MACRS depreciation is the Modified Accelerated Cost Recovery System, the method you generally must use to depreciate most tangible business property placed in service after 1986. Under MACRS, each asset is assigned to a property class that sets three things at once: its recovery period (how many years you write it off over), its depreciation method, and its convention (which part of the year the asset is treated as in service). Get the property class right and the rest of the MACRS calculation follows from it. This page is a reference to the GDS property classes, recovery periods, conventions, and methods, with the IRS primary sources for each.

What is MACRS depreciation?

MACRS is the depreciation system you generally must use for most tangible property placed in service after 1986; property placed in service before 1987 uses ACRS or the prior method. MACRS has two systems: the General Depreciation System (GDS), which most property uses, and the Alternative Depreciation System (ADS), which is required for certain property and can be elected for others. Land is never depreciable, though buildings and certain land improvements may be. To be depreciable, property must be owned by the taxpayer, used in a business or income-producing activity, have a determinable useful life, be expected to last more than one year, and not be excepted property.

Which property class and recovery period applies?

A property class determines the recovery period under GDS. The most common GDS recovery periods are 3, 5, 7, 10, 15, and 20 years for personal property, plus 27.5 years for residential rental property and 39 years for nonresidential real property. 5-year property includes computers and peripheral equipment, office machinery, automobiles and light trucks, and appliances, carpeting, and furniture used in a residential rental activity. 7-year property includes office furniture and fixtures and any property that has no class life and is not assigned to another class. Residential rental property is depreciated over 27.5 years and nonresidential real property over 39 years.

Which convention applies?

The convention determines how much depreciation you take in the year property is placed in service or disposed of. The half-year convention is the default for personal property and treats all property placed in service or disposed of during the year as placed in service at the midpoint of the year. The mid-quarter convention applies instead if the total depreciable basis of MACRS personal property placed in service in the last three months of the year is more than 40% of the total placed in service for the entire year. The mid-month convention applies to all residential rental and nonresidential real property and treats property as placed in service at the midpoint of the month.

Which depreciation method applies?

GDS provides three depreciation methods: the 200% declining balance method, the 150% declining balance method, and the straight line method, each applied over the GDS recovery period. The 200% declining balance method is the default for 3, 5, 7, and 10-year property, with a switch to straight line in the year that produces an equal or larger deduction. The 150% declining balance method is the default for 15 and 20-year property. The straight line method is required for residential rental and nonresidential real property. A taxpayer can elect the 150% declining balance method, or straight line, in place of the 200% method for the shorter-lived classes.

How Section 179 and bonus depreciation interact with MACRS

Section 179 and the special depreciation allowance are applied before regular MACRS depreciation, not instead of it. A taxpayer may elect under Section 179 to expense all or part of the cost of qualifying property in the year it is placed in service, subject to a dollar limit and a taxable-income limit. For qualified property acquired and placed in service after January 19, 2025, the special (bonus) depreciation allowance is 100%; for qualified property placed in service after December 31, 2024, and before January 20, 2025, it is 40%. The special allowance is taken after any Section 179 deduction and before regular MACRS depreciation on the remaining basis.

Where MACRS shows up in a preparer's workflow

For a preparer, MACRS is less about any single calculation and more about consistent asset intake across a book of clients. The recurring work is capturing each new asset, its cost, and its placed-in-service date, assigning the right property class, and confirming whether the mid-quarter convention is triggered by fourth-quarter additions. Those are mechanical, rule-driven steps that scale poorly when done by hand across hundreds of returns, which is exactly where a standardized intake and review process earns its keep. If you are weighing how to handle high-volume fixed-asset and depreciation work without adding headcount, see how outsourcing tax prep sits on top of your existing workflow.

Sources: IRS, "Topic no. 704, Depreciation" (reviewed Feb. 18, 2026), irs.gov/taxtopics/tc704; IRS, "Publication 946 (2025), How To Depreciate Property," irs.gov/publications/p946; IRS, "Publication 527 (2025), Residential Rental Property," irs.gov/publications/p527.