MACRS Depreciation Calculator
What is depreciation?
IRS Publication 946, How To Depreciate Property, published February 14, 2024, explains it this way:
Depreciation is an annual income tax deduction that allows you to recover the cost or other basis of certain property over the time you use the property. It is an allowance for the wear and tear, deterioration, or obsolescence of the property.
MACRS depreciation calculator with schedules.
- Adheres to IRS Pub. 946.
- Supports Qualified property
- Vehicle maximums
- 100% bonus depreciation
- Safe harbor rules
- Latest tax-year 2023 update.
- Export to XLSX/DOCX files
In other words, it is the method by which a business can expense part of the cost of an asset each year over the asset's recovery period.
What is MACRS depreciation?
MACRS or Modified Accelerated Cost Recovery System is, in my opinion, a needlessly complicated system, designed by Congress and implemented by the IRS, for depreciating the cost of assets. MACRS replaced ACRS (Accelerated Cost Recovery System) in 1986.
This MACRS Depreciation Calculator supports nearly all the nuances and conventions of the Internal Revenue Code. It includes support for qualified and listed assets including most motor vehicles. While the calculator is capable of depreciating nearly any asset, if you want to use it correctly, you'll need to familiarize yourself with Publication 946 (linked above).
There's a lot more below
Recent changes and enhancements
- Feb. 2024: Updated maximum vehicle depreciation amounts for Tax Year 2023. Calculator currently supports maximum depreciation calculations on vehicles that weight 6,000 lbs. or less.
- Dec. 2023: Export depreciation schedule's data to Excel/xlsx file. Click on "Print Preview" for access to this feature.
- Dec. 2023: Save schedule to Word/docx file. Saving to a .docx gives you the opportunity to alter the style of the schedule, to add notes, or incorporate the schedule into a report.
With all other calculators on this site, I attempt to provide detailed instructions for their use. That is impossible when it comes to using the MACRS Depreciation Calculator. As mentioned, the writers of the IRC (Internal Revenue Code) have made the subject of depreciation needlessly complicated. While depreciation arithmetic is rather simple — it can be explained in about half a page, the rules governing depreciation cover nearly 100 pages (spread across multiple publications).
Though I have been studying depreciation since before there was MACRS (1986), I am most certainly NOT an income tax professional.
Nonetheless, below is some general guidance on the calculator's use. Much comes directly from IRS Publication 946 as revised for tax year 2023.
A special note about automobile depreciation. In February 2019, the IRS published a revenue procedure that "provides a safe harbor method of accounting for determining depreciation deductions for passenger automobiles." I point this out, because there is no mention of the safe harbor details in Publication 946 (as of the edition published in early 2024 "for use in preparing 2023 returns"). Applying the safe harbor rules results in significantly different depreciation deductions. As of April 13, 2020, this calculator supports the safe harbor depreciation procedure. A special thank you goes out to Robert Valentine, CPA, for pointing this out to me. Robert publishes a depreciation calculator for Windows. (I've not used it.)
What Property Can Be Depreciated?
IRS Pub. 946 p.4:
You can depreciate most types of tangible property (except land), such as buildings, machinery, vehicles, furniture, and equipment. You also can depreciate certain intangible property, such as patents, copyrights, and computer software.
- It must be property you own.
- It must be used in your business or income-producing activity.
- It must have a determinable useful life.
- It must be expected to last more than one year.
Options, settings, and inputs explained
Basis - The basis is frequently the cost of the asset. Frequently, but not always. The basis for real estate is always different than the contract purchase price. If you are depreciating property, you must deduct the value of the land. But, you also add to the basis your settlement costs. For example (Pub. 946 pp. 11-12):
- Legal and recording fees.
- Abstract fees.
- Survey charges.
- Owner's title insurance.
- Amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for
Business Use - If the asset is not used entirely for business, enter the percentage that is for business use. If you enter $100,000 for basis and business use is 80%, then the basis for depreciation (adjusted basis) is $80,000. (The calculator makes this calculation of course.)
Asset Being Depreciated - This has no impact on the calculation. It is included here so that when you print a schedule, it will include the identity of the asset.
Placed Into Service - The date when the asset is available for use. You should note that the business does not have to be using the asset. As long as it is available, the asset is in service.
