Depreciation Calculator

About the Depreciation Calculator

Depreciation is the accounting method of allocating the cost of a tangible asset over its useful life, and it directly affects your business taxes by reducing taxable income each year. Our depreciation calculator supports straight-line depreciation, declining balance (double declining balance), sum-of-years-digits, and MACRS — the method required by the IRS for most US business assets.

How It Works

Straight-line: Annual Depreciation = (Cost − Salvage Value) ÷ Useful Life. A $50,000 machine with $5,000 salvage value over 5 years depreciates $9,000/year. Double Declining Balance: Annual Depreciation = (2 ÷ Useful Life) × Book Value at start of year. This front-loads deductions, benefiting cash flow. MACRS uses IRS-specified recovery periods and percentages — most equipment uses 5 or 7-year MACRS.

Tips & Best Practices

• ✓Section 179 deduction allows immediate expensing of up to $1.16 million in qualified assets in 2025.
• ✓Bonus depreciation (100% in 2022, phasing down) allows additional first-year deductions.
• ✓MACRS 5-year property includes cars, computers, and similar equipment.
• ✓Real property uses 27.5-year (residential) or 39-year (commercial) straight-line depreciation.
• ✓Cost segregation studies can accelerate depreciation on commercial real estate by reclassifying components.

Who Uses This Calculator

Small business owners managing their tax liability, accountants preparing business tax returns, CFOs modeling capital expenditure decisions, and investors evaluating real estate depreciation benefits all use depreciation calculations regularly.