Business Depreciation Calculator
Calculate the annual depreciation deduction for a business asset using straight-line, double declining balance, or MACRS methods. Helpful at tax time or when budgeting asset replacement costs.
Last updated: September 2026
Formula below · 1 source (IRS) · Updated Sep 2026
Compare with similar
About this calculator
Depreciation spreads the cost of a business asset over its useful life. Three methods are supported, each for the year you enter. Straight-Line: (assetCost − salvageValue) / usefulLife each year, and $0 after the last year. Double Declining Balance: each year deducts 2 / usefulLife of the remaining book value, switching to straight-line over the remaining years once that gives a larger deduction, and never taking book value below salvage; year 1 is assetCost × 2 / usefulLife. MACRS (the method the IRS requires for most business property placed in service after 1986): the Useful Life field is read as the recovery period (3, 5, 7, 10, 15 or 20 years; other values round up to the next class) and the deduction is assetCost × the IRS table percentage for that year under the half-year convention (IRS Publication 946, Table A-1). For example, 5-year property deducts 20%, 32%, 19.2%, 11.52%, 11.52% and 5.76% over six tax years, and 7-year property 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, 8.92%, 8.93% and 4.46% over eight; salvage value is ignored. Not modeled: the mid-quarter convention (required when more than 40% of the year's purchases are placed in service in the last quarter), real property (27.5- or 39-year straight-line, mid-month), and Section 179 or bonus depreciation, which can allow full first-year expensing instead.
How to use
Say you purchase equipment for $50,000 with a $5,000 salvage value and a 7-year life. Straight-line: ($50,000 − $5,000) / 7 ≈ $6,428.57 per year for years 1-7. Double declining balance: Year 1 = $50,000 × 2/7 ≈ $14,285.71; Year 2 = ($50,000 − $14,285.71) × 2/7 ≈ $10,204.08, and the deduction keeps declining until straight-line on the remaining balance is larger. MACRS 7-year property: Year 1 = $50,000 × 14.29% = $7,145; Year 2 = $50,000 × 24.49% = $12,245; Year 8 = $50,000 × 4.46% = $2,230. Enter the year in the Year field to see each year's deduction.
Frequently asked questions
What is the difference between straight-line and double declining balance depreciation?
Straight-line depreciation deducts an equal amount every year over the asset's useful life, making it simple and predictable. Double declining balance (DDB) front-loads deductions, giving you a larger write-off in the early years and smaller ones later. DDB is beneficial when you want to reduce taxable income quickly or when assets lose value faster at the start. However, DDB switches to straight-line once the straight-line amount exceeds the declining balance amount to ensure full cost recovery.
What is MACRS depreciation and when does the IRS require it?
MACRS (Modified Accelerated Cost Recovery System) is the depreciation system the IRS requires for most business property placed in service after 1986. It assigns assets to recovery periods (for example, 5-year for computers, cars and light trucks; 7-year for office furniture and most machinery) and uses IRS percentage tables. Under the usual half-year convention, an asset is treated as placed in service in the middle of the first year, so 5-year property is deducted over six tax years: 20%, 32%, 19.2%, 11.52%, 11.52% and 5.76%. Residential rental buildings use 27.5-year straight-line and commercial buildings 39-year straight-line with a mid-month convention, which this calculator does not cover.
How does salvage value affect my depreciation deduction?
Salvage value is the estimated residual worth of an asset at the end of its useful life. Under straight-line depreciation, salvage value is subtracted from the asset cost before dividing by useful life, which reduces the total deductible amount. For MACRS and double declining balance methods, salvage value is generally ignored because the IRS tables already account for recovery limits. Accurately estimating salvage value matters most when using straight-line, as overestimating it reduces your annual tax deduction.