Depreciation Calculator
Depreciation Calculator
| Year | Expense | Accumulated | Book value |
|---|---|---|---|
| 1 | $9,000 | $9,000 | $41,000 |
| 2 | $9,000 | $18,000 | $32,000 |
| 3 | $9,000 | $27,000 | $23,000 |
| 4 | $9,000 | $36,000 | $14,000 |
| 5 | $9,000 | $45,000 | $5,000 |
Based on your results — what to do next:
Could you deduct it all in year one?
Instead of spreading $45,000 over 5 years, Section 179 may let you expense much of it immediately.
Is buying better than leasing?
Total depreciation tax savings of $10,800 at 24% belong in your lease-versus-buy comparison.
See the effect on your business taxes
A $9,000 year-1 deduction lowers taxable business income by the same amount.
A depreciation calculator spreads the cost of an asset, less its salvage value, over its useful life. Pick straight-line, double-declining balance or sum-of-years-digits, enter cost, salvage value, life and your tax rate, and get the annual expense, accumulated depreciation, book value and estimated tax savings.
How the Depreciation Is Calculated
① Straight-line
Annual expense = (Cost − Salvage) ÷ Life
② Double-declining balance
Expense = Book value × (2 ÷ Life), switching to straight-line when that is larger, never below salvage
③ Sum-of-years-digits
Expense = (Cost − Salvage) × (Remaining life ÷ [n(n+1)/2])
| Variable | Meaning | Typical Range |
|---|---|---|
| Cost | Purchase price plus setup costs | Any |
| Salvage | Expected value at end of life | 0–20% of cost |
| Life | Useful life in years | 3–39 |
| Tax rate | Marginal rate used for savings | 10–37% |
Worked Example — $50,000 asset, $5,000 salvage, 5-year life
- Straight-line: $45,000 ÷ 5 = $9,000 per year
- Double-declining: $20,000, $12,000, $7,200, $4,320, $1,480 across years 1 to 5
- Sum-of-years: $45,000 × 5 ÷ 15 = $15,000 in year 1
- At 24%, year-1 tax saving is $2,160 (straight-line) or $4,800 (double-declining)
💡 Pro-Tip
Book depreciation and tax depreciation are different systems. Tax returns use MACRS recovery periods and may allow Section 179 or bonus depreciation to deduct much more in year one. Use this tool for accounting and planning, then confirm the tax method with your CPA.
Depreciation Calculator FAQ
What is depreciation?
An accounting method that allocates the cost of a long-lived asset over the years it is used, matching expense to the revenue it helps produce.
Which depreciation method is best?
Straight-line is simplest and steady. Double-declining and sum-of-years front-load deductions, which helps with early tax savings on assets that lose value quickly, such as vehicles and equipment.
What is salvage value?
The amount you expect the asset to be worth at the end of its useful life. Depreciation stops when book value reaches salvage value.
Is this the same as tax depreciation?
Not exactly. The IRS requires MACRS for most business property and allows Section 179 and bonus depreciation. Use this for book or planning figures and check tax treatment with a professional.