Depreciation Calculator (MACRS)
Calculate annual depreciation deductions using the Modified Accelerated Cost Recovery System (MACRS), the most common method for business assets.
Calculate Depreciation
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How It Works
MACRS spreads asset costs over predefined recovery periods using IRS tables.
Common Recovery Periods
| Period | Examples |
|---|---|
| 5-Year | Computers, vehicles, office equipment, copiers |
| 7-Year | Office furniture, machinery, most equipment |
| 15-Year | Land improvements (parking lots, landscaping) |
| 27.5-Year | Residential rental property (buildings only) |
| 39-Year | Commercial buildings (non-residential) |
Half-Year Convention
Most personal property uses the half-year convention—assets are treated as placed in service at mid-year. This means you get half a year's depreciation in the first and last years.
Frequently Asked Questions
MACRS vs Section 179?
Section 179 deducts the full cost in year one. MACRS spreads it over
multiple years. You can often use both together—Section 179 first, then depreciate any
remaining basis.
What about bonus depreciation?
Bonus depreciation allows immediate expensing of a percentage
(currently phasing down from 100%). Applied after Section 179 and before regular MACRS.
What if I sell the asset early?
You may need to recapture depreciation as ordinary income
(depreciation recapture). The rules differ for personal property vs real estate.
Can I use straight-line instead?
Yes, you can elect straight-line depreciation over the same or
longer recovery periods. This may be beneficial if you expect higher income in future years.
What's the mid-quarter convention?
Required when more than 40% of property is placed in service in the
last quarter. Calculates depreciation based on quarter placed in service rather than
mid-year.
How do I depreciate a vehicle?
Vehicles are 5-year property but have annual depreciation limits
(luxury auto limits). Heavy vehicles over 6,000 lbs GVWR have different rules—often more
favorable.
Use Cases
- Generating MACRS depreciation schedules for business equipment and property
- Comparing depreciation methods (GDS vs ADS, declining balance vs straight-line)
- Estimating annual depreciation deductions for tax planning and cash flow projections
- Calculating remaining depreciable basis after Section 179 or bonus depreciation
- Understanding recovery periods for different asset classes (vehicles, computers, buildings)
Assumptions & Limitations
- Uses MACRS (Modified Accelerated Cost Recovery System) as the primary depreciation method
- Applies the half-year convention by default (asset placed in service mid-year)
- Does not automatically apply the mid-quarter convention when required
- Bonus depreciation percentage depends on the year the asset was placed in service
- Land is not depreciable; only the building or improvement portion can be depreciated
- Does not calculate depreciation recapture when the asset is sold or disposed of
Sources & References
- IRS Publication 946 — How to Depreciate Property (MACRS tables and rules)
- IRS Form 4562 Instructions — Depreciation and Amortization
- IRS Publication 535 — Business Expenses (depreciation section)
- IRS Publication 463 — Travel, Gift, and Car Expenses (vehicle depreciation limits)
- IRS Section 179 — First-year expensing alternative to depreciation
Disclaimer: This calculator provides estimates for educational purposes only. It does not constitute tax advice. Consult a qualified tax professional for advice specific to your situation.