179 Deduction - The basis is lowered by any 179 deduction that you take.
IRS Pub. 946 p. 2:
What’s New for 2023
Section 179 deduction dollar limits. For tax years beginning in 2023, the maximum section 179 expense deduction is $1,160,000. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,890,000.
Also, the maximum section 179 expense deduction for sport utility vehicles placed in service in tax years beginning in 2023 is $28,900.
IRS Pub. 946 p. 15:
You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. This is the section 179 deduction. You can elect the section 179 deduction instead of recovering the cost by taking depreciation deductions.
Class Life / Recovery Period -
IRS Pub. 946 p. 31:
The recovery period of property is the number of years over which you recover its cost or other basis. It is determined based on the depreciation system (GDS or ADS) used.
The recovery periods available is determined by the depreciation method selected. The calculator automatically limits the choice of recovery periods to the ones that are appropriate for the method selected.
In general, recovery periods are longer under ADS than they are under GDS.
Depreciation Method - Currently, the taxpayer may select from one of four depreciation methods. Three methods fall under GDS and one under ADS. Two GDS methods use a declining balance equation that has the effect of accelerating the tax benefit.
IRS Pub. 946 pp. 26-27:
The Modified Accelerated Cost Recovery System (MACRS) is used to recover the basis of most business and investment property placed in service after 1986. MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions.
Which Depreciation System (GDS or ADS) Applies?
Your use of either the General Depreciation System (GDS) or the Alternative Depreciation System (ADS) to depreciate property under MACRS determines what depreciation method and recovery period you use. You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS.
IRS Convention - The three conventions establish when the recovery period begins and ends.
IRS Pub. 946 p. 33:
The mid-month convention: Under this convention, you treat all property placed in service or disposed of during a month as placed in service or disposed of at the midpoint of the month. This means that a one-half month of depreciation is allowed for the month the property is placed in service or disposed of.
The mid-quarter convention: Under this convention, you treat all property placed in service or disposed of during any quarter of the tax year as placed in service or disposed of at the midpoint of that quarter. This means that one and one-half months of depreciation is allowed for the quarter the property is placed in service or disposed of.
The half-year convention: Under this convention, you treat all property placed in service or disposed of during a tax year as placed in service or disposed of at the midpoint of the year. This means that a one-half year of depreciation is allowed for the year the property is placed in service or disposed of.
Special Allowance - calculated. "Qualified Asset" must be set to "Yes" (see below).
IRS Pub. 946 p. 23:
You can take a special depreciation allowance to recover part of the cost of qualified property (defined next), placed in service during the tax year. The allowance applies only for the first year you place the property in service. The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service.
Qualified Asset - if your asset is a qualified asset, select the special allowance including the new 100% bonus depreciation.
Your property is qualified property if it is one of the following:
- Qualified reuse and recycling property.
- Certain qualified property acquired after September 27, 2017.
- Certain plants bearing fruits and nuts.
Is Asset a Vehicle? - when "Yes", it activates the many rules pertaining to vehicle depreciation, including maximum depreciation deductions.
Type of Vehicle - The vehicle type impacts the amount of the maxiumum depreciation that a taxpayer can deduct each year prior to 2018. After 2017, the maximum depreciation amount is the same for all vehicles. In 2019, the IRS issued a safe harbor ruling for vehicles. If you selects qualified asset 100% bonus depreciation then you should probably select safe harbor rules. But be careful. There are exceptions. For example, you can't select 100% bonus depreciation and have a 179 expense deduction too.
Listed Asset -
IRS Pub. 946 p. 51:
Listed property is any of the following:
- Passenger automobiles (as defined later).
- Any other property used for transportation, unless it is an excepted vehicle.
- Property generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video recording equipment).
Note: The calculator will not create an accurate schedule that incorporates a short tax year.
IRS Pub. 946 p. 43:
A short tax year is any tax year with less than 12 full months. This section discusses the rules for determining the depreciation deduction for property you place in service or dispose of in a short tax year. It also discusses the rules for determining depreciation when you have a short tax year during the recovery period (other than the year the property is placed in service or disposed of).
Even with short tax year ommission, I trust that users will find the MACRS Depreciation Calculator helpful. As always, feel free to leave your comments and questions below. Your comments are one of the metrics I use to determine what enhancements or calculators I offer next.
