MACRS Depreciation Calculator
First-year and full-schedule MACRS deductions for 3, 5, 7, and 10-year property using the 200% declining balance tables.
What it does
When a business buys equipment, tax law does not let it subtract the whole cost at once, apart from special provisions. Instead the cost is recovered over a set schedule. MACRS, the modified accelerated cost recovery system, is the default schedule for most business property in the United States.
Property lands in a class by its type: racehorses and tractors at 3 years, computers, cars, and office machines at 5 years, furniture and fixtures at 7 years, and things like barges and certain manufacturing equipment at 10 years. This page covers those four personal property classes.
For each class, the IRS publishes percentages that combine two ideas: 200% declining balance, which front-loads the deductions, and the half-year convention, which assumes property starts being used midway through the first year and finishes midway through the last.
A $10,000 computer in the 5-year class recovers 20% in year one, then 32%, then 19.2%, and so on down to a small final slice, with every percentage coming from the official table. The columns add to exactly 100%.
This page applies the official percentage tables to a basis you enter, shows the whole schedule in dollars, and states plainly what the schedule leaves out.
How to use
- Enter the depreciable basis: what the property cost including freight and installation, before any special first-year write-offs.
- Pick the recovery class, using the type of property you placed in service.
- Read the first-year deduction, which is the largest single year for these classes.
- Check the full year-by-year list in the note under the result.
- Confirm whether section 179, bonus depreciation, or a different convention applies to your situation before filing.
Formula
- Basis
- Depreciable cost of the property once placed in service.
- Table percentage
- The official rate for each tax year of the recovery period.
- Half-year
- A half year of depreciation in the first tax year, half in the last.
The 200% declining balance method doubles the straight-line rate, then phases down, and the tables switch to straight line once that is larger, which is why later years hold steady. The half-year convention adds the extra columns at each end. Automobiles and listed property face annual dollar caps on top of the table, and section 179 or bonus depreciation can replace large parts of the schedule.
Worked example
Example: $10,000 of 5-year property
$10,000 basis, 5-year class, half-year convention (defaults).
- First-year percentage for 5-year property: 20%.
- First-year deduction: 10,000 x 20% = $2,000.
- Year 2 is 32%: $3,200; year 3 is 19.2%: $1,920.
- Years 4 and 5 are 11.52% each: $1,152 + $1,152; year 6 is 5.76%: $576.
- Total recovered: $10,000, exactly the basis, spread over six tax years.
Reference table
| Class | First-year rate | Tax years | Common property |
|---|---|---|---|
| 3-year | 33.33% | 4 | Tractors, racehorses, breeding hogs |
| 5-year | 20% | 6 | Computers, cars, office machines |
| 7-year | 14.29% | 8 | Furniture, fixtures, appliances |
| 10-year | 10% | 11 | Vessels, barges, some manufacturing equipment |
Limits
- Half-year convention only. Property placed in service late in the year can instead require the mid-quarter convention.
- Section 179 expensing and bonus depreciation are not included, and either can change the early years completely.
- Automobiles, listed property, and some farm equipment face annual caps that override the table.
- Real property uses different classes and methods: 27.5 years for residential rentals and 39 years for nonresidential.
- Depreciation recapture and state conformity are separate questions.
Common mistakes
- Depreciating the full invoice when part of the cost belongs to land or non-depreciable items.
- Ignoring the mid-quarter convention when more than 40% of additions happen in the last quarter.
- Stacking section 179 on top of a full table schedule instead of adjusting the basis.
- Using the 5-year table on furniture, which is 7-year property.
- Forgetting that the half-year convention means six tax years for 5-year property, not five.
Try it yourself
Quick checks. Answers sit tucked under each question.
$25,000 of 5-year property. Year 1?
25,000 x 20% = $5,000.
$5,000 of 3-year property. Year 1?
5,000 x 33.33% = $1,666.50.
$50,000 of 7-year property. Year 2?
50,000 x 24.49% = $12,245.
Questions
What is MACRS in one sentence?
It is the standard tax depreciation system that spreads the cost of business property over fixed recovery periods using published percentage tables.
Why does 5-year property take six years?
The half-year convention gives the property half a year of depreciation in the year it starts and half in the year after the fifth full year, adding a sixth tax year.
When does the schedule start?
In the tax year the property is placed in service, meaning it is ready and available for its business use, not when it was ordered or paid for.
Can I skip MACRS and expense everything?
Sometimes. Section 179 and bonus depreciation can replace part or all of the schedule when the rules are met. This calculator shows the plain MACRS table only.
Does this cover rental buildings?
No. Buildings use 27.5-year or 39-year straight-line schedules, and land is never depreciated. This page covers 3, 5, 7, and 10-year personal property.
Are the percentages the same every year?
For assets placed in service after 1986 the tables are fixed by class, so the 5-year row is 20, 32, 19.2, 11.52, 11.52, 5.76 for everyone. Only the basis changes the dollars.
Sources
- IRS Publication 946: how to depreciate property, including the percentage tables
- 26 USC 168: accelerated cost recovery system