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MACRS Depreciation Calculator

Generate a year-by-year MACRS depreciation schedule using official IRS percentage tables. Supports all property classes and conventions.

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Original cost or basis of the asset

IRS property class determines the recovery period

Half-year is default; mid-quarter applies in certain situations

Enter asset details, then click Calculate to generate a depreciation schedule.

How MACRS Depreciation Works

What is MACRS?

MACRS (Modified Accelerated Cost Recovery System) is the tax depreciation system used in the United States for most tangible business property. It was established by the Tax Reform Act of 1986 and replaced the earlier ACRS system.

MACRS is an accelerated depreciation method, meaning it allows larger deductions in the earlier years of an asset’s useful life. This benefits businesses by reducing taxable income more in the near term, improving cash flow.

How the Calculation Works

Each asset is assigned a property class (3, 5, 7, 10, 15, or 20 years) based on its type. The IRS provides specific percentage tables for each class. To calculate depreciation for any year, you multiply the asset’s original cost by the percentage for that year.

For example, a $10,000 computer (5-year property, half-year convention):

  • Year 1: $10,000 × 20.00% = $2,000
  • Year 2: $10,000 × 32.00% = $3,200
  • Year 3: $10,000 × 19.20% = $1,920
  • Year 4: $10,000 × 11.52% = $1,152
  • Year 5: $10,000 × 11.52% = $1,152
  • Year 6: $10,000 × 5.76% = $576

Conventions

The half-year convention assumes assets are placed in service at the midpoint of the year. The mid-quarter convention applies when more than 40% of all assets are placed in service in the last quarter of the year. Your tax advisor can help determine which applies to your situation.

Frequently asked questions

MACRS (Modified Accelerated Cost Recovery System) is the depreciation method required by the IRS for most business and investment property placed in service after 1986. It allows businesses to recover the cost of assets over a predetermined schedule that front-loads deductions, meaning you deduct more in the earlier years of an asset’s life.

3-year property includes tractor units and racehorses. 5-year property covers vehicles, computers, and office equipment. 7-year property includes furniture, fixtures, and most machinery. 10-year property covers vessels and barges. 15-year property includes land improvements and pipelines. 20-year property covers farm buildings and municipal infrastructure.

The half-year convention assumes all property is placed in service at the midpoint of the year, regardless of when it was actually acquired. This means you only get half of the first year’s depreciation. It’s the default convention used for most MACRS property.

Use MACRS for tax purposes on most business property — it’s required by the IRS and gives larger deductions in early years. Use straight-line for financial reporting (GAAP), certain real property, or when you want equal deductions each year. Many businesses use MACRS for taxes and straight-line for books.

MACRS actually allows you to elect straight-line depreciation over the MACRS recovery period or the ADS (Alternative Depreciation System) recovery period. However, once you make this election for an asset, you generally cannot switch back to accelerated MACRS for that same asset.

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