Use this calculator to estimate the Modified Accelerated Cost Recovery System (MACRS) depreciation for eligible property. This calculator uses the 200% Declining Balance method, switching to Straight Line, with the Half-Year convention, based on IRS depreciation tables for common recovery periods.
The Modified Accelerated Cost Recovery System (MACRS) is the primary method for depreciating most tangible depreciable property placed in service after 1986. It allows businesses to recover the cost of certain property over a specified number of years, reducing their taxable income. Unlike straight-line depreciation, MACRS generally allows for larger deductions in the early years of an asset's life.
Key Components of MACRS:
Asset Cost: The original cost of the asset, including purchase price, shipping, and installation.
Recovery Period (Class Life): This is the number of years over which the asset's cost can be recovered. The IRS assigns a specific recovery period to different types of property. Common periods include 3, 5, 7, 10, 15, and 20 years for personal property, and 27.5 or 39 years for real property.
Depreciation Method:
200% Declining Balance (DB): This method doubles the straight-line depreciation rate. It's commonly used for 3, 5, 7, and 10-year property. The system automatically switches to the straight-line method in the year it yields a larger deduction.
150% Declining Balance (DB): Used for 15 and 20-year property, and sometimes for farming property.
Straight Line (SL): Used for real property (27.5 and 39-year property) and can be elected for any property.
Convention: This determines how much depreciation can be claimed in the year an asset is placed in service and in the year it's disposed of.
Half-Year (HY) Convention: Assumes all property placed in service or disposed of during a tax year was placed in service or disposed of at the midpoint of that year. This is the most common convention for personal property and is used in this calculator.
Mid-Quarter (MQ) Convention: Applies if more than 40% of the total basis of personal property is placed in service during the last three months of the tax year. It assumes property was placed in service at the midpoint of the quarter it was acquired.
Mid-Month (MM) Convention: Used for real property, assuming property was placed in service at the midpoint of the month it was acquired.
How This Calculator Works
This calculator focuses on the most common MACRS scenario: personal property depreciated using the 200% Declining Balance method with a Half-Year convention. It uses the official IRS depreciation percentages (derived from IRS Publication 946) for the selected recovery period to provide accurate annual depreciation figures.
Simply enter the initial cost of your asset and select its recovery period. The calculator will then display a year-by-year breakdown of the depreciation amount and the remaining book value.
Example Calculation:
Let's say you purchase a piece of equipment (5-year property) for $50,000.
Asset Cost: $50,000
Recovery Period: 5 Years
Using the 200% DB / Half-Year convention percentages:
Year
Depreciation Rate
Depreciation Amount
Remaining Book Value
1
20.00%
$10,000.00
$40,000.00
2
32.00%
$16,000.00
$24,000.00
3
19.20%
$9,600.00
$14,400.00
4
11.52%
$5,760.00
$8,640.00
5
11.52%
$5,760.00
$2,880.00
6
5.76%
$2,880.00
$0.00
Total Depreciation: $50,000.00
Important Considerations:
This calculator provides estimates based on standard MACRS rules for personal property using the 200% DB method and Half-Year convention.
It does not account for Section 179 expensing, bonus depreciation, or specific state depreciation rules.
Always consult with a qualified tax professional for advice tailored to your specific situation.
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for (var i = 0; i < percentages.length; i++) {
var year = i + 1;
var depreciationAmount = assetCost * percentages[i];
currentBookValue -= depreciationAmount;
totalDepreciation += depreciationAmount;
tableHtml += "
";
tableHtml += "
" + year + "
";
tableHtml += "
$" + depreciationAmount.toFixed(2) + "
";
tableHtml += "
$" + Math.max(0, currentBookValue).toFixed(2) + "
"; // Ensure book value doesn't go negative due to rounding
tableHtml += "
";
}
tableHtml += "
";
tableHtml += "Total Depreciation: $" + totalDepreciation.toFixed(2) + "";
tableHtml += "Note: Due to rounding in IRS percentages and floating-point arithmetic, the final book value might not be exactly $0.00, but will be very close.";
resultDiv.innerHTML = tableHtml;
}