Calculate Asset Depreciation
Annual Depreciation by Method ($50K Asset, $5K Salvage, 5 Years)
| Year | Straight-Line | Declining Balance | Units (20K/yr) |
|---|
Choose method based on tax and cash flow needs.
Depreciation Calculator 2025: Straight-Line, Declining Balance, Units — Tax & Accounting Mastery
Depreciation isn’t just an accounting entry — it’s a powerful tax shield and cash flow tool. Our depreciation calculator computes straight-line, declining balance, and units of production methods with full schedules.
In 2025, with bonus depreciation phasing out and MACRS evolving, accurate depreciation is critical for P&L, taxes, and asset management.
Depreciation Methods Explained
Straight-Line (SL)
Annual = (Cost – Salvage) ÷ Life
Even expense. Best for predictable wear.
Declining Balance (DB)
Rate = 2 × (1 ÷ Life)
Dep = Book Value × Rate
Accelerated. Front-loads expense.
Units of Production (UOP)
Per Unit = (Cost – Salvage) ÷ Total Units
Dep = Units This Year × Per Unit
Usage-based. Ideal for machinery.
Why Depreciation Matters in 2025
Reduces taxable income. Matches expense to revenue. Affects EBITDA, valuation, and loan covenants.
How to Use the Calculator
- Enter asset cost
- Input salvage value
- Set useful life
- Choose method
- For UOP: Add total and current units
- Click “Calculate” — see annual expense, schedule
Real-World Examples
Example 1: Delivery Van (Straight-Line)
Cost: $40,000
Salvage: $8,000
Life: 5 years
Annual: $6,400
Example 2: CNC Machine (Declining Balance)
Cost: $120,000
Salvage: $20,000
Life: 7 years
Year 1: $34,286 → High early deduction
Example 3: Printer (Units of Production)
Cost: $10,000
Salvage: $1,000
Total Prints: 500,000
This Year: 80,000
Dep: $1,440
2025 Tax Rules (US)
| Rule | Details |
|---|---|
| Bonus Depreciation | 20% in 2025 (phasing down) |
| Section 179 | $1.29M limit, $3.22M phase-out |
| MACRS | 3,5,7,10,15,20-year classes |
| ADS | Required for some assets |
MACRS vs Book Depreciation
Tax (MACRS) ≠ Financial (SL). Use both.
How to Choose a Method
- SL: Office furniture, buildings
- DB: Tech, vehicles (tax savings)
- UOP: Manufacturing, mining
2025 Depreciation Trends
- AI Asset Tracking: Real-time usage
- Green Assets: Bonus for EV, solar
- Cloud Software: Capitalized or expensed?
- IFRS 16: Leases on balance sheet
Common Mistakes
- Forgetting salvage value
- Using tax method for books
- Not updating for disposals
- Ignoring half-year convention
Depreciation and Cash Flow
Non-cash expense. Add back to cash flow.
Integrate with Other Tools
- EBITDA: Add back depreciation
- Company Valuation: Affects net book value
- Return on Assets: Uses depreciated value
Disposal & Gain/Loss
Sale Price – Book Value = Gain/Loss
Conclusion: Depreciate Smart
The depreciation calculator is your asset longevity planner. Use it to minimize taxes, match expenses, and optimize capital.
In 2025, smart depreciation = more cash in pocket.
Not tax advice. Consult a CPA.
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