A depreciation calculator spreads an asset’s cost over its useful life, showing how much value it loses each year. Formula: Straight: (cost – salvage) / years. Declining: cost × (2 / years). Headline is Year-1 amount. A $50,000 machine with a $5,000 salvage value and a 5-year life depreciates $9,000 a year straight-line, or $20,000 in year 1 under double-declining balance.
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How to use the depreciation calculator
- Enter the asset’s cost.
- Enter the expected salvage value.
- Enter the useful life in years.
- Choose straight-line or declining balance and read the annual depreciation.
Depreciation methods in the depreciation calculator
Depreciation spreads the cost of an asset, such as a vehicle, machine or computer, over the years you use it. The depreciation calculator offers two common book methods:
- Straight-line: annual depreciation = (cost − salvage value) ÷ useful life. The same amount every year.
- Double-declining balance (DDB): annual depreciation = book value at the start of the year × 2 ÷ useful life. Larger amounts early, smaller later.
Salvage value is what you expect the asset to be worth at the end of its useful life. Book value is cost minus all depreciation taken so far.
Depreciation calculator worked example
A machine costs $50,000, has a $5,000 salvage value and a 5-year life. Straight-line depreciation is ($50,000 − $5,000) ÷ 5 = $9,000 a year. Under double-declining balance the rate is 2 ÷ 5 = 40%, so year 1 is $50,000 × 40% = $20,000. Year 2 is 40% of the remaining $30,000, or $12,000, and so on. DDB never takes book value below salvage, so the last year takes only what is left above $5,000. If the life is very short, such as 2 years, the 100% rate would wipe out the whole cost, so the calculator caps year 1 at cost minus salvage.
| Year | Straight-line | DDB depreciation | DDB book value |
|---|---|---|---|
| 1 | $9,000.00 | $20,000.00 | $30,000.00 |
| 2 | $9,000.00 | $12,000.00 | $18,000.00 |
| 3 | $9,000.00 | $7,200.00 | $10,800.00 |
| 4 | $9,000.00 | $4,320.00 | $6,480.00 |
| 5 | $9,000.00 | $1,480.00 | $5,000.00 |
The depreciation calculator shows this full year-by-year schedule for either method, with the book value after each year, and stops double-declining depreciation at the salvage value. Both methods depreciate the same $45,000 in total. They differ only in timing.
Book depreciation vs tax depreciation
For U.S. federal income tax, most business property placed in service after 1986 must be depreciated under the Modified Accelerated Cost Recovery System (MACRS), according to IRS Publication 946. MACRS uses set recovery periods (for example, 5 years for cars and computers and 7 years for office furniture), conventions such as half-year, and ignores salvage value. So a depreciation calculator using straight-line or DDB with salvage is best for financial statements, budgeting and resale planning, not for filling in Form 4562.
Instead of depreciating, businesses can often deduct the cost of qualifying property in the year it is placed in service under Section 179. For tax years beginning in 2026, the maximum Section 179 deduction is $2,560,000, reduced dollar for dollar once qualifying property placed in service exceeds $4,090,000, and the limit for certain SUVs is $32,000.
Choosing a method
- Use straight-line when an asset provides similar value every year, such as a building or furniture.
- Use an accelerated method such as DDB when an asset loses value quickly or is most productive early, such as vehicles and technology.
- Be consistent: once you choose a method for an asset, keep using it for that asset in your books.
Estimating useful life and salvage
Useful life is how long you expect to use the asset in your business, not how long it could last in theory. Base it on your experience, the manufacturer’s guidance and how heavily you use the asset. Salvage value can be a resale or scrap estimate; many small businesses use zero. Changing either input in the depreciation calculator can noticeably change the annual figure, so document how you chose them.
Estimates for planning only, not legal, tax or financial advice. Check carrier, card network, lender and state rules before relying on a figure.
Keeping depreciation records
Keep the purchase invoice, the date the asset was placed in service, its cost basis including delivery and installation, and the method and life you chose. If you sell the asset, compare the sale price with its book value: selling above book value produces a gain, and selling below produces a loss.
Related converters and calculators
Related calculators:
- ROI calculator: returns
- Auto loan calculator: vehicles
- Income tax calculator: taxes
- Present value calculator: value
Sources
IRS Publication 946: How To Depreciate Property; IRS Rev. Proc. 2025-32 (2026 inflation adjustments).
Questions about this calculator
What is the straight-line formula?
(Cost − salvage) ÷ useful life.
What is double-declining balance?
Book value × 2 ÷ useful life each year, never below salvage.
Can I use this for taxes?
Most U.S. business property uses MACRS for tax; see IRS Publication 946.
What is the 2026 Section 179 limit?
$2,560,000, phased out above $4,090,000.
Does total depreciation differ by method?
No, only the timing differs.
Check the assumptions and units before relying on a result. Financial, tax and health estimates do not replace advice for your individual circumstances.
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