The MACRS depreciation calculator adheres to US income tax code as found in IRS Publication 946 (opens in new tab).
Above is the best source of help for the tax code. If you have a question about the calculator and what it does or does not support, feel free to ask it in the comment section on this page.
Bob Valentine says:
Karl,
In 2019 the Special Allowance (Bonus Depreciation) is 100%; therefore, the full $18,100 in the first year is considered to be Bonus Depreciation and reduces the depreciation basis for calculating depreciation in the succeeding years. So, for year number 2, assuming the same facts as I spelled out in my comment dated April 8, 2020, the calculation of depreciation would be ($40,000 – $18,100) x .32 = $7,008. And year number 3 would be ($40,000 – $18,100) X .192 = $4,205, and so on. Since these numbers are less than the maximum depreciation allowed each year for a luxury auto, the lower calculated amounts are used.
Karl says:
Hi Bob,
The difference in year two due to the multiplier. Further, we seem to be using different techniques.
For 5 year property, 200DB, half-year convention, I’m using 0.4 as the multiplier. From Publication 946, page 41:
Or 2.0 / 5 = 0.4 multiplier.
There happens to be an example using the same parameters, see page 42:
For a vanilla 200DB 5-year, half-year convention, using these facts from the above-sited example, the calculated results match.
This calculator follows (my interpretation) of the steps starting on p. 40 under "Figuring the Deduction Without Using the Tables."
Now that the calculator is fixed to adjust the basis by the special allowance when the user selects a vehicle, I don’t see an issue with the results.
I am certainly willing to reconsider if you disagree.
Robert Valentine says:
Karl,
Your example that depreciates personal property of $1,000 is correct.
However, depreciating luxury automobiles is quite different and complex. And to understand it fully one needs to go beyond Pub 946. In 2019 the bonus depreciation went to 100% and as a result, the IRS issued a Safe Harbor rule that explains how to depreciate autos under this rule. Here is a link that explains the Safe Harbor rule and how to calculate depreciation: https://www.sagecity.com/support_communities/sage_fixed_assets/b/sage_fixed_assets_blog/posts/luxury-auto-light-trucks-and-vans-safe-harbor-rule-changes
I hope this helps. BTW, I am a CPA and I have studied this topic for many years. I have even written a program that calculates depreciation that I sell to CPA offices and private companies: Cellutionware Software.com
Robert Valentine says:
Additionally, the only thing that the article that I referenced in my prior post is that they used in their examples the 2018 maximum annual depreciation limits, rather that the 2019 increased annual maximum limits. For example, the 2019 first year limit is $18,100, instead of $18,000. Other than that, the article is on point. The article was probably written before the IRS issued notification of the increase to the rates.
Karl says:
OMG! Even though I studied the official, 100+ page, IRS publication, I had no chance of getting this right.
Thank you for this. I’m going to need some time to digest the changes required and to get them implemented.
(I edited your comment, to change your firm’s URL into a link. I hope you get some traffic, or better yet some sales.)
Karl says:
Hi Robert, The calculator now supports the safe harbor method, with one caveat. It does not have the ability to calculate depreciation beyond the specified recovery period – it just stops. So for the example that we have been discussing, you won’t see an entry for 2025 ($4,380). I have to do some re-engineering to get that fixed.
I’ve also added support for additional qualified property special allowance percentages. And I’ve made appropriate changes to the documentation.
If you scroll down the page to "A special note about automobile depreciation," you’ll see an honorable mention.
Once again, thank you for taking the time to point out the calculator’s shortcomings.
Robert Valentine says:
Great job Karl!
You have been successful at incorporating the Safe Harbor rules with respect to calculating depreciation for luxury autos in 2019 when the bonus rate (special allowance) is 100%.
I might make one further suggestion: that you also put the bonus depreciation (Special Allowance) in the Depreciation column of the schedule so that it is more easily understood that in the first year that $18,100 (2019 amount) is deductible/expensed.
In addition, you might make a note that after year 6 the auto will continue to be depreciated each year by an amount not to exceed the maximum allowed (for example $5,760 for assets acquired in 2019).
Karl says:
[RV] Great job Karl!
