Introduction to MACRS Tables
The Modified Accelerated Cost Recovery System (MACRS) is the primary depreciation method used for federal income tax purposes in the United States. Rather than calculating depreciation from scratch each year, the IRS publishes percentage tables (Revenue Procedure 87-57, reproduced in IRS Publication 946) that give you the exact depreciation rate to apply to your asset's depreciable basis for each year of its recovery period.
These tables combine three factors into a single percentage:
- Depreciation method — 200% declining balance (DB), 150% DB, or straight-line (SL)
- Recovery period — 3, 5, 7, 10, 15, 20, 27.5, or 39 years
- Convention — half-year, mid-quarter, or mid-month
To use any table, simply multiply the percentage for the current recovery year by the asset's unadjusted depreciable basis (cost minus any Section 179 deduction or bonus depreciation taken).
2025 Legislative Update: One Big Beautiful Bill Act (OBBBA)
Signed into law on July 4, 2025, the OBBBA made two major changes to depreciation:
- 100% Bonus Depreciation Restored — Qualified property acquired and placed in service after January 19, 2025 is eligible for 100% first-year bonus depreciation. This effectively allows full expensing of most tangible personal property in Year 1, superseding the MACRS tables for that asset.
- Section 179 Limit Doubled to $2,500,000 — The maximum Section 179 expense deduction was increased from $1,250,000 to $2,500,000, giving small and mid-size businesses even more first-year write-off capacity.
Even with bonus depreciation available, you still need the MACRS tables for assets where you elect out of bonus depreciation, for the remaining basis after a Section 179 deduction, and for real property that does not qualify for bonus depreciation.
GDS vs. ADS: When to Use Each System
MACRS has two sub-systems. Most taxpayers use GDS, but certain situations require ADS.
| Feature | GDS (General Depreciation System) | ADS (Alternative Depreciation System) |
|---|---|---|
| Method | 200% DB or 150% DB switching to SL | Straight-line only |
| Recovery Periods | Shorter (3, 5, 7, 10, 15, 20, 27.5, 39 years) | Longer (e.g., 5-yr GDS → 9-yr ADS, 7-yr GDS → 12-yr ADS) |
| Depreciation Speed | Faster — front-loaded deductions | Slower — equal annual deductions |
| Default? | Yes — used unless ADS is required or elected | No — only when required or elected |
When ADS Is Required
- Listed property (e.g., vehicles) used 50% or less for business
- Any tangible property used predominantly outside the United States
- Tax-exempt use property
- Tax-exempt bond-financed property
- Property imported from certain trade-restricted countries
- Farming property if the taxpayer elects out of the uniform capitalization rules
When You Might Elect ADS Voluntarily
- To create a more even income stream (e.g., for financial statement alignment)
- When expecting higher tax rates in future years
- For real property trade or business electing out of the interest deduction limitation under Section 163(j)
GDS Depreciation Rate Tables (Half-Year Convention)
The following tables show the annual depreciation percentage for each recovery year under GDS using the half-year convention. Multiply these percentages by the asset's depreciable basis to get each year's depreciation deduction. All rates come from IRS Rev. Proc. 87-57 / Publication 946 Table A-1.
3-Year Property (200% Declining Balance)
Examples: Tractor units for over-the-road use, race horses over 2 years old, qualified rent-to-own property.
| Recovery Year | Depreciation Rate |
|---|---|
| 1 | 33.33% |
| 2 | 44.45% |
| 3 | 14.81% |
| 4 | 7.41% |
5-Year Property (200% Declining Balance)
Examples: Automobiles, taxis, buses, trucks, computers, peripheral equipment, office machinery, appliances, carpeting.
| Recovery Year | Depreciation Rate |
|---|---|
| 1 | 20.00% |
| 2 | 32.00% |
| 3 | 19.20% |
| 4 | 11.52% |
| 5 | 11.52% |
| 6 | 5.76% |
7-Year Property (200% Declining Balance)
Examples: Office furniture and fixtures, agricultural machinery and equipment, railroad track, motorsports entertainment complexes.
