Depreciation Calculator — Calculations & Slabs for FY 2026-27

Asset depreciation is the process of spreading the cost of a physical asset over its useful life. It helps you write off the expense of business assets gradually, matching the cost to the revenue they help generate, rather than taking a massive financial hit in the first year.

Useful life is the estimated number of years an asset is expected to remain productive and functional for your business. For tax purposes, tax authorities like the IRS set standard recovery periods for different types of assets (e.g., 5 years for computers, 7 years for office equipment).

Salvage value (or residual value) is the estimated amount you expect to sell or trade the asset for at the end of its useful life. If you expect to run the asset until it is completely worn out or worthless, you can set this to $0.

Straight-line depreciation spreads the expense evenly across every year of the asset's life. Declining balance is an accelerated method that writes off a larger percentage of the asset's value in the early years, which is ideal for assets like vehicles or electronics that lose value rapidly.

No. Regardless of the depreciation method you use, you cannot depreciate an asset below its salvage value. Once the asset's book value drops to match its salvage value, yearly depreciation stops. This ensures full compliance with the latest regulations, allowing you to estimate values correctly and avoid common filing errors.