Free Equipment Depreciation Calculator

A truck, a trailer, a skid steer or a table saw isn’t used up on the job you bought it for. It works for years, wears out a little each one, and is worth less every year until it’s sold or scrapped. Depreciation spreads the cost of that equipment over the years it earns money, instead of charging all of it to the year you paid.

It matters in two separate places, and they use different rules.

• Your own books and pricing. You want the real yearly cost of owning the equipment, so your overhead and your rates pay for it, and pay for the next one. Straight-line depreciation over the life you expect is the plainest way to see that.
• Your tax return. The IRS sets how business property is depreciated for tax, mostly through a system called MACRS, with elections that can deduct much more in the first year.

This calculator does straight-line for your books, with salvage value and business-use share, and shows a MACRS schedule from the IRS percentage tables for comparison.

1. Depreciable amount = (cost − salvage value) × business-use share.
2. Depreciation each year = depreciable amount ÷ useful life in years.
3. Book value at the end of a year = cost × business-use share − all depreciation so far.

Cost includes what it took to put the equipment to work: the price, sales tax, delivery and setup. Salvage value is what you expect to get for it at the end. Useful life is how many years you expect to use it, which for your own books is your call.

A $36,000 machine you expect to sell for $6,000 after five years depreciates ($36,000 − $6,000) ÷ 5 = $6,000 a year. After three years its book value is $18,000.

This is the method IRS Publication 946 describes for straight-line: subtract salvage, divide by the useful life, and the yearly amount stays the same unless the basis or the life changes. For a tax return, though, most equipment uses MACRS instead.

A machine on the books

The $36,000 machine above, used only for business, with $6,000 of salvage after five years: $6,000 a year of depreciation. If the business runs 2,000 crew hours a year, owning the machine costs $3 for every crew hour before fuel, repairs and insurance. That $3 belongs in your overhead.

The same machine on a tax schedule

If it’s 5-year property, MACRS with the half-year convention deducts 20% of the $36,000 in the first year, $7,200, then 32%, 19.2%, 11.52%, 11.52% and 5.76%: six tax years in all, because the first and last years each count as half a year. MACRS ignores salvage value, so the deductions add up to the full $36,000.

A trailer used partly for personal hauling

A $12,000 trailer is used 75% for business. With $2,000 of salvage over eight years, the depreciable amount is ($12,000 − $2,000) × 75% = $7,500, and straight-line depreciation is $937.50 a year. Only the business share is depreciable, on the books or on a return.

Publication 946 lists cars, taxis, buses and trucks as 5-year property and office furniture and fixtures as 7-year property. Other equipment’s class comes from the class-life tables in its Appendix B.

Two elections let a business deduct much more than the MACRS percentages in the first year. Both are tax choices with trade-offs, and both are worth talking through with a tax professional before you buy.

Section 179 lets you deduct the cost of qualifying equipment in the year you place it in service. For tax years beginning in 2026, the limit is $2,560,000, and it’s reduced by the amount the cost of qualifying property placed in service that year goes over $4,090,000. Sport utility vehicles have a lower limit of $32,000.

Bonus depreciation, which the IRS calls the special depreciation allowance, is 100% for certain qualified property acquired and placed in service after January 19, 2025, under the law enacted in 2025. You can elect a smaller allowance instead.

Writing off a truck in its first year lowers that year’s tax, but the truck still wears out over many years. For pricing, keep using straight-line: the cost of owning the truck belongs in your rates every year, not just the year you bought it.

Depreciation needs a short record for each piece of equipment, and it pays to start one the day you buy it.

• What it is, with the make, model and serial number.
• When you placed it in service, which is the day it was ready to work, not the day you ordered it.
• What it cost in all, including tax, delivery and setup.
• How much it’s used for business, if not all of it.
• What you depreciate each year, on your books and on your return.
• When and how it left: sold, traded in or scrapped, and for how much.

A simple spreadsheet is enough. It answers your accountant’s questions at tax time, shows when the big replacements are coming, and gives you the yearly cost to put in your overhead.

Pricing from the tax deduction. A first-year write-off makes the equipment look free in later years. It isn’t, and your rates have to pay for the replacement.

Leaving depreciation out of overhead. Fuel and repairs feel like costs; the slow loss of value doesn’t, until it’s time to replace the machine.

Depreciating the personal share. Only business use counts. A trailer used a quarter of the time for personal hauling depreciates on three quarters of its cost.

Forgetting the setup costs. Delivery, sales tax and installation are part of the cost basis.

Ignoring vehicle limits. Passenger automobiles have yearly dollar caps on depreciation, covered in chapter 5 of Publication 946, so a car’s tax schedule can run longer than the table suggests.

Add up a year of depreciation on everything you own, plus the fuel, repairs and insurance to keep it running, and put it in your overhead. Divide by a year of crew hours to see what equipment costs per hour of work. That number is part of what the labor rate calculator needs, and part of the fixed costs in the break-even calculator.

Equipment used heavily on one kind of job can be charged to those jobs directly, as an equipment line, so the work that wears it out pays for it. The job profit calculator shows whether each job carried its share.

BuildWell adds your overhead percentage to every hour of labor on an estimate, so the cost of owning your equipment is in every price once it’s in your overhead. You set the percentage once in Pricing settings and can change it on any estimate.