| Recovery Year | Depreciation Rate |
|---|---|
| 1 | 14.29% |
| 2 | 24.49% |
| 3 | 17.49% |
| 4 | 12.49% |
| 5 | 8.93% |
| 6 | 8.92% |
| 7 | 8.93% |
| 8 | 4.46% |
10-Year Property (200% Declining Balance)
Examples: Vessels, barges, tugs, single-purpose agricultural or horticultural structures, fruit/nut-bearing trees and vines.
| Recovery Year | Depreciation Rate |
|---|---|
| 1 | 10.00% |
| 2 | 18.00% |
| 3 | 14.40% |
| 4 | 11.52% |
| 5 | 9.22% |
| 6 | 7.37% |
| 7 | 6.55% |
| 8 | 6.55% |
| 9 | 6.56% |
| 10 | 6.55% |
| 11 | 3.28% |
15-Year Property (150% Declining Balance)
Examples: Municipal wastewater treatment plants, qualified leasehold improvement property, retail motor fuels outlets, land improvements (fences, roads, sidewalks, bridges, landscaping).
| Recovery Year | Depreciation Rate |
|---|---|
| 1 | 5.00% |
| 2 | 9.50% |
| 3 | 8.55% |
| 4 | 7.70% |
| 5 | 6.93% |
| 6 | 6.23% |
| 7 | 5.90% |
| 8 | 5.90% |
| 9 | 5.91% |
| 10 | 5.90% |
| 11 | 5.91% |
| 12 | 5.90% |
| 13 | 5.91% |
| 14 | 5.90% |
| 15 | 5.91% |
| 16 | 2.95% |
20-Year Property (150% Declining Balance)
Examples: Farm buildings (not single-purpose agricultural structures), municipal sewers, initial clearing and grading land improvements.
| Recovery Year | Depreciation Rate |
|---|---|
| 1 | 3.750% |
| 2 | 7.219% |
| 3 | 6.677% |
| 4 | 6.177% |
| 5 | 5.713% |
| 6 | 5.285% |
| 7 | 4.888% |
| 8 | 4.522% |
| 9 | 4.462% |
| 10 | 4.461% |
| 11 | 4.462% |
| 12 | 4.461% |
| 13 | 4.462% |
| 14 | 4.461% |
| 15 | 4.462% |
| 16 | 4.461% |
| 17 | 4.462% |
| 18 | 4.461% |
| 19 | 4.462% |
| 20 | 4.461% |
| 21 | 2.231% |
Real Property Depreciation Rates
Real property (buildings and structural components) uses the straight-line method with the mid-month convention under GDS. The mid-month convention treats property as placed in service at the midpoint of the month, so the first-year and last-year deductions depend on the month the property is placed in service.
27.5-Year Residential Rental Property
Residential rental property includes any building where 80% or more of gross rental income is from dwelling units (apartments, houses, mobile homes). The annual straight-line rate for a full 12-month year is:
In the first year, the rate is prorated based on the month placed in service. For example, property placed in service in January gets 11.5/12 of the full-year rate (about 3.485%), while property placed in service in June gets 6.5/12 (about 1.970%).
39-Year Nonresidential Real Property
Nonresidential real property includes office buildings, stores, warehouses, and any building that is not residential rental property or has a class life of less than 27.5 years. The annual straight-line rate for a full year is:
Like residential property, the first-year deduction is prorated by month placed in service using the mid-month convention. The depreciation continues for 39 full years (plus the partial first and last year, totaling 40 tax years).
Depreciation Conventions Explained
A convention establishes when depreciation begins and ends for purposes of computing the first-year and last-year deductions. There are three conventions used under MACRS:
Half-Year Convention (Most Common)
The half-year convention treats all personal property placed in service during the year as if it were placed in service at the midpoint of the year — regardless of the actual date. This means:
- You claim only half a year of depreciation in the first year
- You claim the other half in the year after the recovery period ends
- This is why a 5-year property has 6 rows in its table (Years 1 through 6)
All the GDS tables shown above use the half-year convention.
