Declining Balance Depreciation Calculator
Declining balance is an accelerated depreciation method that writes off more of an asset's value in its early years, when most assets lose value fastest. Instead of spreading the cost evenly, it applies a fixed rate to the book value at the start of each year, so the deduction is largest in year one and shrinks every year after. The rate comes from a factor divided by the useful life: a 200% factor gives double declining balance, while a 150% factor depreciates a little more slowly. This calculator takes the asset cost, the salvage value you expect to recover at the end, the useful life in years, and the factor, then returns the depreciation rate, the first-year deduction and the total depreciation across the asset's life. Crucially, depreciation can never drive book value below salvage, so the calculator floors the final years to land exactly on the salvage figure. The numbers here are book depreciation, the kind used in financial statements; US federal tax depreciation generally follows the Modified Accelerated Cost Recovery System set out in IRS Publication 946. Every figure is computed deterministically from the standard declining balance formula, shown in full below, with a worked example and a year-by-year schedule that reconcile exactly to the calculator.
Declining balance depreciation applies a fixed rate to the falling book value. A 200% rate over a 5 year life is 40% a year, so a $10,000 asset depreciates $4,000 in year one.
Declining balance depreciation formula
rate = factor / useful life
year depreciation = rate * beginning book value
beginning book value = cost - accumulated depreciation
floor: depreciation never takes book value below salvage
factor = 2.00 for double declining, 1.50 for 150% declining
The rate is fixed for the whole life, but it is applied to a falling book value, so the dollar amount of depreciation declines each year. Once a year's full-rate deduction would push book value under the salvage value, the deduction is reduced so book value lands exactly on salvage. Total depreciation always equals cost minus salvage.
Worked example
An asset costs 10,000, has a salvage value of 1,000, a useful life of 5 years and a 200% (double declining) factor.
- Rate = 2.00 / 5 = 0.40, or 40% per year
- Year 1: 0.40 * 10,000 = 4,000.00, book value falls to 6,000.00
- Year 2: 0.40 * 6,000 = 2,400.00, book value falls to 3,600.00
- Year 3: 0.40 * 3,600 = 1,440.00, book value falls to 2,160.00
- Year 4: 0.40 * 2,160 = 864.00, book value falls to 1,296.00
- Year 5: full rate would give 518.40, but that breaches salvage, so the deduction is floored at 1,296.00 - 1,000.00 = 296.00, leaving book value at 1,000.00
- Total depreciation = 4,000.00 + 2,400.00 + 1,440.00 + 864.00 + 296.00 = 9,000.00
The rate is 40%, the year 1 deduction is 4,000.00 and total depreciation is 9,000.00 (which equals cost minus salvage). These are the calculator's default inputs, so the results above match the widget exactly.
Default depreciation schedule
This schedule uses the default inputs: cost 10,000, salvage 1,000, 5-year life, 200% factor. The final year is floored so book value ends exactly at salvage.
| Year | Beginning book value | Depreciation | Ending book value |
|---|---|---|---|
| 1 | 10,000.00 | 4,000.00 | 6,000.00 |
| 2 | 6,000.00 | 2,400.00 | 3,600.00 |
| 3 | 3,600.00 | 1,440.00 | 2,160.00 |
| 4 | 2,160.00 | 864.00 | 1,296.00 |
| 5 | 1,296.00 | 296.00 | 1,000.00 |
| Total | 9,000.00 |
Method and recovery rules: US Internal Revenue Service, Publication 946.
Declining balance depreciation calculator: frequently asked questions
What is declining balance depreciation?
Declining balance is an accelerated depreciation method that applies a fixed rate to the asset's beginning book value each year, so the dollar amount of depreciation is largest in the first year and shrinks over time. The rate is the chosen factor divided by the useful life. A 200% factor (double declining balance) and a 150% factor are the most common, because they front-load deductions to better match assets that lose value fastest when new.
How is the declining balance rate calculated?
The rate equals the factor divided by the useful life in years. With a 200% factor and a 5-year life, the rate is 2.00 / 5 = 40% per year. With a 150% factor and the same life, it is 1.50 / 5 = 30%. That rate is applied to the book value at the start of each year, not to the original cost, which is why depreciation declines as the book value falls.
Why does the final year not use the full rate?
Depreciation can never reduce the book value below the salvage value, the amount you expect to recover at the end of the asset's life. In the last year or two, applying the full rate would push book value under salvage, so the calculator floors the deduction to bring book value exactly down to salvage instead. This keeps total depreciation equal to cost minus salvage across the whole life.
Is declining balance the same as MACRS for US taxes?
Not exactly. The figures here are book depreciation, the kind used in financial statements. US federal tax depreciation generally uses the Modified Accelerated Cost Recovery System (MACRS), which is built on declining balance methods but uses set recovery periods, official percentage tables and a convention for the year an asset is placed in service. See IRS Publication 946 for the tax rules; use this tool for the underlying book method.
When should I switch to straight-line depreciation?
Many declining balance schedules switch to straight-line in the year that gives a larger deduction, which is what MACRS tables already build in. This calculator instead floors the final-year deduction at salvage, a common book approach that reaches the same total. If you need the exact MACRS schedule for a tax return, use the official percentage tables in IRS Publication 946 rather than a simple rate.
Official sources
- Depreciation methods, recovery periods and MACRS tables: US Internal Revenue Service, Publication 946, How To Depreciate Property. As at 24 June 2026.
Reviewed by the CalculatorHub team, edited by James Graham, 24 June 2026. See our methodology. This is general information, not financial, tax, legal or investment advice.