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Depreciation Calculator

Calculate straight-line, declining balance, sum-of-years, and MACRS depreciation. Chart book value over asset life.

Tested tool guide Tested browser tools Checked August 16, 2026

What Depreciation Calculator does, with a checked example

This tool takes an asset's cost, salvage value, and useful life, then runs the depreciation schedule under whichever method you pick: straight-line splits the depreciable base evenly across the life, declining balance applies a fixed percentage to the shrinking book value each year, sum-of-years-digits front-loads expense using a declining fraction, and MACRS applies the IRS's fixed percentage tables. It then charts book value falling year by year. The most common surprise is that declining balance, left alone, never reaches the salvage value exactly - many implementations switch to straight-line partway through, and if this one doesn't, your final year's book value can land above or below what you expect.

Worked example

A concrete input and expected output from the current implementation.

Input

Asset cost: $50,000, Salvage value: $5,000, Useful life: 5 years, Method: Straight-line

Expected output

Annual depreciation: $9,000. Book value by year end: Year 1 $41,000, Year 2 $32,000, Year 3 $23,000, Year 4 $14,000, Year 5 $5,000.

Straight-line depreciation is (cost - salvage) / life = ($50,000 - $5,000) / 5 = $9,000 per year, subtracted evenly until book value reaches the $5,000 salvage floor.

How the result is produced

1

Method-specific formulas

Straight-line computes (cost - salvage) / life as a flat annual amount. Declining balance multiplies the prior year's book value by a rate (often double the straight-line rate) and stops reducing once book value hits salvage. Sum-of-years-digits weights each year by a shrinking fraction of the digit sum (e.g. 5+4+3+2+1=15 for a 5-year asset). MACRS applies IRS half-year or mid-quarter convention percentage tables by property class instead of computing from cost and life directly.

2

Year-by-year book value chart

After computing the schedule, the tool plots book value against time so you can see the curve shape: a straight diagonal line for straight-line, a steep early drop that flattens for declining balance and SYD, and MACRS's characteristic first-year and half-year-convention final-year adjustments.

Good uses

  • Building a fixed-asset depreciation schedule for small-business bookkeeping or year-end closing entries
  • Comparing how much expense straight-line versus declining balance would show in early years for internal financial projections
  • Estimating a MACRS depreciation table for a piece of business property before filing

Limits and checks

  • MACRS in the tool is a computed approximation of IRS Publication 946 tables and conventions; it is not a substitute for the actual IRS percentage tables or a tax professional's review of your specific property class and placed-in-service date
  • Declining balance methods only reach the salvage value exactly if the tool switches to straight-line partway through the schedule - verify the final year's book value equals your salvage input rather than assuming it
  • All methods assume the asset is placed in service at the very start of a period unless you're using MACRS's built-in half-year or mid-quarter convention, so partial-year acquisitions elsewhere in the schedule may need manual adjustment

Common questions

Can I use this tool's MACRS output directly on my tax return?

No. Use it to estimate and sanity-check depreciation amounts, but file taxes using the official IRS Publication 946 tables and Form 4562, or have a tax preparer verify the property class, convention, and figures first.

Why doesn't my declining balance schedule end exactly at the salvage value I entered?

Declining balance depreciates a fixed percentage of a shrinking book value, which mathematically never reaches zero or a set salvage figure on its own. Some schedules switch to straight-line in the final years to close the gap; check whether this tool does that before relying on the last year's number.

References and verification

The example and behavioral notes were checked against the browser implementation. Standards and primary references below define the relevant format, formula, or platform behavior.

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