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Math of Money

Depreciation

Spreading an asset's cost over its useful life instead of expensing it all at once, by the straight-line, declining balance, or sum-of-the-years'-digits method.

Straight-line depreciation splits the depreciable base (cost minus salvage value) evenly across the useful life, so the deduction is the same dollar amount every year. Declining balance and sum-of-the-years'-digits are accelerated methods that front-load more of the deduction into the early years, when many assets lose value and productivity fastest.

All three methods deduct the same total over an asset's life — the depreciable base — only the year-by-year timing differs. Financial-statement (book) depreciation is also not the same as tax depreciation, which in the U.S. generally follows the IRS's MACRS percentage tables rather than any of these formulas.

Calculators that use this

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Disclaimer: Definitions are general education, not financial, tax, or legal advice. Figures are for the 2026 tax year unless noted.