Thank you. It did manage to kill a substantial amount of a 3-day weekend.
[RV] put the bonus depreciation (Special Allowance) in the Depreciation column of the schedule
Good idea. I will do that.
[RV] In addition, you might make a note that after year 6 the auto will continue to be depreciated each yea
Yes. That’s what I meant by:
[KT] with one caveat. It does not have the ability to calculate depreciation beyond the specified recovery period…I have to do some re-engineering to get that fixed.
Since I assume, you are a programmer too, the challenge is setting up the looping. Currently, I have one loop that is initialized based on the length of the recovery period. Only when the code completes the loop’s execution can it be determined if an asset has been fully depreciated. If it’s not, I need a 2nd calculation. I should refactor the code to do this eloquently. On the to-do list.
Jolene Hancock says:
Is there anyway to change from 5-7 year depreciation using this calculator?
Karl says:
Yes, you can change the recovery period. When the calculator loads, however, it is set up for an automobile depreciation schedule. Auto requires (per IRS) a 5 year recovery period.
So, turn off the vehicle option, and then you’ll be able to set a 7-year recovery period.
Taylor Vo says:
Hi Karl,
I’m having trouble understanding the way the calculator comes up with the depreciation amount. Here are the follow information:
Cost basis: $27,000
Business Use: 100%
Placed into service: 03/23/2016
Depreciation Method: GDS 200% DB
Property Class: 5-year
IRS Convention: Half-year
179 Deduction: 0
Qualified Asset: No
Special Allowance: 0
Asset is a vehicle?: Yes
Type of Vehicle?: Automobile
Listed Asset?: Yes
Indian Reservation Property?: No
According to Pub 946 Table A-1 (pg. 70/112), the depreciation rate for Half-Year Convention of 5-year property are:
1st year: 20%
2nd year: 32%
3rd year: 19.20%
4th year: 11.52%
5th year: 11.52%
But then I see the calculator generating the following:
1st year: 3,160
2nd year: 5,100
3rd year: 3,050
4th year: 1,875
5th year: 1,875
Compared to when I calculated using the rates listed on Pub 946 (Cost basis x rate):
1st year: 5,400
2nd year: 8,640
3rd year: 5,184
4th year: 3,110.40
5th year: 3,110.40
How is the calculator coming up with different numbers? Am I missing something or interpreting this incorrectly? Greatly appreciate your help in advance!
Karl says:
Hi Taylor, I’m not able to go through all the steps right now to confirm the calculation.
But the first difference I see is that your calculation is not accounting for the maximum depreciation amount for vehicles placed into service in 2016.
These are the amounts, first year, second year etc. of depreciation:
2016: 3160, 11160, 5100, 3050, 1875
So, my calculator matches the first year, and since you don’t match the first year, it won’t be possible to match subsequent years.
And as I recall, there are some variations for listed property as well.
Hope this helps some.
Taylor Vo says:
So I did a bit of research and read about the additional rules for listed property on Pub 946 pg. 60. It seems that the maximum deduction for assets placed before 2018 without taking special depreciation is 3,160 first year and then 5,100 for the second year, etc. Is that how you’re getting your numbers? Would like to confirm if this is the case for this scenario. Thanks for replying back Karl!
Karl says:
You’re welcome.
Yes, the calculator takes into account maximum limits for vehicles.
AJ Roderick says:
Hi Karl,
I am struggling to understand the depreciation amount for the 2nd year and on. Here is the information:
Cost basis: $2,076.10
Business Use: 100%
Placed into service: 03/31/2017
Depreciation Method: GDS 200% DB
Property Class: 5-year
IRS Convention: Half-year
179 Deduction: 0
Qualified Asset: Special Allowance 50%
Special Allowance: 1,039.00
Asset is a vehicle?: No
Type of Vehicle?: N/A
Listed Asset?: No
Indian Reservation Property?: No
Using the following rates:
1st year: 20%
2nd year: 32%
3rd year: 19.20%
4th year: 11.52%
5th year: 11.52%
6th year: 5.76%
Calculates depreciation expense as – cost basis x rate :
1st year: 207.67 + 1,039 special allowance
2nd year: 265.82
3rd year: 108.45
4th year: 52.58
5th year: 46.52
6th year: 20.58
Calculator output:
1st year: 1,247
2nd year: 332
3rd year: 199
4th year: 120
5th year: 119
6th year: 60
Can you explain the 2nd year and on of depreciation? How is it calculating 332… when 830 x 32% = 265? I am assuming I am just missing a step. Thanks for your help in advance!
