# MACRS Depreciation Schedules for Equipment

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Last modified: 2026-05-29T19:39:17+00:00
Type: efin_guide

## Summary

MACRS Depreciation Schedules for Equipment. Comprehensive guide covering the topic in depth, with worked examples, current data, and cross-references.

## Content

MACRS (Modified Accelerated Cost Recovery System) is the IRS depreciation system used for business equipment. It determines how you write off equipment cost over time when you do not use Section 179 or bonus depreciation for the full amount.

MACRS class lives


Class lifeRecovery periodTypical equipment

3-year3 yearsTractor units (over-the-road), special tools, racehorses
5-year5 yearsLight trucks, computers, copiers, some manufacturing, office equipment
7-year7 yearsMost heavy equipment, furniture, fixtures, agricultural equipment
10-year10 yearsSingle-purpose ag/horticultural structures, certain barges
15-year15 yearsLand improvements, restaurant property, retail motor fuels improvements
20-year20 yearsFarm buildings, certain real property



Most equipment finance discussions involve 5-year and 7-year property.

The depreciation method

MACRS uses declining balance methods that switch to straight line:


3, 5, 7, 10-year property: 200% declining balance, switching to straight line
15 and 20-year property: 150% declining balance, switching to straight line
27.5 and 39-year (real property): Straight line only


5-year property MACRS schedule


YearDepreciation %

120.00%
232.00%
319.20%
411.52%
511.52%
65.76%



Note: 6 years for 5-year property because of the half-year convention.

7-year property MACRS schedule


YearDepreciation %

114.29%
224.49%
317.49%
412.49%
58.93%
68.92%
78.93%
84.46%



Worked example

$100,000 piece of 5-year property placed in service mid-year. Section 179 and bonus depreciation already exhausted.

Annual depreciation:

Year 1: $100,000 × 20% = $20,000
Year 2: $100,000 × 32% = $32,000
Year 3: $100,000 × 19.2% = $19,200
Year 4: $100,000 × 11.52% = $11,520
Year 5: $100,000 × 11.52% = $11,520
Year 6: $100,000 × 5.76% = $5,760
Total: $100,000


Half-year convention

The standard MACRS convention assumes equipment is placed in service mid-year, regardless of actual date. This is why "5-year" property takes 6 years to fully depreciate.

Exception: if more than 40% of total property is placed in service in the last 3 months of the year, the mid-quarter convention applies, with different first-year and last-year tables.

Stacking with Section 179 and bonus

The optimal stacking order:

Section 179 first (up to limit or taxable income)
Bonus depreciation on remaining basis (40% in 2025, declining)
MACRS on whatever remains


Most equipment buyers fully expense in year 1 via Section 179 + bonus, so MACRS only applies when the limits are exceeded or election out.

When to elect MACRS instead of Section 179

Reasons to NOT use Section 179:

Spread deductions across years to match expected income
Avoid creating a net operating loss
State conformity issues that limit Section 179 benefit
Maintaining basis for future strategic use


Alternative Depreciation System (ADS)

ADS is a slower, straight-line method. Required for:

Property used predominantly outside the US
Tax-exempt use property
Listed property used 50% or less for business
Property financed by tax-exempt bonds


You can also elect ADS voluntarily. Sometimes useful for tax planning.

State conformity

Most states follow federal MACRS for state income tax. Some decouple (decoupled bonus depreciation, lower Section 179 limits). Check your state's rules with your CPA.

Action steps


Confirm equipment classification (5-year vs 7-year vs other)
Plan Section 179 and bonus depreciation strategy first
MACRS applies to remaining basis
Track depreciation by tax year on Form 4562
Confirm state conformity with your CPA