Depreciation Calculator

Straight-line is the default for long-lived, slow-degrading assets where wear is roughly even over time: buildings, furniture, land improvements, and most intangibles. Double-declining-balance (DDB) fits assets that lose the most value early and stabilize later, which is why it is the standard pick for vehicles, laptops, phones, servers, and other technology. Sum-of-years-digits (SYD) is also front-loaded but slightly less aggressive than DDB and is sometimes used for production equipment. Units-of-production is the right model when wear tracks usage rather than calendar time, such as a press rated for 1 million stamps or a truck rated for 300,000 miles. Pick the method that best matches how the asset actually loses economic value.

Both apply a fixed percentage to the asset's remaining book value each year. The difference is just the rate. Declining-balance uses any rate you pick (often 150% of the straight-line rate, also called 150% declining-balance). Double-declining-balance fixes the rate at 2 / useful life, which is exactly twice the straight-line rate, so a 5-year asset depreciates at 40% per year (2 / 5). DDB front-loads expense more aggressively than a 150% declining-balance schedule and is the most common accelerated method on US books.

SYD weights each year by how many years of life remain. For a 5-year asset, the denominator is 5 + 4 + 3 + 2 + 1 = 15. Year 1 gets 5/15 of the depreciable base (33.3%), year 2 gets 4/15 (26.7%), and so on down to 1/15 (6.7%) in year 5. The total still adds to 100% of (cost - salvage), so book value lands exactly on salvage in the final year. Compared to DDB, SYD declines more smoothly: roughly 33% in year 1 versus 40% under DDB on the same 5-year asset.

US companies typically run two depreciation schedules: a book schedule for GAAP financial statements and a tax schedule for the IRS. For book purposes, GAAP allows straight-line, declining-balance, SYD, or units-of-production. For US federal income tax, the IRS requires the Modified Accelerated Cost Recovery System (MACRS) under IRC Section 168, which uses fixed IRS tables, half-year or mid-quarter conventions, and class lives by asset category. MACRS is more accelerated than straight-line, which creates a timing difference (book and tax depreciation eventually agree on total expense, just not on when it lands). Use this calculator for book or planning math; use a MACRS calculator for the Form 4562 figure.

Salvage value (also called residual value or scrap value) is the dollar amount you expect to recover when you dispose of the asset at the end of its useful life. For straight-line, SYD, and DDB, book value approaches but never drops below salvage. For tax purposes under MACRS, salvage is treated as zero. For book purposes under GAAP, use a defensible estimate based on resale data, manufacturer guidance, or industry norms: roughly 10-20% of cost for vehicles after 5 years, 0-10% for tech gear, and 10-25% for industrial equipment. When in doubt, zero is a conservative, common choice.