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Depreciation Calculator

Calculate yearly depreciation and book value with the straight-line, double declining balance, 150% declining balance or sum-of-the-years’-digits method.

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ItemValue

Depreciation schedule

YearDepreciationAccumulatedBook value
This is book (accounting) depreciation with full years. Declining balance switches to straight-line when that gives more, and never goes below salvage value. US tax depreciation usually uses MACRS, with IRS conventions and tables (IRS Publication 946). Ask an accountant for tax filings.

Quick Answer

Straight-line depreciation = (cost − salvage value) ÷ useful life. A $30,000 machine with a $5,000 salvage value and a 5-year life loses $5,000.00 a year. With double declining balance, the first year is $12,000.00, because it charges 40% of the book value.

Last updated: 2 November 2026 ·How we calculate this: standard book depreciation methods

Table of Contents

How This Depreciation Calculator Works

Enter what the asset cost, what it should be worth at the end (salvage value), and how many years you expect to use it. Choose a method, and the calculator shows the first-year depreciation and a full yearly schedule with accumulated depreciation and book value.

Quick explanation: depreciation spreads an asset's cost over the years it is used.

  • Straight-line: the same amount every year.
  • Declining balance: more in early years, less later.
  • Sum of the years' digits: also front-loaded, but more gently.

How to Use the Depreciation Calculator

  1. Enter the asset's cost, including delivery and setup.
  2. Enter the salvage value expected at the end of its life.
  3. Enter the useful life in years.
  4. Choose a depreciation method.
  5. Press Calculate and read the schedule year by year.

Core Formulas

  • Straight-line: (cost − salvage) ÷ life
  • Declining balance: book value × (factor ÷ life), with factor 2 for double or 1.5
  • Sum of the years' digits: (cost − salvage) × remaining life ÷ (n(n + 1) ÷ 2)
  • Book value: cost − accumulated depreciation

Key Terms

  • Depreciation: spreading the cost of an asset over its useful life.
  • Salvage value: what an asset is expected to be worth at the end of its life.
  • Useful life: how many years the asset is expected to be used.
  • Book value: cost minus accumulated depreciation.
  • MACRS: Modified Accelerated Cost Recovery System, the main US tax depreciation method.

Worked Example

A $10,000 computer system with a $1,000 salvage value and a 4-year life, using sum of the years' digits.

  • Sum of digits = 4 + 3 + 2 + 1 = 10
  • Year 1 = $9,000 × 4 ÷ 10 = $3,600.00, and year 2 = $9,000 × 3 ÷ 10 = $2,700.00
  • Year 3 = $1,800.00, year 4 = $900.00, leaving a book value of $1,000.00

Real-Life Examples

  • Company vehicle: $40,000 with $8,000 salvage over 5 years is $6,400.00 a year straight-line, or $16,000.00 in year 1 with double declining balance.
  • Office furniture: $12,000 with no salvage over 7 years is $1,714.29 a year.
  • Equipment loan planning: compare book value with the loan balance each year.
  • Selling an asset: the gain or loss is the sale price minus the book value at that time.

Book Depreciation vs Tax Depreciation (MACRS)

  • Book depreciation: for financial statements, using methods like those here.
  • MACRS: the US tax system, with set recovery periods, conventions and percentage tables.
  • Section 179 and bonus depreciation: tax rules that can let businesses deduct more in the first year.

Straight-Line Depreciation by Life

27.5 and 39 years are the IRS recovery periods for residential and nonresidential rental buildings.

Useful lifeRatePer year
3 years33.33%$3,333.33
5 years20.00%$2,000.00
7 years14.29%$1,428.57
10 years10.00%$1,000.00
15 years6.67%$666.67
20 years5.00%$500.00
27.5 years3.64%$363.64
39 years2.56%$256.41

Choosing a Method

  • Straight-line: simple, and suits assets that wear evenly, such as buildings and furniture.
  • Declining balance: suits assets that lose value fast, such as vehicles and technology.
  • Tax rules: US tax returns normally use MACRS, not these book methods.
  • Consistency: use the same method each year for the same kind of asset.

Common Mistakes to Avoid

  • Depreciating land. Land is not depreciated.
  • Ignoring salvage value. Depreciation stops at the salvage value.
  • Using book methods for taxes. US taxes usually need MACRS.
  • Forgetting setup costs. Shipping and installation are part of the cost.
  • Switching methods. Changing methods often needs approval and disclosure.

Frequently Asked Questions

Subtract the salvage value from the cost and divide by the useful life in years.

Each year, depreciate the book value by twice the straight-line rate. For a 5-year asset, that is 40% a year.

No. Depreciation stops when the book value reaches the salvage value.

Late in the asset's life, straight-line on the remaining value gives more depreciation, so this calculator switches to it.

An accelerated method that weights each year by its remaining life over the sum of the year numbers.

For US taxes, cars and light trucks are generally 5-year property under MACRS. For your books, use your own estimate.

No. Land does not wear out, so it is not depreciated.

The total depreciation taken so far.

No. It shows book methods. Use IRS Publication 946 or tax software for MACRS.

Depreciation is generally a deductible business expense, which lowers taxable income.

Many people use zero, or a conservative estimate of resale or scrap value.

Yes, the building but not the land. Residential rental buildings use a 27.5-year recovery period for US taxes.

References & Sources

SourceUsed ForLink
IRS, Publication 946, How To Depreciate Property US tax depreciation, MACRS and recovery periods. https://www.irs.gov/publications/p946
Wikipedia, Depreciation Book depreciation methods. https://en.wikipedia.org/wiki/Depreciation