π Depreciation Calculator
Yearly depreciation schedules: straight-line, declining balance, and MACRS.
Depreciation Expense
Estimates for planning only, not financial advice. MACRS rates are the standard IRS tables.
How to Use This Calculator
Enter the asset\'s cost, its expected salvage value at the end of its life, and the useful life in years, then pick a depreciation method. The calculator builds the full year-by-year schedule showing each year\'s expense, accumulated depreciation, and remaining book value.
Enter the Asset Cost (what you paid, including delivery and installation) and the Salvage Value (what you expect it to be worth when you retire it). Salvage cannot exceed cost.
Enter the Useful Life in years. This is an accounting estimate of how long the asset will serve the business, not necessarily the IRS recovery period.
Pick a Method: Straight-Line for even wear, Double Declining Balance for fast early write-offs, 150% Declining Balance as a middle ground, or MACRS 5/7-Year for US tax estimates.
Review the schedule. Note the first-year and total depreciation, and download the CSV for your books or tax preparer.
The Depreciation Formulas
Straight-line is simple arithmetic: the depreciable base (cost minus salvage) split evenly. Declining balance compounds in reverse: each year takes a fixed percentage of whatever book value remains, which is why year 1 is huge and the tail is tiny. The method switches to straight-line math implicitly in the final year by capping depreciation at the salvage value, so the book value lands exactly on salvage. MACRS works differently: it applies fixed IRS percentages to the full cost, ignores salvage, and uses a half-year convention, so a 5-year asset actually depreciates over 6 calendar years (20.00, 32.00, 19.20, 11.52, 11.52, then 5.76 percent).
Worked Example
$10,000 machine, $1,000 salvage value, 5-year life. Straight-line: (10000 - 1000) / 5 = $1,800 every year, total $9,000 over 5 years. Double declining balance at 40 percent per year: year 1 = $4,000 (book value $6,000), year 2 = $2,400 ($3,600), year 3 = $1,440 ($2,160), year 4 = $864 ($1,296), year 5 is capped at $296 so the book value lands exactly on the $1,000 salvage. Total is still $9,000, but $6,400 of it lands in the first two years. MACRS 5-year on the same $10,000: year 1 = 20% = $2,000, year 2 = 32% = $3,200, then $1,920, $1,152, $1,152, and $576 in year 6, totaling the full $10,000 with no salvage.
Depreciation and Your Taxes
Depreciation is one of the few expenses that lowers your tax bill without costing cash in the year you claim it, which is why method choice matters. Accelerated methods like DDB and MACRS push deductions into the early years, when the money is usually tightest after a big purchase. But the total deduction over the asset\'s life is the same under every method (except MACRS, which takes salvage too), so accelerated depreciation is a timing benefit, not a bigger benefit. Also note that US tax law offers Section 179 and bonus depreciation, which can let you expense qualifying assets immediately instead of depreciating them at all. Talk to your tax preparer before choosing, because the right answer depends on your income, entity type, and the current tax year\'s rules.
Estimates for planning only, not financial advice.
Frequently Asked Questions
What is depreciation?
Depreciation spreads the cost of a long-lived asset, like equipment, vehicles, or buildings, across the years it helps produce income. It is a non-cash expense: it reduces reported profit and taxes without spending new money. The IRS requires most business assets to be depreciated over set recovery periods rather than deducted all at once.
What is the difference between straight-line and declining balance?
Straight-line divides (cost minus salvage value) evenly across the asset's life, giving the same expense every year. Declining balance applies a fixed percentage to the shrinking book value each year, so depreciation is heaviest early and fades over time. On a $10,000 asset with $1,000 salvage and a 5-year life, straight-line gives $1,800 every year, while double declining balance gives $4,000 in year 1 and only $296 in year 5.
What is MACRS?
MACRS, the Modified Accelerated Cost Recovery System, is the depreciation method US tax law requires for most business assets. It uses IRS-set percentages and recovery periods (3, 5, 7, 10, 15, 20, or 27.5 years) and ignores salvage value. This calculator includes the standard 5-year and 7-year MACRS tables using the half-year convention, where the asset is treated as placed in service mid-year.
Why does the schedule never depreciate below salvage value?
Salvage value is your estimate of what the asset will be worth at the end of its useful life, and accounting rules say the book value cannot go below it. Accelerated methods are capped in the final year so the remaining book value lands exactly on salvage. MACRS is the exception: it ignores salvage entirely and depreciates the full cost, because tax law, not accounting theory, defines it.
Which method should I choose?
Use straight-line for financial reporting when the asset loses value evenly, like office furniture. Use declining balance or MACRS when the asset loses value fastest early on, like vehicles and computers, because the bigger early deduction matches reality and reduces early-year taxes. For tax returns, MACRS is usually mandatory in the US; for internal books, pick the method that best matches how the asset actually wears out.