Depreciation Calculator
Adjust the inputs below. Results update as you type.
How it works
Straight-line: (cost − salvage) / useful life. Declining balance doubles the straight-line rate applied to book value each year. Sum-of-years-digits front-loads depreciation. MACRS (US tax) uses IRS-specified recovery periods and conventions. Depreciation reduces taxable income; accumulated depreciation reduces book value on the balance sheet. Consult a tax advisor for MACRS class assignments.
Input guidance
- Use realistic rates from lender or provider quotes instead of headline averages.
- Model conservative, baseline, and optimistic scenarios before deciding.
- Include recurring real-world costs (fees, taxes, insurance, maintenance) where relevant.
The formula
Straight-line depreciation = (cost − salvage value) ÷ useful life per year. Declining-balance methods apply a fixed percentage to the shrinking book value each year for faster early depreciation.
Worked example
A $20,000 asset with a $2,000 salvage value over 5 years depreciates $3,600 per year on a straight-line basis ($18,000 ÷ 5).
More examples to test
- Conservative case: use a higher interest rate and lower growth assumptions to stress-test affordability.
- Optimistic case: use a lower rate with stable income assumptions to compare upside potential.
How to interpret results
Treat this as a planning model, not a final approval tool. Compare at least two scenarios and focus on total-cost and cash-flow trade-offs.
When this can be inaccurate
Results can diverge due to fees, changing rates, tax rules, lender policies, and behavior changes that simplified models cannot fully capture.
Change history
- July 2026: Quality-reviewed for publication with formula checks and explanatory copy updates.
Site-wide corrections also appear on the corrections log.
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Frequently asked questions
What is straight-line depreciation?+
Spreading an asset's cost (minus salvage) evenly across its useful life, giving the same expense each year — the simplest method.
What is declining balance?+
An accelerated method that takes larger deductions early and smaller ones later, matching assets that lose value fastest when new.
Why does depreciation matter?+
It allocates an asset's cost over the years it is used, affecting accounting profit and, for businesses, taxable income.
How should I use this result?+
Treat it as a planning estimate. Compare at least two realistic scenarios, then confirm with statements, quotes, or a qualified professional before acting.
How often should I refresh assumptions?+
Refresh whenever rates, income, costs, or policy limits change materially, and before making irreversible commitments.