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Depreciation Calculator

Calculate asset depreciation using three methods: straight-line, declining balance, and sum-of-years-digits. See annual expense, book value, schedule, and tax savings. Free, no sign-up.

Last revised 25 August 2026

By Team GlobalCalqulate · About our editorial standards

Asset Details

Asset Cost ($)

Initial purchase price.

Salvage Value ($)

Estimated value at end of useful life.

Useful Life (Years)

How many years you expect to use the asset.

Depreciation Method

Declining Rate (%)

200% for double-declining, 150% for 1.5x.

Tax Rate (%)

Corporate or personal tax rate.

Financial Disclaimer: This result is an educational estimate produced by applying a standard formula to the figures you entered. It is not an offer, a quotation, or financial advice: real costs and returns depend on a provider's pricing, fees and underwriting, and on circumstances this calculator does not collect. Confirm the figures with the provider or a qualified adviser before acting on them. Full disclaimer.

Sources & methodology

Formula:: Straight line
Reference:: Internal Revenue Service (IRS)
Content last updated:: August 2026
Scheduled re-verification:: August 2027

Calculation type: Exact calculation. Figures are taken from Internal Revenue Service (IRS) — see sources below.

Your entries stay on this device. This calculator runs entirely in your browser — the figures you type are not sent to us or to anyone else. The page itself uses cookies for analytics and advertising, described in the privacy policy.

Formula & methodology

Formula used

Straight line

annual depreciation = (cost − salvage) ÷ useful life

The depreciable amount is spread evenly across every year of the asset's life.

Declining balance

rate = declining % ÷ useful life;  year's depreciation = book value × rate

A fixed percentage of the remaining book value each year, so charges are largest early on. 200% gives double-declining balance.

Book value

book value = cost − accumulated depreciation

What the asset is carried at after depreciation to date. It is never taken below the salvage value.

Tax saving

tax saving = depreciation × tax rate

Depreciation is a deductible expense, so it reduces taxable profit by the amount charged.

Variable definitions

Symbol	Meaning	Unit
cost	Asset cost. the purchase price plus costs of getting the asset into use	currency
salvage	Salvage value. the estimated resale value at the end of the useful life	currency
life	Useful life. how many years the asset is expected to be in service	years

Step-by-step calculation

1. Enter cost, salvage value and useful life
The cost must exceed the salvage value, or there is nothing to depreciate.
2. Choose the method
Straight line spreads the charge evenly; declining balance front-loads it.

Limitations

These are accounting methods, not tax schedules. Tax depreciation follows statutory rules — MACRS in the United States, capital allowances in the UK — that differ from book depreciation.
Useful life and salvage value are estimates. Changing either changes every year's charge.
Declining balance is capped so book value never falls below salvage value, which means the final year's charge is often smaller than the formula alone would give.

This page is educational. It applies a standard formula to the figures you enter and shows the arithmetic behind the result. It is an estimate, not an offer, a quotation or financial advice: real costs depend on the provider's pricing, fees and underwriting, and on circumstances this calculator does not collect.

Sources & references

Publication 946: How to Depreciate Property — MACRS tables and methods — Internal Revenue Service (IRS)

Help & FAQs

Frequently Asked Questions

Clear answers to common questions to help you use this calculator confidently.

What is depreciation?

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Depreciation is an accounting method that spreads an asset's cost across its useful life, reflecting its decline in value. It's a non-cash expense used in financial reporting and tax calculations to match asset costs with the revenue they generate.

What's the difference between straight-line and declining balance depreciation?

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Straight-line depreciates assets equally each year, making it simple and consistent. Declining balance uses an accelerated rate applied to decreasing book value, resulting in higher depreciation early and lower later — useful for assets that lose value quickly.

What is salvage value and why does it matter?

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Salvage value is the estimated resale or scrap value at the end of an asset's useful life. It matters because depreciation = (Asset Cost − Salvage Value) ÷ Years. A higher salvage value reduces total depreciation, affecting annual deductions.

What's the difference between book value and market value?

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Book value is calculated using depreciation: Asset Cost − Accumulated Depreciation. Market value is what you could actually sell it for now. They often differ significantly — a $50,000 vehicle may have $20,000 book value but only $15,000 market value.

Can I depreciate land?

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No. Land is not depreciable because it doesn't wear out or lose usable value. Buildings and improvements on land are depreciable, though — when purchasing property, cost is allocated between land (non-depreciable) and building (depreciable).

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How to Use This Calculator

Enter Asset Details

Input the purchase cost, estimated salvage value at the end of its life, and how many years you plan to use it.

Choose a Depreciation Method

Straight-line gives equal expense each year. Declining balance front-loads depreciation (more in early years). Sum-of-years-digits provides another accelerated option.

Enable Tax Savings

Toggle tax deduction to see how much depreciation reduces your taxable income at your tax rate.

Review the Schedule

See year-by-year depreciation expense, remaining book value, and cumulative tax savings.

