Build a depreciation schedule from the IRS MACRS tables, with Section 179 and bonus depreciation, or use straight-line, declining balance or sum-of-years.
Section 179 and bonus depreciation are claimed before the MACRS table. Limits shown are for tax year 2026.
IRS Publication 946, Table A-1 — half-year convention, 200% declining balance switching to straight line (150% for 15- and 20-year property).
| Year | Rate |
|---|---|
| 1 | 20.000% |
| 2 | 32.000% |
| 3 | 19.200% |
| 4 | 11.520% |
| 5 | 11.520% |
| 6 | 5.760% |
Tax year 2026. Section 179 figures from IRS Rev. Proc. 2025-32 § 4.24; the 100% bonus rate was reinstated by P.L. 119-21.
| Limit | Amount |
|---|---|
| Maximum Section 179 deduction | $2,560,000 |
| Phase-out begins at | $4,090,000 |
| Fully phased out at | $6,650,000 |
| Bonus depreciation rate | 100% |
Estimates for planning only, not tax advice. Section 179 is limited by your taxable business income, the phase-out is measured across every asset you place in service that year, and the mid-quarter convention may apply if more than 40% of the year's basis is placed in service in the last three months. Confirm your figures on Form 4562 with a tax professional.
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Depreciation spreads the cost of a business asset across the years it earns its keep. This calculator runs the actual IRS percentage tables from Publication 946 — half-year for equipment, mid-month for buildings — and applies the two first-year elections that usually decide the answer: Section 179 expensing and bonus depreciation. It also handles the book methods your accountant uses for financial statements: straight-line, declining balance and sum-of-years' digits.
Depreciation allocates the cost of a tangible asset over its useful life instead of expensing it all at once. For US tax purposes that allocation follows MACRS, the Modified Accelerated Cost Recovery System, which assigns every asset a recovery period and a published percentage table. Land is never depreciated. Intangible assets such as patents are amortized under different rules. Book depreciation, used for financial statements under GAAP, is a separate calculation that may use a different method and a salvage value MACRS ignores entirely.
Straight-Line Depreciation Formula
Machinery, computers and furniture run 3 to 7 years under MACRS, and bonus depreciation can expense the lot in year one.
Most cars and light trucks are 5-year property. Passenger vehicles also face separate annual luxury-auto caps not modelled here.
Buildings depreciate straight-line over 27.5 years on the mid-month convention. Land is excluded, so allocate the purchase price first.
Nonresidential buildings run 39 years, also mid-month. Neither Section 179 nor bonus depreciation applies to the building itself.
Straight-line, declining balance and sum-of-years' digits produce the book depreciation your GAAP statements report.
Section 179 and bonus depreciation can write off the whole purchase in year one. The calculator shows what each election is worth before you commit.
Equipment takes the half-year convention; buildings take mid-month, and their first-year rate depends on the month you placed them in service.
The schedule gives you the recovery period, convention, method and yearly deduction that Form 4562 asks for, line by line.
Every year shows beginning value, deduction, accumulated depreciation and remaining basis, so you know the gain or loss when you sell.
Switch between MACRS and the three book methods on the same asset to see how far the two schedules diverge.
For tax years beginning in 2026 the maximum Section 179 deduction is $2,560,000, per IRS Rev. Proc. 2025-32. It is reduced dollar for dollar once the cost of Section 179 property placed in service that year passes $4,090,000, so it disappears entirely at $6,650,000. The deduction is also capped at your taxable income from the active conduct of a trade or business, and the cost of a sport utility vehicle counted toward it cannot exceed $32,000.
Yes. P.L. 119-21, the One Big Beautiful Bill Act, reinstated the 100% special depreciation allowance for qualified property acquired and placed in service after January 19, 2025. Qualified property means tangible property depreciated under MACRS with a recovery period of 20 years or less, so buildings do not qualify. You may elect out under section 168(k)(7), which is what the calculator does when you clear the bonus checkbox.
Section 179 first. Publication 946 puts it plainly: the special depreciation allowance is a deduction you take after any Section 179 deduction and before you figure regular depreciation under MACRS. So the order is Section 179, then bonus on what remains, then the MACRS table on whatever basis is still left.
Residential rental and nonresidential real property are treated as placed in service at the midpoint of the month you actually placed them in service, so the first year is prorated by half-months. That is why Tables A-6 and A-7a have twelve columns: a 39-year building bought in January takes 2.461% in year one, one bought in December takes 0.107%. Equipment instead uses the half-year convention, where the month makes no difference at all.
MACRS is the depreciation system US taxpayers must use for most business property. It assigns each asset a recovery period — 3, 5, 7, 10, 15, 20, 27.5 or 39 years — and a published percentage table. The tables for equipment use 200% declining balance switching to straight line (150% for 15- and 20-year property), with the switch already built into the rates. MACRS ignores salvage value: an asset is recovered down to zero.
Because the IRS requires it. Publication 946 states that you must switch to the straight line method beginning in the first year for which it will give an equal or greater deduction. Without the switch, a declining balance never actually reaches zero — each year removes a fraction of a shrinking balance. The switch is what guarantees the asset is fully depreciated down to its salvage value by the end of its life.
Salvage value is what you expect the asset to be worth at the end of its useful life. Book depreciation subtracts it before spreading the cost, so a $46,000 fit-out with $4,000 of resale value depreciates $42,000. MACRS ignores salvage value completely — that is why the salvage field disappears when you select MACRS, and why a MACRS schedule always ends at a book value of zero.
When the mid-month convention does not apply and more than 40% of the total depreciable basis you placed in service during the year falls in the last three months. It replaces the half-year convention for every asset placed in service that year, not just the late ones. Because that test depends on your whole year rather than a single purchase, this calculator assumes the half-year convention and says so — check Tables A-2 through A-5 if the 40% test catches you.
Only the portion used for rental. Depreciation follows business or income-producing use, so a duplex where you occupy one unit is depreciated on the rented share of the basis. You must also strip out land before you start, because land is never depreciable — the usual approach is to allocate the purchase price between land and building using the assessed values on your property tax bill.