Straight Line Depreciation Calculator: Annual Depreciation
Work out the annual depreciation expense on a fixed asset under the straight-line method — the simplest way to spread an asset's cost across the years it will be used.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Annual depreciation |
|---|---|
| $20k cost · 10 years | $2,000.00 |
| $5k cost · 5 years | $1,000.00 |
| $120k cost · 20 years | $6,000.00 |
| $1,800 cost · 3 years | $600.00 |
How This Calculator Works
Enter the depreciable cost — asset purchase price less estimated salvage value — and the useful life in years. The calculator divides one by the other to give the annual depreciation expense, the same amount you book every year of the asset's life.
The Formula
Cost per Unit
Total Amount is the full cost or price, Quantity is the number of units it covers
Worked Example
A $22,000 piece of equipment with a $2,000 salvage value depreciated over 10 years carries a $2,000 annual depreciation expense — the same charge every year until book value drops to salvage. By year 10, accumulated depreciation equals depreciable cost.
Key Insight
Straight-line is the simplest depreciation method and the one most companies use for book accounting because it produces stable, comparable income statements. Tax depreciation in the US usually follows MACRS — an accelerated method — which is why book and tax depreciation almost always disagree.
Straight-line vs accelerated depreciation
STRAIGHT-LINE. Equal annual depreciation. Simple. Used for: financial reporting (most companies); some long-life assets for tax.
MACRS (Modified Accelerated Cost Recovery System). U.S. tax depreciation. Accelerated — more depreciation in early years.
Example. $50,000 equipment, 5-year useful life. Straight-line: $10K/year × 5 years.
MACRS 5-year: $10K (Y1), $16K (Y2), $9.6K (Y3), $5.76K (Y4), $5.76K (Y5), $2.88K (Y6).
Why accelerated tax depreciation. (1) MATCHES ECONOMIC REALITY. Equipment loses more value early. (2) STIMULATES INVESTMENT. Tax incentive for capital spending.
Section 179. Immediate full deduction up to $1.16M (2024). Used for substantial portion of small business equipment purchases.
Bonus depreciation. Additional first-year deduction. 60% (2024); 40% (2025); 20% (2026); 0% (2027) absent legislative renewal.
Tax planning. Substantial deductions taken early under MACRS + Section 179 + bonus depreciation. Strategic timing of equipment purchases around year-end common.
Salvage value and useful life selection
SALVAGE VALUE. Estimated value at end of useful life. For tax purposes: often $0 (Section 179 + bonus depreciation makes salvage value irrelevant for first-year planning). For book purposes: estimate actual recovery (often $0 or modest).
USEFUL LIFE. Different methodology between book and tax. BOOK life: management estimate based on actual use. TAX life: IRS class life table. Often different from book life.
Examples. Office furniture: 7-year book; 7-year MACRS class. Computers: 3-year book; 5-year MACRS. Vehicles: 5-year book; 5-year MACRS (with substantial limitations on luxury vehicles).
Substantial deviation between book and tax depreciation common. Creates deferred tax assets/liabilities tracked on balance sheet.
Strategic implications. (1) MATCH BOOK TO ACTUAL USE. Book depreciation should reflect actual asset consumption. Long-life assets (buildings) substantially longer book life than tax.
(2) MAXIMIZE TAX DEDUCTIONS. Take maximum allowable Section 179 + bonus depreciation in year of purchase. Defer tax to future years.
(3) PLAN ASSET REPLACEMENTS. Time purchases for tax benefit + business need. End-of-year purchases get full first-year deduction in current tax year.
U.S. asset depreciation periods (straight-line book; MACRS tax)
Reference U.S. asset depreciation periods.
| Asset class | Book life (straight-line) | MACRS class |
|---|---|---|
| Computers, software | 3-5 years | 5-year MACRS |
| Office furniture | 7 years | 7-year MACRS |
| Light vehicles | 5 years | 5-year MACRS (with limits) |
| Heavy trucks (>6,000 lbs) | 5 years | 5-year MACRS |
| Manufacturing equipment | 10 years | 7-year MACRS |
| Improvements to leased property | Building life | 39-year MACRS (commercial) |
| Commercial buildings | 39 years | 39-year MACRS |
| Residential rental property | 27.5 years | 27.5-year MACRS |
| Land | Not depreciable | Not depreciable |
Different methods for different purposes. Book depreciation reflects actual asset consumption for financial reporting. Tax depreciation uses IRS prescribed methods (MACRS) plus immediate expensing (Section 179, bonus depreciation). Substantial book/tax differences typically tracked through deferred tax accounts.
Frequently Asked Questions
How is straight line depreciation calculated?
Subtract salvage value from asset cost to get depreciable cost, then divide by useful life in years. A $22,000 asset with $2,000 salvage over 10 years depreciates at $2,000 a year.
What is salvage value?
The estimated amount the asset will be worth at the end of its useful life — what you could sell it for, or its scrap value. Many small assets are assigned a salvage of zero.
How is this different from MACRS?
MACRS — the US tax depreciation system — accelerates depreciation into the early years, lowering taxable income sooner. Straight-line spreads the cost evenly and is used mostly for book accounting.
When does Section 179 or bonus depreciation apply?
Section 179 and bonus depreciation let businesses expense some or all of qualifying assets in the year of purchase, skipping the depreciation schedule. They are tax-only — book accounting still uses straight-line or MACRS.
Why use straight line at all?
Predictability and comparability. The same expense lands every year, which makes income statements smoother and easier to forecast. Most companies use it for book accounting even when tax depreciation runs accelerated.
When is this calculator unreliable?
For U.S. tax purposes (IRS uses MACRS accelerated method, not straight-line — substantially different schedule). Also unreliable when ignoring Section 179 expensing or bonus depreciation (can substantially accelerate first-year deduction). For tax planning, consult tax CPA — substantial planning opportunities depend on entity type and overall tax situation.
References & Authoritative Sources
- Internal Revenue Service (IRS) — Publication 946: Depreciation · consulted June 1, 2026 · Federal regulator on depreciation
- Financial Accounting Standards Board (FASB) — Property and Equipment Standards · consulted June 1, 2026 · Accounting standards
- Institute of Management Accountants (IMA) — Depreciation Methods · consulted June 1, 2026 · Professional management accounting
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Methodology & Review
Straight-line depreciation equals (cost - salvage value) / useful life. The calculator returns annual depreciation. Standard method for U.S. accounting and many tax purposes. Equipment typically 5-10 years; vehicles 5-10; buildings 39 years commercial; residential rental 27.5 years. Calculation produces equal depreciation each year. RELIABILITY: Reliable for direct calculation. Less reliable for tax planning because (a) IRS MACRS schedule differs from straight-line (often accelerated); (b) Section 179 expensing allows immediate deduction (not straight-line); (c) bonus depreciation varies by year.
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