Straight-Line Depreciation Calculator
Calculate the annual straight-line depreciation of an asset from its cost, salvage value and useful life, with the yearly book-value schedule.
How it works
Annual depreciation = (cost − salvage value) ÷ useful life · Book value = cost − accumulated depreciation
Straight-line depreciation spreads an asset’s cost evenly across its useful life, subtracting the salvage value first because that portion is expected to be recovered when the asset is sold. Each year the same amount is expensed and the book value falls by that amount until it reaches salvage. It is the simplest method and is common for financial reporting, though the IRS uses accelerated MACRS schedules for most business tax depreciation.
Worked example
A $25,000 machine with a $5,000 salvage value and a 5-year life depreciates ($25,000 − $5,000) ÷ 5 = $4,000 per year. After three years, accumulated depreciation is $12,000 and the book value is $13,000.
Frequently asked questions
What is salvage value?
It is the estimated amount you expect to recover when you dispose of the asset at the end of its useful life. Only the cost above salvage is depreciated.
Is straight-line what the IRS uses?
For most business assets the IRS requires MACRS, which front-loads deductions. Straight-line is standard for book (financial-statement) purposes and is available for some assets like buildings and certain elections.
What happens after the asset is fully depreciated?
Depreciation stops once book value reaches salvage value. You keep the asset on the books at its salvage value until it is sold or scrapped.
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Educational estimate using simplified US federal rules — ignores state tax, credits and your full situation. Not tax advice; confirm with a CPA or IRS guidance.