Understanding Your Results

Straight-Line
Equal depreciation each year: (Cost − Salvage) ÷ Useful Life. Simplest method, most common for financial reporting.
Declining Balance
Higher depreciation in early years: Book Value × (Rate ÷ Useful Life). Double-declining uses 200% rate.
Sum-of-Years-Digits
Accelerated method using fraction: Remaining Life ÷ Sum of Years. Depreciation decreases each year.
Tax Deduction
Depreciation is a non-cash expense that reduces taxable income, creating tax savings at your rate.

Key Tips

✓
Straight-line is used for GAAP financial reporting. Accelerated methods (declining balance, SYD) maximize near-term tax savings.
✓
The IRS requires MACRS for tax depreciation in the US — this calculator shows common book methods.
✓
Salvage value must be reasonable — overstating it reduces annual depreciation expense.
✓
Depreciation does not affect cash flow directly, but the tax savings improve after-tax cash flow.

How Asset Depreciation Works

What Is Depreciation?

Depreciation is the accounting process of allocating an asset's cost over its useful life. When a business buys equipment, vehicles, or buildings, the cost isn't expensed all at once — it's spread across the years the asset is expected to generate value. This matches the expense with the revenue it helps produce. Depreciation is a non-cash expense: it reduces reported profit and taxable income but doesn't involve actual cash leaving the business. The annual depreciation amount depends on three factors: the asset's purchase cost, its estimated salvage value at end of life, and the depreciation method chosen.

Comparing the Three Methods

Straight-line gives the same depreciation amount every year — predictable and easy to calculate. Declining balance (typically double-declining at 200%) front-loads depreciation: much higher in years 1-2, then tapering off. This is useful for assets that lose value quickly, like technology equipment. Sum-of-years-digits uses a fraction: in a 5-year asset, year 1 depreciates 5/15 of the depreciable base, year 2 gets 4/15, and so on. Both accelerated methods result in lower taxable income in early years and higher taxable income later — effectively a tax deferral benefit.

Tax Implications

Depreciation reduces taxable income. At a 21% corporate tax rate, every $1,000 of depreciation saves $210 in taxes. This tax shield is one reason businesses prefer accelerated depreciation methods — getting the deductions sooner improves net present value. In the US, the IRS requires MACRS (Modified Accelerated Cost Recovery System) for tax purposes, which uses prescribed lives and methods. This calculator shows GAAP/financial reporting methods. For actual tax filing, consult your accountant or tax software.

Limitations

This calculator assumes a constant depreciation rate and a predictable salvage value. In reality, assets may become obsolete faster than expected, or market values may diverge from book values. It does not model mid-year conventions, partial-year depreciation, or Section 179/bonus depreciation (immediate expensing options in the US tax code). Use for planning and financial modeling. For official financial statements and tax filings, consult an accounting professional.

Why Accuracy Matters

Depreciation decisions directly impact your tax liability and financial statements. Using the wrong method or useful-life estimate can mean missing early-year deductions, misstating book value, or creating discrepancies that surface during an audit. For actual tax filings, verify your figures with a CPA or tax professional — this calculator is for planning and estimation.

Key Takeaway

Different depreciation methods produce different Year 1 deductions:. • → Straight-Line: Most consistent, best for assets with stable usage. • → Declining Balance: Highest early deductions, best for technology & vehicles. • → Sum-of-Years-Digits: Moderate acceleration, good for rapid obsolescence. Tip: Consult your accountant or tax advisor to select the method that minimizes your tax liability while meeting accounting standards.

1. Straight-Line Depreciation Formula

Annual Depreciation = (Asset Cost − Salvage Value) ÷ Useful Life. or. Depreciation = Depreciable Base ÷ Years. Where:. • Asset Cost = Original purchase price. • Salvage Value = Expected value at end of useful life. • Useful Life = Number of years asset is expected to be useful. • Depreciable Base = Asset Cost − Salvage Value. Practical Example:. Equipment costs $50,000, salvage value is $5,000, useful life is 10 years. Annual Depreciation = ($50,000 − $5,000) ÷ 10 = $45,000 ÷ 10 = $4,500/year. When to Use Straight-Line:. • Most common for financial reporting and tax purposes. • Assets with consistent usage patterns. • Properties, buildings, and long-term assets. • GAAP-compliant and easy to understand.

2. Declining Balance Depreciation Formula

Depreciation Rate = 1 ÷ Useful Life × 2 (Double Declining). Annual Depreciation = Book Value × Depreciation Rate. Where:. • Depreciation Rate = 2 ÷ Useful Life (2 = double declining factor). • Book Value = Current asset value (decreases each year). • Annual Depreciation = Higher in early years, lower in later years. Practical Example:. Vehicle costs $35,000, salvage value $5,000, useful life 5 years. Double declining rate = 2/5 = 40%. Year 1: $35,000 × 40% = $14,000 depreciation. Year 2: ($35,000 − $14,000) × 40% = $21,000 × 40% = $8,400. Year 3: ($21,000 − $8,400) × 40% = $12,600 × 40% = $5,040. When to Use Declining Balance:. • Vehicles, machinery, and technology with rapid obsolescence. • Assets that lose significant value in early years. • Tax planning to maximize early deductions. • MACRS depreciation method (IRS standard for US businesses).