Mid-Quarter Convention
You must use the mid-quarter convention if more than 40% of the total depreciable basis of all personal property placed in service during the year was placed in service in the last three months (Q4) of the tax year. Under this convention:
- Property is treated as placed in service at the midpoint of the quarter it was actually placed in service
- Q1 property gets 10.5 months, Q2 gets 7.5 months, Q3 gets 4.5 months, Q4 gets 1.5 months of first-year depreciation
- Separate percentage tables exist for each quarter (IRS Publication 946, Tables A-2 through A-5)
Mid-Month Convention (Real Property Only)
Real property (27.5-year and 39-year) always uses the mid-month convention. Property is treated as placed in service at the midpoint of the month it was actually placed in service. This convention applies regardless of how much property was placed in service in Q4.
Bonus Depreciation & Section 179 (Post-OBBBA)
100% Bonus Depreciation
The OBBBA restored 100% first-year bonus depreciation for qualified property acquired and placed in service after January 19, 2025. Under prior law, bonus depreciation had been phasing down: 80% in 2023, 60% in 2024, 40% in 2025 (pre-OBBBA). The restoration means that for most new tangible personal property, you can deduct the entire cost in Year 1.
Key points about bonus depreciation:
- Applies to new and used property (as long as it is new to the taxpayer)
- No dollar limit — applies to the full cost of the asset
- You can elect out of bonus depreciation on a class-by-class basis if you prefer to use the regular MACRS tables
- Does not apply to real property (27.5-year and 39-year) unless it is qualified improvement property
Section 179 Deduction
Section 179 allows businesses to expense the cost of qualifying property in the year it is placed in service, rather than depreciating it over multiple years. Under the OBBBA:
- Maximum deduction: $2,500,000 (doubled from $1,250,000)
- Phase-out threshold begins when total property placed in service exceeds the applicable limit
- Deduction cannot exceed the taxpayer's taxable income from active trade or business
- Applies to tangible personal property, off-the-shelf software, qualified real property improvements (HVAC, roofs, fire protection, alarm systems, security systems)
Order of Application
When multiple provisions apply, the deductions are taken in this order:
- Section 179 — elected first, up to the applicable limit
- Bonus Depreciation — applied to the remaining basis
- Regular MACRS — applied to any remaining basis using the tables above
How to Read and Apply the MACRS Tables: A Practical Example
Let's walk through a complete example using the 7-year GDS table with the half-year convention.
Example: Office Furniture Purchased for $50,000
Asset: Office furniture and fixtures
Cost basis: $50,000
Property class: 7-year (GDS)
Convention: Half-year
Assumption: No bonus depreciation or Section 179 elected
| Year | Rate | Depreciation | Cumulative | Book Value |
|---|---|---|---|---|
| 1 | 14.29% | $7,145 | $7,145 | $42,855 |
| 2 | 24.49% | $12,245 | $19,390 | $30,610 |
| 3 | 17.49% | $8,745 | $28,135 | $21,865 |
| 4 | 12.49% | $6,245 | $34,380 | $15,620 |
| 5 | 8.93% | $4,465 | $38,845 | $11,155 |
| 6 | 8.92% | $4,460 | $43,305 | $6,695 |
| 7 | 8.93% | $4,465 | $47,770 | $2,230 |
| 8 | 4.46% | $2,230 | $50,000 | $0 |
Step 1: Identify the property class. Office furniture is 7-year property under MACRS GDS.
Step 2: Look up the 7-year table (half-year convention) above.
Step 3: For each recovery year, multiply the rate by the depreciable basis ($50,000). For Year 1: $50,000 x 14.29% = $7,145.
Step 4: Continue through all 8 rows (the half-year convention creates an extra year). The asset is fully depreciated to $0 by the end of Year 8.
Notice that the table has 8 rows for a 7-year property. This is because the half-year convention gives you only half a year of depreciation in Year 1, so the remaining half is picked up in Year 8. The same pattern applies to all property classes — a 5-year property has 6 rows, a 10-year property has 11 rows, and so on.
Use our MACRS Depreciation Calculator to compute these schedules automatically for any asset cost, property class, and convention.