MACRS Depreciation Calculator

IRS Publication 946, How To Depreciate Property, published February 14, 2024, explains depreciation as follows:

MACRS depreciation calculator with schedules.

• Adheres to IRS Pub. 946.
• Supports Qualified property
• Vehicle maximums
• 100% bonus depreciation
• Safe harbor rules
• Export to XLSX/DOCX files

Click to Try It Now!

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.

In practical terms, depreciation is the method a business uses to expense a portion of an asset’s cost each year during the asset’s recovery period.

There is more below…

Preliminary Details

With other calculators on this site, I provide detailed instructions for their use. That is not possible for the MACRS Depreciation Calculator. As noted earlier, the Internal Revenue Code makes depreciation complex. The arithmetic is straightforward — it can be explained in about half a page. However, the rules governing depreciation span nearly 100 pages across multiple publications. Confirm your understanding (and mine) of the applicable depreciation rules with a qualified income tax professional before filing a return.

Although I have studied depreciation since before MACRS (1986), I am not an income tax professional.

Nonetheless, the guidance below summarizes how to use the calculator. Much of this material comes directly from IRS Publication 946, revised for tax year 2023.

A special note about automobile depreciation. In February 2019, the IRS issued a revenue procedure that “provides a safe harbor method of accounting for determining depreciation deductions for passenger automobiles.” This is important because the safe harbor details do not appear in Publication 946 (as of the edition published in early 2024, “for use in preparing 2023 returns”). Applying the safe harbor rules can result in significantly different depreciation deductions. As of April 13, 2020, this calculator supports the safe harbor depreciation procedure. Thank you to Robert Valentine, CPA, for identifying this issue. Robert publishes a depreciation calculator for Windows. (I have not used it.)

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.

Basis — Basis is often the cost of the asset. Often, but not always. The basis for real estate is always different from the contract purchase price. If you are depreciating real property, you must remove the value of the land. You then add allowable settlement costs to the basis. 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, and similar charges.

Business Use — If the asset is not used entirely for business, enter the percentage used for business. For example, if the basis is $100,000 and business use is 80%, the adjusted basis for depreciation is $80,000. (The calculator performs this calculation.)

Asset Being Depreciated — This does not affect the calculation. It appears on the printed schedule to identify the asset.

Placed Into Service — The date when the asset is available for use. The business does not need to be using the asset. Once it is available, it is considered in service.

179 Deduction — The basis is reduced by any Section 179 deduction taken.

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 available recovery periods are determined by the depreciation method selected. The calculator automatically limits the choices to the recovery periods appropriate for the selected method.

In general, recovery periods are longer under ADS than under GDS.

Depreciation Method — Taxpayers may select from four depreciation methods. Three methods fall under GDS and one under ADS. Two GDS methods use a declining balance formula that accelerates the deduction.

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 the asset is a qualified asset, select the special allowance, including the 100% bonus depreciation where applicable.

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 does not create an accurate schedule that includes 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 the omission of short tax year calculations, users should find the MACRS Depreciation Calculator helpful. Comments and questions are welcome. Feedback helps prioritize future enhancements and calculators.

We are currently researching updates for the calculator. Although the calculator computes MACRS depreciation accurately, we believe the main issues involve edge cases and how the rules apply in specific situations. Please obtain professional guidance before relying on any calculation. Depreciation rules are becoming increasingly complex.

MACRS-Related Federal Tax Law Changes Enacted in July 2025 Under Public Law 119-21

Executive summary

Public Law 119-21 (enacted July 4, 2025) made five core, MACRS-adjacent “cost recovery” changes that directly affect depreciation computations, elections, and recapture outcomes for businesses and investors: (i) it permanently restored 100% bonus depreciation under IRC §168(k) for property acquired after January 19, 2025 and removed the prior “placed-in-service by” sunset dates for bonus-eligible property acquired after that date; (ii) it created a one-time transitional election (via §168(k)(10)) allowing reduced bonus percentages (40% / 60%) for the first taxable year ending after January 19, 2025; (iii) it increased and re-based the inflation mechanics for the IRC §179 expensing cap and phase-out threshold starting in tax years beginning after December 31, 2024; (iv) it enacted a new IRC §168(n) “qualified production property” (QPP) 100% special depreciation allowance for qualifying portions of new (and certain used) nonresidential real property used integrally in a qualified production activity, coupled with unusually strong ordinary-income recapture under §1245 if the property ceases qualifying use within 10 years; and (v) it (a) brought certain qualified sound recording productions into the §181 expensing regime and (b) treated such productions as §168(k) “qualified property,” including a special placed-in-service rule tied to initial release/broadcast.

