Equipment Depreciation Calculator

Straight-line: (Cost - Salvage Value) / Useful Life. Example: $50K equipment, $5K salvage, 10 years = $4,500/year. Tax depreciation often uses MACRS (accelerated). 2026 Section 179 deduction: up to $1,250,000 expensed immediately. Bonus depreciation: 100% in 2026 (restored by OBBBA for property acquired after Jan 19, 2025).

Section 179 first ($1,250,000 cap, must be profitable to use). Bonus depreciation (100% in 2026, no cap) for amounts over Section 179 limit or businesses with losses. Both reduce current-year taxes; straight-line spreads over useful life.

Buy if: equipment lasts 5+ years, you have capital, want full depreciation. Lease if: technology obsolescence is fast, want flexibility, conserve capital. Operating leases are off-balance-sheet (pre-2019 rules). Calculate true cost - leasing usually 20-30% more expensive long-term.

Depreciation applies to tangible assets (machinery, vehicles, buildings), while amortization applies to intangible assets (patents, trademarks, purchased software). The concept is the same: spread the cost of an asset over its useful life.

Not necessarily. For accounting, you use the asset's real economic life. For taxes, you must follow the tables set by your country's tax authority, which can differ significantly. It is common for a business to use 7 years for accounting and 5 years for taxes on the same piece of equipment.

If you sell the asset for more than its book value, the difference (a book gain) may be taxable. In many countries this is called depreciation recapture and is taxed as ordinary income up to the amount of accumulated depreciation, with any additional excess taxed as a capital gain.

For accounting purposes, once the asset reaches its salvage value it stops depreciating, even if you keep using it. You can keep it on the books at salvage value (or $0 if you set that value) and continue using it. If you significantly improve it, that improvement cost can be capitalized and depreciated separately.