Free Tax Tool · Capital Asset Recovery

MACRS Depreciation Calculator: Generate Your IRS Tax Schedule

Updated: November 2026 | Formulas verified against IRS Publication 946.

This MACRS depreciation calculator turns an asset's cost, recovery period, and convention into a complete IRS-style schedule in seconds. Business owners rely on the Modified Accelerated Cost Recovery System to recover the capital cost of equipment, vehicles, computers, and furniture through yearly tax deductions instead of a single lump-sum expense. Enter your figures, read the year-by-year deductions, and carry them to Form 4562. Everything runs in your browser, so no cost figure ever leaves your device.

What is MACRS Depreciation?

MACRS stands for the Modified Accelerated Cost Recovery System, the default method the IRS requires for depreciating most tangible business property placed in service after 1986. It front-loads deductions, so an asset produces larger tax write-offs in its early years and smaller ones later.

MACRS depreciation replaced the older, slower approaches with a fixed set of recovery periods and percentage tables. You do not estimate how long a machine will really last. The tax code assigns the asset to a class, such as 5-year or 7-year property, and each class carries a published percentage for every year. Multiply the percentage by the asset's depreciable basis and you have that year's deduction.

Two features of the system surprise first-time users. First, the recovery period is a tax classification and not a prediction of useful life: a laptop is 5-year property even if you replace it in three. Second, a 5-year asset is deducted across six tax years, because the convention treats the asset as placed in service partway through the first year and leaves a partial year at the end.

The reason the front-loading matters is the time value of money. A deduction taken this year lowers this year's tax bill, and a dollar of tax saved now is worth more than a dollar saved in year six. For a business buying equipment with borrowed money, the faster tax shield can meaningfully reduce the real cost of the purchase. If you are weighing a financed equipment purchase, run the payment side through our business loan calculator and compare it to the tax savings from the schedule above.

This page covers the General Depreciation System (GDS), the method that applies to nearly every small business. The Alternative Depreciation System (ADS) uses longer, straight-line periods and is required in narrower cases, such as property used mostly outside the United States or tax-exempt use property. Most owners who search for tax depreciation guidance on equipment need GDS, which is what the calculator uses.

How to Use the MACRS Depreciation Table

To use a MACRS depreciation table, find the column for your recovery period, pick the row for the tax year, and multiply that percentage by your asset's depreciable basis. IRS Publication 946 publishes these percentages in Appendix A, and they already account for the convention.

Publication 946 splits the tables by convention. Table A-1 covers the half-year convention across all classes. Tables A-2 through A-5 cover the mid-quarter convention, one table for each quarter of the year the asset enters service. Once you know your convention and class, you only need to look up a single column. The percentages for each class add up to exactly 100 percent, which is a useful check on any schedule you build by hand.

Depreciable basis is usually the purchase price plus sales tax, delivery, and installation, less any Section 179 deduction and any bonus depreciation you elected to claim. Year one is the tax year in which the asset is placed in service, meaning ready and available for use, not necessarily the year you paid for it. An invoice dated in December for equipment that is installed in February starts depreciating in the following year.

5 year macrs table

The 5-year class is the one most small businesses use most often. It covers computers and peripheral equipment, office machinery such as copiers and printers, cars and light-duty trucks, and certain equipment used in construction or research. A passenger vehicle bought for the business is 5-year property, though the annual deduction on passenger automobiles is capped by luxury auto limits that the IRS adjusts every year. The half-year percentages are below.

Notice that year two holds the largest deduction at 32 percent, not year one. The half-year convention only gives you six months of year one, while year two is a full twelve months at the accelerated rate. The method is double-declining balance (200 percent) switching to straight-line when that yields a larger deduction, which is what produces the flat 11.52 percent in years four and five.

7 year macrs table

Seven-year property is the catch-all class. Office furniture, desks, file cabinets, fixtures, and most machinery and equipment that have no assigned class life land here. If you cannot find a specific asset in Publication 946 and it is not real estate, it is 7-year property by default. Agricultural machinery and railroad track also use this class.

The slight wobble between 8.93 and 8.92 percent in the later years is a rounding artifact of the published table and not an error. The IRS rounds each year to two decimals, and the schedule still totals 100 percent. The calculator above applies the same percentages, then adjusts the last year by a few cents so your deductions sum exactly to your cost.

The 3, 10, 15, and 20-year classes work the same way. Three-year property includes certain tractor units and race horses. Ten-year property includes some vessels and single-purpose agricultural structures. Fifteen-year property covers land improvements such as fences, roads, sidewalks, and landscaping, along with qualified improvement property. Twenty-year property is rare for small businesses and includes farm buildings and municipal sewers.

Reading Your MACRS Depreciation Schedule

A MACRS depreciation schedule lists every tax year of an asset's recovery period with its rate, deduction, and remaining basis. The deduction column goes on Form 4562 each year, and the remaining basis column tells you your adjusted tax basis if you sell the asset.

Keep the schedule with your tax records for as long as you own the asset plus the standard retention window. When you sell or scrap equipment, your gain or loss is the sale price minus the remaining basis. If you sell for more than the remaining basis, part of the gain is depreciation recapture and is taxed as ordinary income rather than capital gain, so the schedule is not just a deduction tool but a record you will need at disposal.

