Max $2,560,000 for 2025
First Year Deduction
$65,716
Total Depreciation
$100,000
| Year | MACRS Rate | MACRS Deduction | Total Deduction |
|---|---|---|---|
| Year 1(incl. S179 + bonus) | 14.29% | $5,716 | $65,716 |
| Year 2 | 24.49% | $9,796 | $9,796 |
| Year 3 | 17.49% | $6,996 | $6,996 |
| Year 4 | 12.49% | $4,996 | $4,996 |
| Year 5 | 8.93% | $3,572 | $3,572 |
| Year 6 | 8.92% | $3,568 | $3,568 |
| Year 7 | 8.93% | $3,572 | $3,572 |
| Year 8 | 4.46% | $1,784 | $1,784 |
| Total | $40,000 | $100,000 | |
What is MACRS depreciation?
MACRS (Modified Accelerated Cost Recovery System) is the current tax depreciation method required by the IRS for most business and investment property. It allows businesses to deduct the cost of tangible assets over a specified recovery period using declining balance methods. MACRS provides larger deductions in the earlier years, which accelerates tax benefits.
What is Section 179?
Section 179 allows businesses to deduct the full purchase price of qualifying equipment and software in the year it is placed in service, rather than depreciating it over time. For 2025, the maximum Section 179 deduction is $1,250,000, with a phase-out threshold beginning at $3,130,000 in total purchases. This applies to new and used equipment.
What is bonus depreciation in 2025?
Bonus depreciation allows businesses to take a large first-year deduction on qualifying assets. For 2025, the bonus depreciation rate is 60% (phasing down from 100% in 2022 by 20% per year). It applies to the cost remaining after Section 179, and can be used on new and used assets. The rate will continue to decrease to 40% in 2026 and 20% in 2027.
What are recovery periods?
Recovery periods determine how many years an asset is depreciated. Common periods include: 3 years for racehorses and tractor units; 5 years for automobiles, computers, and office equipment; 7 years for office furniture and most manufacturing equipment; 15 years for land improvements; 27.5 years for residential rental property; and 39 years for commercial buildings.
IRS-Aligned: MACRS rates and Section 179 limits reflect IRS Publication 946 for the 2025 tax year. Bonus depreciation follows the TCJA phase-down schedule. Consult a tax professional for complex asset situations.
Disclaimer: This calculator provides estimates based on current IRS rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your filing status, state of residence, deductions, and individual circumstances. Always consult a qualified tax professional or CPA before making financial decisions. Read our terms
This calculator uses official rates and thresholds from:
- IRS Publication 946 — How to Depreciate Property (MACRS)
- IRS Publication 544 — Sales and Other Dispositions of Assets
Last verified: March 2026 · Tax year 2025. Results are indicative — consult a qualified accountant for personalised advice.