What is MACRS depreciation?
This MACRS depreciation calculator turns what you paid for a business asset into the federal tax deduction for every year you're allowed to take one. Type the cost, pick the property class, and the full schedule appears, year by year, in dollars.
MACRS stands for the Modified Accelerated Cost Recovery System. It's how US tax law spreads the cost of business property over time. You don't guess how long a laptop will last. The law files it in a class (5-year, in the laptop's case), and IRS Publication 946 prints the percentage you deduct each year. It covers most property placed in service since 1987.
The "accelerated" part matters. Equipment front-loads its deductions: a $10,000 machine in the 5-year class deducts $3,200 in its second year and only $576 in its last. Buildings don't get that treatment. A $275,000 rental house deducts about $10,000 a year for 27.5 years, flat.
That split is why the question comes up so often. Landlords, freelancers who bought a camera, contractors who bought a truck, bookkeepers closing someone else's year: they all end up on Form 4562 with the same question. What do I deduct this year, and what's left for later?
How to use the MACRS depreciation calculator
- Type the cost basis. That's the price plus sales tax, delivery and installation. For a building, leave out the land. Land never depreciates.
- Pick the property class. Each option lists common examples: computers and cars are 5-year, office furniture is 7-year, a residential rental is 27.5-year.
- Leave the convention on Half-year unless the mid-quarter rule applies to you (more on that below). For 27.5- and 39-year property, the convention menu becomes a month menu. Pick the month the building went into service.
- Check the year placed in service. It starts at the current year, and the table's first row is that year.
- If you're taking Section 179 or bonus depreciation, open the Section 179 / bonus panel and fill in the amounts.
- Read the first-year deduction at the top, then the full schedule below it. Copy as CSV drops the whole table into a spreadsheet.
There's no Calculate button. The schedule redraws as you type. There's also no account, no trial and no "book a demo to see year 2." A depreciation schedule shouldn't need a fixed-asset module rented per seat, per month, or an email form standing between you and year two. This one is the whole schedule, on the first screen.
How MACRS depreciation works
There are two methods, and the property class decides which one you get.
Equipment and other personal property (3 to 20 years)
Deduction for year N = MACRS base × Pub 946 table rate for year N
The MACRS base is your cost minus any Section 179 and bonus. The rate comes from a table. Behind the tables sits 200% declining balance (150% for the 15- and 20-year classes), switching to straight line once that gives more. The IRS rounds every rate and prints the result. The MACRS depreciation calculator uses the printed tables as constants, digit for digit, so its numbers match what a preparer checks against.
A worked example. You buy a $2,400 laptop for the business, half-year convention. Table A-1's 5-year column is 20.00, 32.00, 19.20, 11.52, 11.52 and 5.76 percent, so the schedule reads:
- Year 1: $480.00
- Year 2: $768.00
- Year 3: $460.80
- Years 4 and 5: $276.48 each
- Year 6: $138.24
That's six tax years for a 5-year asset. The half-year convention treats everything as placed in service mid-year, so the last half-year spills into year six.
Buildings (27.5 and 39 years)
Year-1 deduction = basis × (12 − month + 0.5) ÷ 12 ÷ recovery period
Rental and commercial buildings use straight line with the mid-month convention. The building counts as placed in service halfway through its month. A $275,000 rental that goes into service in January gets 11.5 months in year one: $275,000 × 11.5 ÷ 330 = $9,583.33. Every full year after that is $10,000.00, and the 28th row picks up the last $5,416.67. The calculator counts in half-months, so no rounding creeps in along the way.
Section 179 and bonus come off before any of this. On $45,000 of 5-year equipment with 40% bonus, bonus takes $18,000, MACRS runs on the remaining $27,000, and year one totals $23,400.00 ($18,000 bonus plus $5,400 of MACRS).
Common MACRS schedules
Here's $10,000 of personal property under the half-year convention, class by class. It's handy for sanity-checking a return, or for deciding which class an asset belongs in before you commit to one.
| Class | Typical assets | Year 1 | Year 2 | Tax years on schedule |
|---|---|---|---|---|
| 3-year | Tractor units, some manufacturing tools | $3,333.00 | $4,445.00 | 4 |
| 5-year | Cars, computers, office equipment | $2,000.00 | $3,200.00 | 6 |
| 7-year | Office furniture, fixtures, most machinery | $1,429.00 | $2,449.00 | 8 |
| 10-year | Boats, fruit trees | $1,000.00 | $1,800.00 | 11 |
| 15-year | Fences, paving, landscaping | $500.00 | $950.00 | 16 |
| 20-year | Farm buildings, water utility property | $375.00 | $721.90 | 21 |
Under the half-year convention, year two is always bigger than year one. The convention hands you half a year up front, then the declining-balance rate hits a full year of undepreciated cost.
