About the Depreciation Calculator
This depreciation calculator spreads the cost of an asset — a vehicle, machine, computer, furniture or building improvement — over its useful life and produces a year-by-year schedule of depreciation expense, accumulated depreciation and book value. Pick a method, enter the cost, salvage value and useful life, and choose which year you want to see highlighted.
Straight-line gives the same expense every year and is the default for most financial statements. Declining-balance methods (double-declining and 150%) and sum-of-the-years’ digits front-load the expense, which better matches assets that lose value quickly. The declining-balance schedules switch to straight-line once that gives a larger deduction and never depreciate below salvage value.
For US tax returns, choose MACRS and a property class: the calculator applies the IRS general depreciation system percentages with the half-year convention from Publication 946 (salvage value is ignored under MACRS). It does not model Section 179 expensing, bonus depreciation or the mid-quarter convention, so confirm tax deductions with your tax preparer.
With the default inputs, the depreciation in selected year is $9,000.00. Change any value above to recalculate instantly.
How to use the depreciation calculator
- 1Enter the full cost of the asset, including delivery and installation.
- 2Enter the salvage value you expect at the end of its life.
- 3Set the useful life in years.
- 4Choose a depreciation method — or MACRS and a property class for US taxes.
- 5Pick the year to highlight and review the full schedule and chart.
Formula and method
Straight-line divides the depreciable base (cost minus salvage) evenly across the useful life. Declining balance applies a fixed rate — f ÷ L, where f is 2 for double-declining or 1.5 for 150% — to the opening book value each year; this calculator switches to straight-line on the remaining base when that becomes larger, and stops at salvage value, matching common accounting practice.
Sum-of-the-years’ digits multiplies the depreciable base by a shrinking fraction: remaining life over the sum of the years’ digits. MACRS multiplies the full cost basis by the IRS percentage for each recovery year (Pub 946 Table A-1, half-year convention), which is why a 5-year asset is depreciated over six tax years.
- C
- Asset cost (cost basis)
- S
- Salvage value
- L
- Useful life in years
- BV
- Book value at the start of the year
- f
- Declining-balance factor (2 or 1.5)
- y
- Year number
Worked examples
$50,000 equipment, straight-line over 5 years
The depreciable base is $50,000 − $5,000 = $45,000. Spread evenly over 5 years, that is $9,000 a year, leaving a book value of $41,000 after the first year and $5,000 at the end.
Double-declining balance, year 3
The DDB rate is 2 ÷ 5 = 40% of opening book value: $4,000 in year 1, $2,400 in year 2 and $1,440 in year 3, leaving $2,160. The final year is capped so book value ends exactly at the $1,000 salvage value.
MACRS 5-year property, year 2
MACRS ignores salvage. Year 1 is 20% of $30,000 ($6,000) and year 2 is 32% ($9,600), for $15,600 accumulated. The half-year convention stretches a 5-year class over six tax years.
Sum-of-the-years’ digits, 5-year life
The digits 1 to 5 sum to 15. Year 1 takes 5/15 of the $45,000 base ($15,000), year 2 takes 4/15 ($12,000), and so on down to 1/15 in year 5.
Frequently asked questions
What is the easiest depreciation method?+
Straight-line: subtract salvage value from cost and divide by the useful life. It produces the same expense every year and is the most common method for financial statements.
When should I use double-declining balance?+
Use it for assets that lose most of their value or usefulness early, such as vehicles and technology. It records larger expenses in the first years and smaller ones later, while total depreciation stays the same.
What is MACRS depreciation?+
MACRS (Modified Accelerated Cost Recovery System) is the method the IRS requires for most business property placed in service after 1986. Assets are assigned a recovery class (3, 5, 7, 10, 15, 20 years and longer for real property) with fixed yearly percentages.
Why does a 5-year MACRS asset take 6 years?+
The half-year convention treats assets as placed in service in the middle of the year, so you get half a year of depreciation in the first year and the remaining half year in the sixth tax year.
Does salvage value matter for tax depreciation?+
Not under MACRS — you depreciate the full cost basis to zero. Salvage value matters for book (financial-statement) depreciation under straight-line, declining-balance and sum-of-years’ methods.
Can I deduct the whole cost in the first year?+
In the US, Section 179 expensing (subject to an annual dollar limit) and bonus depreciation — made permanent at 100% for qualifying property acquired after January 19, 2025 — can let you deduct much or all of the cost of qualifying equipment in the year you place it in service. This calculator shows regular depreciation only.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.