of purchase, rather than spreading it over multiple years. Bonus depreciation is similar but allows 60% immediate expensing in 2024 (phasing down annually).