3. Sum-of-Years-Digits (SYD) Depreciation Formula

Sum of Years = n(n+1) ÷ 2. Depreciation Rate (Year X) = (Remaining Years) ÷ Sum of Years. Annual Depreciation = Depreciable Base × Depreciation Rate. Where:. • n = Useful life in years. • Sum of Years = Total of all years (1+2+3+.+n). • Depreciable Base = Asset Cost − Salvage Value. • Remaining Years = Years left in useful life. Practical Example:. Computer equipment costs $12,000, salvage value $1,200, useful life 5 years. Sum of Years: 1+2+3+4+5 = 15. Depreciable Base: $12,000 − $1,200 = $10,800. Year 1: $10,800 × (5÷15) = $10,800 × 0.333 = $3,600. Year 2: $10,800 × (4÷15) = $10,800 × 0.267 = $2,880. Year 3: $10,800 × (3÷15) = $10,800 × 0.200 = $2,160. When to Use Sum-of-Years-Digits:. • Moderate acceleration between straight-line and declining balance. • Assets with predictable life spans and moderate value decline. • Equipment and machinery with 5-10 year useful lives. • Less aggressive than double declining for tax benefits.

Depreciation Methods Comparison

Aspect Straight-Line Declining Balance Sum-of-Years. Year 1 Deduction Lowest Highest High. Acceleration None Aggressive Moderate. Total Deduction Same for all Same for all Same for all. Tax Impact Steady Front-loaded Front-weighted. Common Use Most assets Vehicles, tech Mid-life assets. Important Note. Tax regulations vary by country, industry, and asset type. The depreciation method you choose affects your tax liability. Always consult with a certified accountant or tax professional before selecting a depreciation method for tax purposes. The IRS may require specific methods (like MACRS in the US) for tax depreciation.

Estimating Useful Life

Useful life depends on asset type and industry norms. Common estimates: vehicles 5-7 years, equipment 7-10 years, buildings 27.5-39 years, furniture 7 years, computer equipment 5 years. These are general guidelines — your accounting policy or applicable tax rules may specify different lives for your situation.

Formula & methodology

Formula used

Straight line

annual depreciation = (cost − salvage) ÷ useful life

The depreciable amount is spread evenly across every year of the asset's life.

Declining balance

rate = declining % ÷ useful life;  year's depreciation = book value × rate

A fixed percentage of the remaining book value each year, so charges are largest early on. 200% gives double-declining balance.

Book value

book value = cost − accumulated depreciation

What the asset is carried at after depreciation to date. It is never taken below the salvage value.

Tax saving

tax saving = depreciation × tax rate

Depreciation is a deductible expense, so it reduces taxable profit by the amount charged.

Variable definitions

Symbol	Meaning	Unit
cost	Asset cost. the purchase price plus costs of getting the asset into use	currency
salvage	Salvage value. the estimated resale value at the end of the useful life	currency
life	Useful life. how many years the asset is expected to be in service	years

Step-by-step calculation

1. Enter cost, salvage value and useful life
The cost must exceed the salvage value, or there is nothing to depreciate.
2. Choose the method
Straight line spreads the charge evenly; declining balance front-loads it.

Limitations

These are accounting methods, not tax schedules. Tax depreciation follows statutory rules — MACRS in the United States, capital allowances in the UK — that differ from book depreciation.
Useful life and salvage value are estimates. Changing either changes every year's charge.
Declining balance is capped so book value never falls below salvage value, which means the final year's charge is often smaller than the formula alone would give.

Calculator inputs

Asset Details

Your results

Sources & methodology

Formula & methodology

Formula used

Straight line

Declining balance

Book value

Tax saving

Variable definitions

Step-by-step calculation

Limitations

Sources & references

What is depreciation?

What's the difference between straight-line and declining balance depreciation?

What is salvage value and why does it matter?

What's the difference between book value and market value?

Can I depreciate land?

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Calculator inputs

Asset Details

Your results

Sources & methodology

How to Use This Calculator

Example: $10,000 Equipment, 5-Year Life

Understanding Your Results

Key Tips

How Asset Depreciation Works

What Is Depreciation?

Comparing the Three Methods

Tax Implications

Limitations

Why Accuracy Matters

Key Takeaway

1. Straight-Line Depreciation Formula

2. Declining Balance Depreciation Formula

3. Sum-of-Years-Digits (SYD) Depreciation Formula

Depreciation Methods Comparison

Estimating Useful Life

Formula & methodology

Formula used

Straight line

Declining balance

Book value

Tax saving

Variable definitions

Step-by-step calculation

Limitations

Sources & references

How to Use This Calculator

Example: $10,000 Equipment, 5-Year Life

Understanding Your Results

Key Tips

How Asset Depreciation Works

What Is Depreciation?

Comparing the Three Methods

Tax Implications

Limitations

Why Accuracy Matters

Key Takeaway

1. Straight-Line Depreciation Formula

2. Declining Balance Depreciation Formula

3. Sum-of-Years-Digits (SYD) Depreciation Formula

Depreciation Methods Comparison

Estimating Useful Life