Karl says:
Hello AJ, I don’t have the equation in my head, and I’m not able to sit down and research this. If I did that every time I was asked, I would not have any time left to build this site (I only do it parttime as is). I’ll give you a pointer though. If it were me, I would sit down with the worksheet found in publication 946 and step through the calculation using your numbers. That should reveal the source of the problem. (I guess there’s always a chance that I have something wrong too. However, I have tested this calculator using every example found in the publication.)
Robert Valentine says:
AJ Roderick,
Here is the way the second year is to be calculated when using the percentages.
$2,076.10 – $1,038 = $1,038.10 X .32 = $332.19
The Cost Basis when using percentages is the Cost less any Section 179 less any Bonus depreciation claimed. The result is what you multiply the percentages each year by.
In your example, you are subtracting not only the Bonus depreciation but also the accumulated depreciation from the cost basis to arrive at the Cost Basis and this is incorrect.
If you were calculating MACRS depreciation manually without using the percentages, then the way you would calculate depreciation for the second year would be:
$2,076.10 – $1,038 – $207.67 = $830.43 X 2/5 = $332.17
Doe says:
I love this calculator and thank you for providing it. I would love to see calculation on disposal year as well, especially with listed property. I’m dealing with a 100% business use passenger vehicle (truck) that would take 14 years to depreciate because of the rules (under HY 200DB)So we disposed of it in May of year 6. I’m not sure whether to take half year depreciation on the $1975 allowed for the year (ie $887.50) or take the full $1975. One accountant said to take just 5 months but I don’t think that’s true under HY convention. So if you could add sold date to the calculator, that would be incredibly helpful.
Karl says:
I think adding a sold date is a good idea. Perhaps I’ll be able to do that when I upgrade the calculator. The biggest problem I see is the amount of time it will take me to study how to do the calculation.
Blair Presson says:
So for a vehicle if you claim section 179 and Bonus depreciation on a vehicle the 1st year. The you don’t receive any further depreciation deduction, the following year or even subsequent years, even if you otherwise have remaining depreciable basis in the asset. For example a $25,000 vehicle and you claim $10,100 Sect 179 and 8,000 bonus. Year 1. Then Year 2 and 3 and 4 you have 0 depreciation expense? Thanks. I guess I’m slow on how that works.
Karl says:
This is not tax advice since I do not know your particular situation. But I think what you’ll want to do is to not take a 179 deduction. Rather take a 100% special depreciation allowance and set "Type of Vehicle" to auto (safe harbor). These settings will fully depreciate the asset.
Lynda L Kinard says:
Why does the depreciation calculator when calculating on Automobiles, the 2nd through 5th year are only a couple of dollars. Then it spreads the deprecation out over 5 more years. So a 7 year schedule becomes 12 years. I do appreciate the opportunity to use this service.
Karl says:
Vehicle depreciation is very complex. All the details are important. But, in general, there is a maximum amount of depreciation each year that is allowed to be deducted. This calculator respects those maximums.
Or, have you select the 100% special allowance, but didn’t select the Auto-Safe Harbor? If not, you probably should do that. There are some details about safe harbor rules in the text on this page.
(One thing, if you are not in the U.S., this would not be a valid calculator for you to use.)
Glad to hear you appreciate the service.
Lynda L Kinard says:
Thank you for the answers. My client bought 2 new vehicles this year. Hopefully, I can get the calculator to give me a good schedule.
Curt Williams says:
How do I create a comprehensive depreciation schedule with all assets listed with current-year depreciations?
Karl says:
This calculator is designed for individual assets. It does not support consolated schedules.
Randy Dodd says:
will it be updated for 2020-2023? i input some numbers and it told me that it was only for 2019 or before.
Karl says:
I’m not aware of any changes to the law that requires an update to the calculator.
What are the specifics of the message you saw? Perhaps you have a setting selected that is saying only if the asset was placed into service before 2020?
Karl says:
Maybe you saw a message about inclusion amounts? That might need to be updated, actually.