The deduction also feeds your estimated taxes. Higher early-year deductions lower your taxable profit, which in turn lowers the quarterly payments you owe. If you are self-employed, the depreciation reduces income subject to income tax, but run the interaction through our self-employment tax calculator and the 1099 quarterly tax estimator to see how your payments change.

Half-Year vs. Mid-Quarter Convention

The half-year convention treats every asset as placed in service at the midpoint of the tax year, regardless of the actual purchase date. The mid-quarter convention is required only if more than 40 percent of the year's total depreciable basis is placed in service during the fourth quarter.

Under the half-year convention, you receive half a year of depreciation in year one no matter whether you bought the asset in January or in November. That generosity is the reason the IRS built a safeguard. Without it, a business could buy everything on December 30 and claim a half-year of deductions for assets it had owned for one day. The 40 percent test closes that gap.

The test works on the aggregate. Add up the depreciable basis of all MACRS property you placed in service during the year, excluding nonresidential real property, residential rental property, and railroad grading and tunnel bores, along with property placed in service and disposed of in the same year. If the portion placed in service from October through December is more than 40 percent of that total, every asset placed in service that year must use the mid-quarter convention, not just the fourth-quarter purchases. One large December purchase can therefore change the treatment of everything else you bought.

The basis used in the test is reduced by any Section 179 deduction first, which gives you a planning lever. Expensing a large fourth-quarter asset under Section 179 can pull the fourth-quarter percentage back under 40 percent. Bonus depreciation does not reduce the basis for this test.

A quick example. In a tax year, a business places $60,000 of equipment in service in the first three quarters and $50,000 in the fourth. The fourth-quarter share is $50,000 of $110,000, or about 45 percent, so the mid-quarter convention is mandatory. A fourth-quarter 5-year asset then earns only 5 percent in year one, against the 20 percent the half-year table gives. Use the quarter selector in the calculator to see the difference for your own asset. The mid-quarter tables in this tool cover the 3, 5, and 7-year classes.

MACRS vs. Bonus Depreciation and Section 179

The order is fixed: Section 179 expensing comes first, bonus depreciation applies to the remaining basis, and regular MACRS percentages apply to whatever basis is left. Each step shrinks the basis that the next step sees.

Section 179 lets you elect to deduct the cost of qualifying equipment in the year you place it in service, subject to an annual dollar limit, a phase-out once total purchases pass a threshold, and a cap at your business taxable income. Bonus depreciation is a separate first-year deduction of a percentage of the remaining basis. Unlike Section 179, bonus depreciation has no business-income limit and can create a net operating loss. Congress has changed both the limits and the bonus percentage repeatedly, including in recent legislation, so confirm the current-year figures in the latest Publication 946 and Form 4562 instructions before you file.

Here is how the layers stack. Suppose you buy a $50,000 machine, a 7-year asset. You elect a $20,000 Section 179 deduction, leaving a $30,000 basis. If bonus depreciation at 60 percent applies to that remainder, you deduct $18,000 more, leaving $12,000. Regular MACRS then applies the 7-year percentages to that $12,000. To model the last step, enter $12,000 in the calculator. Your first-year total is the Section 179 amount plus the bonus amount plus the year-one MACRS deduction.

Electing everything immediately is not always the right call. Taking a large deduction in a low-income year wastes it, while spreading deductions through MACRS preserves them for years when your tax rate may be higher. You can also elect out of bonus depreciation for an entire class of property. A researcher's view of the trade-off: front-loading is worth the most when your current marginal rate is at least as high as your expected future rate, and worth the least when profits are about to rise.

Frequently Asked Questions (FAQ)

What assets qualify for 5-year MACRS?

Computers and peripheral equipment, office machinery such as copiers and calculators, cars, light-duty trucks, and certain appliances and equipment used in rental property all fall into the 5-year class. Assets used in specific industries, such as construction, may be assigned there by the class tables in Publication 946. If you cannot place an asset, check the asset class list, and remember that unlisted personal property defaults to 7-year.

Can I use MACRS for real estate?

Yes, though not with the 3 to 20-year tables. Residential rental property is depreciated over 27.5 years and nonresidential real property over 39 years, both straight-line using the mid-month convention. Land is never depreciable. This calculator covers the personal property classes only. Components of a building, such as qualified improvement property, can fall into the 15-year class and may be calculated here.

Is my data saved on your servers?

No. This calculator is 100% client-side. Every number is processed by JavaScript inside your browser tab, and nothing is transmitted, logged, or stored on our servers. Close the tab and the figures are gone, which is why you should save or print your schedule before leaving.

Does the half-year convention apply if I buy in January?

Yes. Under the half-year convention, the asset is treated as placed in service at mid-year whatever the actual month, so a January purchase and a June purchase receive the same year-one percentage. Only the mid-quarter convention distinguishes between quarters.

Can I switch my depreciation method later?

Generally not freely. Once you choose a method and convention for an asset, changing it requires IRS consent through an accounting method change. Choose the treatment carefully in the first year, and keep the schedule with your records.