Depreciation Calculator
- Depreciated so far
- Book value left
Straight line spreads $45,000.00 evenly over 5 years.
How the depreciation calculation works
Yearly depreciation and book value for an asset by straight line or double declining balance for your books, or by the IRS MACRS percentage table for your tax return.
Straight line spreads the cost evenly
(Cost − salvage) ÷ useful life. A $50,000 asset with a $5,000 salvage value over 5 years depreciates $9,000 a year.
Double declining balance uses twice the straight-line rate
Over 5 years the straight-line rate is 20%, so DDB charges 40% of the remaining book value each year: $20,000 in year 1, then $12,000.
Book value is cost minus depreciation so far
After 3 straight-line years: $50,000 − 3 × $9,000 = $23,000.
Never depreciate below salvage
The schedule stops at the salvage value. With DDB, the final year takes book value exactly down to salvage.
MACRS uses the IRS percentage table
For taxes, multiply the cost by each year's rate from IRS Table A-1 (half-year convention). Salvage is ignored. 7-year property takes 14.29% in year 1, so a $50,000 asset gives $7,145, then 24.49% ($12,245) in year 2.
Worked example. A $50,000 asset with a $5,000 salvage value and a 5-year life depreciates $9,000 a year by straight line, so its book value after 3 years is $23,000. As 7-year MACRS property for taxes, the same asset gives deductions of $7,145, $12,245 and $8,745 in years 1 to 3, leaving a $21,865 tax basis.
Depreciation FAQ
How do you calculate straight-line depreciation?
Subtract the salvage value from the cost and divide by the useful life in years. ($50,000 − $5,000) ÷ 5 = $9,000 a year.
How does double declining balance work?
Multiply the book value at the start of each year by 2 ÷ useful life. It gives larger deductions early and smaller ones later.
What is the depreciation formula?
Straight line: (cost − salvage value) ÷ useful life. Double declining balance: book value at the start of the year × 2 ÷ useful life. MACRS: cost × the IRS table rate for that year.
How does the MACRS depreciation table work?
IRS Table A-1 (Publication 946, 2025 edition) gives a percentage of cost for each year under the half-year convention. 5-year property: 20%, 32%, 19.2%, 11.52%, 11.52%, 5.76%. 7-year property: 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, 8.92%, 8.93%, 4.46%. The half-year convention treats the asset as placed in service mid-year, so 5-year property is deducted over 6 tax years.
When must I use the mid-quarter convention instead?
When more than 40% of the depreciable basis of the property you placed in service during the year (not counting real estate) was placed in service in the last 3 months of the tax year. Then the IRS mid-quarter tables (A-2 to A-5) apply instead of the half-year table this calculator uses.
Can I deduct the whole cost in year 1 with Section 179 or bonus depreciation?
Often, yes. For tax years beginning in 2025 the Section 179 limit is $2,500,000, reduced once purchases pass $4,000,000 ($2,560,000 and $4,090,000 for 2026). The One Big Beautiful Bill Act restored 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. Whatever you deduct that way comes off the cost before MACRS. See Publication 946 and the Form 4562 instructions, or ask a tax adviser.
How do I calculate depreciation on a rental property?
Residential rental buildings use straight-line depreciation over 27.5 years under IRS rules, on the building's value only, since land isn't depreciated. See IRS Publication 527.
Which method should I use for my books?
Straight line suits assets that wear evenly, like furniture. Declining balance suits assets that lose value fast early on, like computers or vehicles.
Sources: IRS Publication 946: How to Depreciate Property · IRS Publication 527: Residential Rental Property · IRS Instructions for Form 4562 (2025)