MACRS Depreciation Calculator
Calculate the annual depreciation schedule under MACRS for any business asset. Includes Section 179 expensing and 2026 bonus depreciation percentages.
MACRS Recovery Periods Cheat Sheet
| Asset Class | Examples |
|---|---|
| 3-year | Software (off-the-shelf), racehorses, tractor units |
| 5-year | Computers, peripherals, vehicles, light trucks, R&D equipment |
| 7-year | Office furniture, fixtures, manufacturing equipment |
| 10-year | Water transportation equipment, single-purpose ag structures |
| 15-year | Land improvements, restaurant property, qualified leasehold |
| 20-year | Farm buildings (other than single-purpose ag) |
| 27.5-year | Residential rental real estate |
| 39-year | Commercial real estate (offices, retail, warehouses) |
Source: IRS Publication 946, Table B-1 (Asset Class Tables). Last updated: May 2026.
Section 179 — Immediate Expensing Up to $1.25M
Section 179 lets businesses immediately expense (deduct entirely in the year placed in service) the cost of qualifying equipment, up to $1,250,000 for 2026. Phase-out begins when total qualifying purchases exceed $3,130,000 — limiting use to small/mid businesses. Vehicles have separate limits: $30,000 cap on luxury cars, $30,000 SUV cap (over 6,000 lbs GVW gets the higher cap). Source: IRS Section 179, Rev. Proc. 2024-40.
Bonus Depreciation 2026 — The 40% Year
Bonus depreciation (Section 168(k)) allows immediate expensing of a percentage of qualifying asset cost. Schedule: 2022 was 100%, 2023 80%, 2024 60%, 2025 60% (per OBBB), 2026 40%, 2027 20%, 2028+ 0%. Unlike Section 179, bonus depreciation has no annual dollar cap and applies to new AND used property. Critical strategy: place major equipment in service in 2026 (still 40%) vs 2027 (only 20%) saves substantial tax deferral.
Optimization Order: Section 179 → Bonus → MACRS
For maximum first-year deduction: (1) Apply Section 179 first up to its dollar limit and business income limitation (can't create net loss for the year). (2) Apply bonus depreciation to whatever remains. (3) Apply MACRS year-1 percentage to the residual. This order generally maximizes first-year deduction and preserves bonus depreciation 'electing out' flexibility on assets where you don't want full expensing. Always reconfirm with a CPA for high-value asset placements.
Frequently Asked Questions
What is the difference between Section 179 and bonus depreciation?
Section 179 has a dollar cap ($1.25M in 2026) and a business income limitation (can't create net loss). Bonus depreciation has no dollar cap but is a percentage (40% in 2026, declining). Section 179 is generally elected per-asset; bonus is automatic but you can 'elect out' per asset class. Most small businesses use Section 179 first because it doesn't reduce the depreciation basis below zero \u2014 bonus depreciation does.
Can I depreciate land?
No. Land is not depreciable under MACRS or any other US tax depreciation system. Only the structures and improvements ON land are depreciable. When you purchase real estate, you must allocate the price between land (non-depreciable) and building (depreciable) \u2014 typically 20-30% to land, 70-80% to building.
What is the half-year convention?
Most MACRS property uses the half-year convention, meaning the asset is treated as placed in service mid-year \u2014 receiving only half a year of depreciation in year 1 (and half year in the final recovery year). This is why MACRS year-1 percentages look small (e.g., 20% on 5-year property, not 40%). The 'mid-quarter convention' applies if you place more than 40% of total year's assets in the last quarter.
How does bonus depreciation phase out work?
Under TCJA 2017 with OBBB 2025 modifications: 2024 = 60%, 2025 = 60%, 2026 = 40%, 2027 = 20%, 2028+ = 0%. Place assets in service before each year-end to lock in that year's percentage. There's discussion in Congress of extending or restoring 100% bonus \u2014 monitor IRS announcements.
Can I claim Section 179 on a vehicle?
Yes, but with luxury vehicle limits. For 2026: passenger autos limited to ~$12,200 first year, ~$19,200 with bonus depreciation. SUVs over 6,000 lbs GVW get a special $30,000 Section 179 limit. Vehicles must be used >50% for business \u2014 track mileage logs carefully. Source: IRS Rev. Proc. 2024-40, Section 280F.
Do I have to use MACRS for all business assets?
Almost always yes for assets placed in service after 1986. Limited exceptions (ADS straight-line for foreign-use property, certain elections) but most US business depreciation uses MACRS. Real estate must use the longer 27.5/39-year MACRS straight-line method \u2014 accelerated MACRS does not apply to real estate.