Through March 27, 2026, the primary federal administrative developments for these MACRS-related changes are: IRS Notice 2026-11 (interim guidance on amended §168(k) and qualified sound recording productions), IRS Notice 2026-16 (interim guidance on new §168(n) QPP), and Rev. Proc. 2026-17 (transition relief allowing certain taxpayers to withdraw prior “excepted trade or business” elections under §163(j)(7) and make related depreciation/election adjustments, including late §168(k)(7) elections, using amended returns and/or partnership AAR procedures).

No final Treasury/IRS regulations implementing the OBBB amendments to §168(k) or new §168(n) had been issued in the sources reviewed as of March 27, 2026; Treasury and the IRS explicitly announced expected forthcoming proposed regulations in both Notice 2026-11 (bonus depreciation) and Notice 2026-16 (QPP).

The practical “takeaways” are not merely increased first-year deductions. The law reshapes transactions and compliance in ways that can surprise even sophisticated taxpayers: bonus depreciation becomes acquisition-date driven (post–Jan. 19, 2025) rather than sunset-date driven; QPP creates a powerful but election-based 100% write-off for manufacturing/production facility components that is paired with aggressive §1245 recapture on disqualifying use; sound recording projects become more explicitly integrated into bonus/§181 cost recovery with a bespoke placed-in-service concept; and §179 begins operating at meaningfully larger scale for many taxpayers (subject to familiar taxable income and investment-limit constraints).

Scope, methodology, and source hierarchy

This report focuses strictly on provisions enacted in July 2025 under Public Law 119-21 that directly amend MACRS cost recovery rules and closely related depreciation/recapture provisions (IRC §§168(k), 168(n), 179, 181 cross-effects, and §1245), plus the principal “binding contract,” transition, and election mechanics embedded in those statutory amendments.

Primary sources were prioritized in the following order: (1) enacted statutory text from GovInfo (Public Law HTML); (2) IRS/Treasury administrative guidance (Notices, Revenue Procedures) and IRS official news releases; and (3) nonpartisan legislative explanations (CRS and Senate Finance staff materials). Representative practitioner analyses are included to illustrate implementation choices and risks, but statutory text and IRS guidance govern.

Conference report language: In the accessible legislative materials gathered for this report, no “conference report” specific to Public Law 119-21 was located. In lieu of a conference report, the report cites (a) the enacted Public Law text, (b) Senate Finance Committee section-by-section explanatory text, and (c) Congressional Research Service’s section-by-section summary of the tax provisions in the enacted law.

Statutory MACRS and related cost recovery changes enacted in July 2025

Permanent 100% bonus depreciation and removal of placed-in-service sunsets for post–Jan. 19, 2025 acquisitions

Statutory change. Section 70301 of Public Law 119-21 amended IRC §168(k) to “make permanent” bonus depreciation by removing the prior sunset/phase-down architecture (including deletion of §168(k)(2)(A)(iii) and conforming deletions in long-production-period and specified-plant rules), and by changing the core rule in §168(k)(1)(A) to “100 percent” rather than “the applicable percentage.” The statute also struck §168(k)(6) (the “applicable percentage” phase-down rules) and §168(k)(8) (which had contained certain phase-down mechanics), and revised specified plant provisions so that “100 percent” applies.

Practical consequence. For property that meets the definition of “qualified property” under §168(k)(2) and is acquired after January 19, 2025, the statute eliminates the prior “must be placed in service before January 1, 2027/2028” limitations that had been embedded in §168(k)(2) for many categories of qualified property. IRS Notice 2026-11 confirms that the placed-in-service-date requirement in Treas. Reg. §1.168(k)-2(b)(4) does not apply for post–Jan. 19, 2025 acquisitions when applying amended §168(k).

Key statutory cross-cut: binding contract acquisition-date rule. Public Law 119-21 §70301(c)(4) provides that, for purposes of determining whether property is “acquired after” January 19, 2025, property is not treated as acquired after the date a written binding contract is entered into for the acquisition. IRS Notice 2026-11 ties this rule operationally to the existing bonus depreciation regulatory framework by directing taxpayers to apply rules consistent with Treas. Reg. §1.168(k)-2(b)(5), with substituted dates and other modifications.

