Free Depreciation Calculator: MACRS, Straight Line and Rental Property
Calculate tax depreciation for business property with the IRS MACRS rates, for rental and commercial buildings over 27.5 or 39 years, and with Section 179 or 100% bonus depreciation, as a year-by-year schedule you can download.
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When you buy equipment, a vehicle or a rental building for business, you usually cannot deduct the whole cost at once; you deduct it over several years as depreciation. This free depreciation calculator applies the IRS MACRS rates from Publication 946, handles residential rental and commercial buildings, and lets you add a Section 179 deduction or 100% bonus depreciation, with a year-by-year schedule to download.
Depreciation calculator
MACRS rates from IRS Publication 946 (Table A-1, half-year convention) for 3- to 20-year property; buildings use straight line with the mid-month convention. Passenger car limits under section 280F, the mid-quarter convention, the alternative depreciation system and state rules are not included.
Key takeaways
- A $10,000 computer or other 5-year property placed in service in 2026 is depreciated $2,000, $3,200, $1,920, $1,152, $1,152 and $576 over six tax years.
- A residential rental building costing $250,000 (without the land) placed in service in June gives $4,924.24 in the first year and $9,090.91 in each full year after.
- For qualified property acquired and placed in service after January 19, 2025, 100% bonus depreciation lets you deduct the full cost in the first year.
- The Section 179 limit for 2026 is $2,560,000, reduced once you place more than $4,090,000 of property in service.
MACRS recovery periods
| Class | Examples (IRS Publication 946) | Method |
|---|---|---|
| 3-year | Over-the-road tractor units, qualified rent-to-own property, certain horses | 200% declining balance |
| 5-year | Cars, light trucks, computers, office machines, appliances and carpets in rental units | 200% declining balance |
| 7-year | Office furniture and fixtures, and property without another class | 200% declining balance |
| 10-year | Boats and barges, single-purpose agricultural structures, fruit and nut trees | 200% declining balance |
| 15-year | Land improvements such as fences, sidewalks and roads; qualified improvement property | 150% declining balance |
| 20-year | Farm buildings, municipal sewers | 150% declining balance |
| 27.5-year | Residential rental buildings | Straight line, mid-month |
| 39-year | Commercial (nonresidential) buildings | Straight line, mid-month |
Land never depreciates. When you buy a rental property, split the price between the land and the building, for example using the ratio on your property tax assessment, and depreciate only the building.
MACRS depreciation rates (half-year convention)
| Year | 5-year | 7-year |
|---|---|---|
| 1 | 20.00% | 14.29% |
| 2 | 32.00% | 24.49% |
| 3 | 19.20% | 17.49% |
| 4 | 11.52% | 12.49% |
| 5 | 11.52% | 8.93% |
| 6 | 5.76% | 8.92% |
| 7 | — | 8.93% |
| 8 | — | 4.46% |
Because the half-year convention treats property as placed in service in the middle of the year, 5-year property is depreciated over six tax years. If more than 40% of the depreciable property you placed in service during the year (not counting buildings) was placed in service in the last three months, the mid-quarter convention applies instead, with different rates.
Buildings: 27.5 and 39 years
Residential rental and commercial buildings use the straight-line method with the mid-month convention: the building is treated as placed in service in the middle of its month. A residential building placed in service in June 2026 gets 6.5 months of depreciation in 2026: $250,000 × 6.5 ÷ 12 ÷ 27.5 = $4,924.24. Every full year after that is $250,000 ÷ 27.5 = $9,090.91, and the last year gets the rest. The calculator figures these amounts directly; the IRS percentage tables round the rates, so tax software that uses them can show amounts that differ by a few dollars.
Section 179 and bonus depreciation
- Section 179: you can choose to deduct the cost of qualifying equipment in the year you place it in service, up to $2,560,000 for 2026. The deduction cannot exceed your taxable business income for the year, and it is reduced dollar for dollar once you place more than $4,090,000 of property in service.
- Bonus depreciation: for qualified property with a recovery period of 20 years or less that you acquire and place in service after January 19, 2025, you can deduct 100% of the cost in the first year. You can elect out, or for the first tax year ending after January 19, 2025 elect a 40% rate instead.
- Order: Section 179 comes first, bonus depreciation applies to the rest, and regular MACRS to whatever is left.
- Buildings do not qualify for bonus depreciation, but qualified improvements to the interior of a commercial building do, as 15-year property.
Deducting everything at once is not always best: if your income is low this year and you expect higher income later, spreading depreciation over several years can save more tax. Passenger cars also have yearly dollar limits that this calculator does not apply.
Depreciation recapture
When you sell depreciated property for more than its remaining basis, part of the gain is taxed as ordinary income (for equipment) or up to 25% (for real estate). You must reduce the basis by the depreciation you were entitled to, even if you did not claim it, so it pays to claim it every year.
Frequently asked questions
How do I calculate depreciation for my rental property?
Take the cost of the building without the land, plus closing costs that belong to the building, and depreciate it over 27.5 years with the mid-month convention. Choose "Residential rental building" in the calculator and the month you first rented it out or made it available.
What is MACRS?
The Modified Accelerated Cost Recovery System, the tax depreciation system for most business property placed in service after 1986. It sets the recovery period, the method and the convention for each type of property.
Can I depreciate a car I use for business?
Yes, the business-use share of it, as 5-year property. If you use the standard mileage rate instead, depreciation is already included in the rate. Cars used 50% or less for business must use the straight-line alternative system, and passenger cars have annual dollar limits.
Is bonus depreciation 100% in 2026?
Yes, for qualified property acquired and placed in service after January 19, 2025. Property acquired under a binding contract before January 20, 2025, falls under the older phase-down rules.
Where do I report depreciation?
On Form 4562, which carries the deduction to Schedule C for a business or Schedule E for a rental.
