Depreciation Calculator Guide: Straight-Line, Useful Life & Book vs Tax
Depreciation spreads a tangible asset’s cost across periods it helps generate revenue—methods and lives depend on policy and jurisdiction.
Depreciation Calculator Guide: Straight-Line, Useful Life & Book vs Tax
Updated May 2026 · ~8 min read
Depreciation allocates a depreciable amount across accounting periods under a selected method and policy. It is not a direct forecast of market value, physical wear, replacement spending, cash flow, or guaranteed tax savings. Book and tax depreciation can use different bases, lives, conventions, incentives, and recapture rules.
When straight-line depreciation shows up
- Forecasting P&L: you spread capex into predictable expense lines for scenario models.
- Lease accounting comparisons: you contrast straight-line rent versus Right-of-Use asset amortization contexts.
- Teaching fundamentals: learners link asset cost, salvage, and service life to periodic expense.
- Not sole tax truth: IRS or local authorities may mandate faster lives or bonus depreciation regimes.
The formula
Straight-line annual depreciation ≈ (Cost − Salvage value) ÷ Useful life (years) Monthly variant divides annual charge by 12 when books report monthly
Straight-line uses depreciable base divided by useful life, subject to residual value, componentization, partial periods, impairment, and policy. Tax methods are jurisdiction-specific.
An accounting allocation with separate tax analysis
A $100,000 asset with $10,000 residual value over five years has $18,000 annual straight-line depreciation before partial-period or impairment adjustments. This does not predict resale value or replacement capex.
Common mistakes
- Treating depreciation as market-value decline.
- Mixing tax schedules with book reporting without reconciliation.
- Assuming a deduction guarantees tax savings.
- Ignoring residual value, componentization, partial periods, and impairment.
- Equating depreciation with maintenance or replacement capex.
Try the calculator
Use the interactive calculator to plug in your numbers and see results instantly—without redoing the math by hand.
Open depreciation calculator →FAQ
Is depreciation a cash expense?
The current-period charge is noncash, but the asset required past or future cash investment.
Does tax depreciation equal book depreciation?
Often not. Different rules can create temporary or permanent differences.
Does depreciation predict resale value?
No. Market value depends on condition, demand, technology, and other factors.
Can methods change?
Changes depend on accounting and tax rules and may require disclosure or approval.
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Educational Disclaimer
This article is for educational and informational purposes only and should not be considered investment, financial, tax, or legal advice. Market information may change over time, and readers should verify important details independently before making financial decisions.