One-time transitional election to apply reduced bonus percentages for the first taxable year ending after Jan. 19, 2025

Statutory change. Public Law 119-21 §70301(b)(3) rewrote §168(k)(10) to provide a transitional election for “the first taxable year ending after January 19, 2025.” If elected, bonus depreciation is computed at 40% for most qualified property and 60% for long-production-period property and specified aircraft described in §168(k)(2)(B) or (C). The statute also provides a parallel 40% election for specified plants planted or grafted during that first taxable year ending after January 19, 2025.

Why it matters. This election is a statutory “bridge” designed to allow certain taxpayers (often those with mid-year fiscal years or earnings-and-profits considerations) to keep a smaller first-year deduction than 100% in that one transitional year. IRS Notice 2026-11 provides detailed “substituted date/percentage” instructions for making this election using procedures consistent with Treas. Reg. §1.168(k)-2(f)(3) and by referencing the applicable Form 4562.

New IRC §168(n): qualified production property 100% special depreciation allowance with §1245 recapture

Statutory change. Public Law 119-21 §70307 added new §168(n), permitting a taxpayer election to claim a 100% special depreciation allowance for “that portion” of nonresidential real property that qualifies as “qualified production property” (QPP). The statute defines QPP using a multi-factor test keyed to integral use in a “qualified production activity,” U.S./possession placed-in-service location, “original use” requirement (with a special used-property rule), a construction-begin window (after Jan. 19, 2025 and before Jan. 1, 2029), taxpayer designation in the election, and a placed-in-service deadline (before Jan. 1, 2031). The statute also explicitly excludes portions used for offices/administrative/lodging/parking/sales/research/software development or engineering and other non-production functions.

Distinctive features that materially affect MACRS planning. Section 168(n) (i) treats QPP as a separate class of property for certain opt-out elections and coordinates with ADS by excluding property subject to ADS and treating QPP as separate nonresidential real property for the §168(g)(7) ADS election; (ii) provides an “act of God” authority for Treasury to extend the Jan. 1, 2031 placed-in-service deadline; (iii) imposes a specialized recapture rule if the property ceases qualifying use within 10 years, applying §1245 as if a deemed disposition occurs when the nonqualifying productive use begins, and requiring that ordinary income recapture be at least the amount of the §168(n) deduction; and (iv) separately amends §1245(a)(3) to treat QPP as §1245 property.

Administrative implementation to date. IRS Notice 2026-16 provides interim definitional and procedural rules for applying §168(n), including detailed definitions (building, structural components, unit of property), elaboration of “integral part” and qualified production activity concepts, rules for identifying eligible and ineligible portions, and election mechanics, pending regulations.

Qualified sound recording productions: integration into §181 and bonus depreciation, including a special placed-in-service rule

Statutory change. Public Law 119-21 §70434 amended IRC §181 to include “qualified sound recording production” within §181’s elective expensing regime (subject to a $150,000 aggregate cost limitation), defined qualified sound recording productions as sound recordings produced and recorded in the United States, and amended §168(k) in two key ways: (i) adding qualified sound recording productions to the statutory list of §168(k)(2)(A)(i) “qualified property” (when a §181 deduction would have been allowable absent specified limitations), and (ii) amending §168(k)(2)(H) to treat a qualified sound recording production as placed in service “at the time of initial release or broadcast.” The effective date applies to productions commencing in taxable years ending after July 4, 2025.

Interim IRS guidance. Notice 2026-11 provides (a) acquisition-date rules for sound recording productions (treating principal recording commencement as the acquisition date concept for effective-date purposes), (b) confirmation of the special placed-in-service rule, and (c) special mechanics for the §168(k)(7) election to opt out of bonus depreciation by defining the “class of property” at the level of each separate production for qualified sound recording productions.

Termination of the special five-year recovery period for specified “energy property”

Statutory change. Public Law 119-21 §70509 amended §168(e)(3)(B)(vi) by striking a subclause and redesignating the remaining subclauses, with the effective date keyed to property “the construction of which begins after December 31, 2024.”

Legislative explanation of scope. Senate Finance staff materials describe this as terminating the “special five-year recovery period” for a defined set of energy property types if construction begins after Dec. 31, 2024. The list in that explanation includes, among other items, solar energy equipment, geothermal equipment, qualified fuel cell property, qualified microturbine property, combined heat and power system property, wind energy property, thermal energy equipment, waste energy recovery property, energy storage technology, qualified biogas property, and microgrid controllers. The same explanation notes that this change does not (if otherwise eligible) affect the availability of bonus depreciation or depreciation under other applicable provisions; it removes the special five-year recovery period treatment.

