How Is the Depreciation Deduction — 2025 Publ 946 (PDF)

Terms you may need to know (see Glossary):

Adjusted basis Amortization Basis Business/investment use Convention Declining balance method Disposition Exchange Nonresidential real property Placed in service

Publication 946 (2025) Chapter 4 Figuring Depreciation Under MACRS 35

Table 4-1. Depreciation Methods Note: The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL.
Note: The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL.
Method	Type of Property	Benefit
GDS using 200% DB	• Nonfarm 3-, 5-, 7-, and 10-year property • Farm 3-, 5-, 7-, and 10-year property placed in service after 2017, in tax years ending after 2017	• Provides a greater deduction during the earlier recovery years • Changes to SL when that method provides an equal or greater deduction
GDS using 150% DB	• Farm 3-, 5-, 7-, or 10-year property placed in service before 2018 • All 15- and 20-year property • Nonfarm 3-, 5-, 7-, or 10-year property2 • Farm 3-, 5-, 7-, or 10-year property placed in service after 20172	• Provides a greater deduction during the earlier recovery years • Changes to SL when that method provides an equal or greater deduction1
GDS using SL	• Nonresidential real property • Residential rental property • Trees or vines bearing fruits or nuts • Water utility property • All 3-, 5-, 7-, 10-, 15-, and 20-year property2 • Property for which you elected section 168(k) (4) of the Internal Revenue Code for a tax year beginning before January 1, 2018 • Qualified improvement property (as defined in section 168(e)(6) of the Internal Revenue Code) placed in service after 2017	• Provides for equal yearly deductions (except for the first and last years)
ADS using SL	• Listed property used 50% or less for business • Property used predominantly outside the United States • Tax-exempt property • Tax-exempt bond-financed property • Farm property used when an election not to apply the uniform capitalization rules is in effect • Imported property3 • Any property for which you elect to use this method4 • Any nonresidential real property, residential rental property, or qualfied improvement property held by an electing real property trade or business (as defined in section 163(j)(7)(B) of the Internal Revenue Code) • Any property that has a recovery period of 10 years or more under GDS that is held by an electing farming business (as defined in section 163(j)(7)(C) of the Internal Revenue Code)	• Provides for equal yearly deductions (except for the first and last years)
1 The MACRS percentage tables in Appendix A have the switch to the straight line method built into their rates. 2 See section 168(b)(5) of the Internal Revenue Code. 3 See section 168(g)(6) of the Internal Revenue Code. 4 See section 168(g)(7) of the Internal Revenue Code.

Property class Recovery period Straight line method Unadjusted basis

To figure your depreciation deduction under MACRS, you first determine the depreciation system, property class, placed in service date, basis amount, recovery period, convention, and depreciation method that apply to your property. Then, you are ready to figure your depreciation deduction. You can figure it using a percentage table provided by the IRS, or you can figure it yourself without using the table.

36 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2025)