Timing moves the first year more than most people expect. Here's the same $10,000 of 5-year property under each convention, next to a $275,000 rental placed in service in different months:
| 5-year property, $10,000 | Year 1 | 27.5-year rental, $275,000 | Year 1 |
|---|---|---|---|
| Half-year | $2,000.00 | January | $9,583.33 |
| Mid-quarter, Q1 | $3,500.00 | April | $7,083.33 |
| Mid-quarter, Q2 | $2,500.00 | July | $4,583.33 |
| Mid-quarter, Q3 | $1,500.00 | October | $2,083.33 |
| Mid-quarter, Q4 | $500.00 | December | $416.67 |
That $500 in the Q4 row is the reason the mid-quarter rule exists. If more than 40% of the year's equipment, by cost, went into service in October through December, you can't claim a half-year on it. The deductions don't disappear. They slide into later years. A December rental works the same way: $416.67 in year one, and the schedule runs 29 rows instead of 28.
Edge cases and limitations
The MACRS depreciation calculator does the Pub 946 math exactly. It doesn't make the judgment calls around it. If a number looks off, check these first:
- Section 179 limits aren't checked. There's an annual dollar cap and a business-income limit. Type more than the asset cost and the calculator caps it at the cost and says so. It won't tell you whether you qualify for the amount.
- Cars have their own caps. Passenger vehicles face annual depreciation limits that can sit well below the table amount. The schedule shows the unlimited MACRS figure.
- Business use is assumed to be 100%. If you use the asset half the time for work, multiply the cost by your business-use percentage before you type it in.
- General Depreciation System only. The Alternative Depreciation System and the 150% election aren't here yet.
- Buildings ignore Section 179 and bonus. Switch to 27.5 or 39 years and both fields grey out. Your values stay put, so switching back restores them.
- Tiny amounts stay honest. If Section 179 leaves a few cents, the last rows read $0.00, never a negative, and the column still adds up to what you paid.
If you're stuck on which class an asset belongs in, start with the examples on each option, then check Pub 946's class-life table. If that still leaves you unsure, a tax professional can settle it in one conversation. The calculator is the math, not tax advice.
Related calculations
Depreciation rarely travels alone. If you're financing the asset, the amortization calculator splits each loan payment into interest and principal. Interest is a separate deduction from depreciation. For a rental, the rental yield calculator shows what the property returns before tax. The cap rate calculator compares it against other properties on the same footing. And if you want to know what your car will sell for in five years, not what you can deduct, that's the car depreciation calculator. It tracks market value, which has nothing to do with the IRS tables.
Frequently asked questions
What's the difference between MACRS and straight-line depreciation?
Straight line deducts the same amount every year. MACRS on equipment deducts more in the early years and less later, using declining balance until straight line catches up. Buildings are the exception: 27.5- and 39-year property is straight line under MACRS too, apart from a partial first and last year.
What happens if I sell the asset before the schedule ends?
You stop depreciating it in the year you dispose of it. Under the half-year convention you generally get half of that year's table deduction. Any gain up to the depreciation you've already taken is usually taxed as recapture. The calculator shows the full schedule and doesn't model a sale, so stop reading at your disposal year.
Can I use MACRS for something I bought before 1987?
No. Property placed in service before 1987 falls under the older ACRS rules, or earlier ones. That's why the year field accepts 1987 through 2100 and nothing outside it.
Does my state follow the same depreciation?
Not always. Many states don't follow federal bonus depreciation, and some cap Section 179 lower than the federal rules. Run a second schedule in the MACRS depreciation calculator with bonus set to 0 to see the plain MACRS version your state return may need.
Can I export the schedule to a spreadsheet?
Yes. Copy as CSV puts the whole table on your clipboard with the header row Year, Line, Rate %, Deduction, Remaining basis. The numbers are plain decimals with no thousands separators, so they paste into any spreadsheet as numbers, not text.
Does the calculator store what I type?
No. The MACRS depreciation calculator runs the math in your browser, and nothing about your assets is saved or sent anywhere. Close the tab and it's gone. For a record, copy the CSV into your own books.