Effective dates, transition rules, binding-contract rules, and taxpayer elections

This section consolidates, provision-by-provision, the effective-date architecture and the elections/transition rules that govern whether a taxpayer uses the “old” or “new” depreciation outcomes for a given asset.

Bonus depreciation under amended §168(k)

Effective date baseline. Public Law 119-21 §70301(c)(1) applies the §168(k) amendments generally to “property acquired after January 19, 2025,” and adds a binding-contract acquisition rule under §70301(c)(4), under which property is not treated as acquired after that date if a written binding contract for the acquisition was entered into on or before that date.

Placed-in-service timing after the effective date. For post–Jan. 19, 2025 acquisitions, the statute removed prior placed-in-service “sunset” conditions; IRS Notice 2026-11 operationalizes this by stating that the placed-in-service date requirement rules in Treas. Reg. §1.168(k)-2(b)(4) do not apply for determining whether property acquired after Jan. 19, 2025 is qualified property under amended §168(k).

Transition election (§168(k)(10)). The reduced-percentage election applies to taxable years ending after January 19, 2025 (statutory applicability), and is available only for “the first taxable year ending after January 19, 2025.” IRS Notice 2026-11 supplies the mechanics to make that election by following rules consistent with Treas. Reg. §1.168(k)-2(f)(3), substituting (among other items) the new effective dates and the 40%/60% rates.

Components of larger self-constructed property (“component election”). Notice 2026-11 permits taxpayers to rely on the existing component election framework in Treas. Reg. §1.168(k)-2(c), with substituted effective-date references, allowing eligible components of larger self-constructed property to qualify when the larger project otherwise would not.

Section 179 increased limitations

Effective date. Public Law 119-21 §70306(c) provides that the increased §179(b)(1) maximum and the §179(b)(2) phase-out threshold apply to property placed in service in taxable years beginning after December 31, 2024. This aligns the larger limits with tax year 2025 for calendar-year taxpayers.

Inflation indexing mechanics. Section 70306(b) modifies §179(b)(6) to re-base cost-of-living adjustments for the new dollar amounts by substituting “calendar year 2024” for “calendar year 2016” for purposes of applying the inflation adjustment to the amounts in §179(b)(1) and (2).

Election mechanics. Section 179 remains an annual election generally made on a timely filed return; Form 4562 is the standard reporting/election vehicle for §179 expensing.

New QPP election under §168(n)

Effective date. The statutory effective date in §70307(c) applies to “property placed in service after the date of the enactment of this Act” (i.e., after July 4, 2025). Notice 2026-16 summarizes that §168(n) provides a temporary special depreciation allowance for QPP placed in service after July 4, 2025, and before January 1, 2031, provided the construction-begin window (after Jan 19, 2025 and before Jan 1, 2029) and other requirements are satisfied.

Election and designation. The statute requires that the taxpayer’s election specify the nonresidential real property and the designated portion treated as QPP, made on the return “in such manner as the Secretary may prescribe,” and makes the election generally irrevocable absent “extraordinary circumstances.” Notice 2026-16 provides interim rules on the time and manner for making the election and the content of the designation statement pending regulations.

Used-property “original use” special rule and binding contracts. §168(n)(2)(B) allows certain acquired property to satisfy the “original use” and “construction begins” tests if it was not used in a qualified production activity during a defined historical window (Jan. 1, 2021 through May 12, 2025), was not previously used by the taxpayer, and meets §179(d) related-party and basis rules; it also contains explicit written-binding-contract timing rules for when property is treated as acquired for purposes of determining whether it falls inside the acquisition window. Notice 2026-16 restates these statutory rules and highlights the statutory acquisition-date/binding-contract structure.

Energy property recovery period change

Effective date. The statutory effective date ties to the “construction begins” concept: §70509 applies to energy property for which construction begins after December 31, 2024. Senate Finance staff explanatory language uses this same rule and clarifies that what ends is the special five-year recovery period, while depreciation continues under §168/Rev. Proc. 87-56 as otherwise applicable and (if otherwise eligible) bonus depreciation eligibility is not eliminated merely by this change.

Summary table of each MACRS-related change and action items

Table entries are derived from the enacted statutory text, IRS Notices, and IRS revenue procedure cited throughout.