Why timing of the deduction beats size of the deduction
Straight-line, DDB, and SYD all produce the same total depreciation (cost − salvage) over the asset's life. They differ in timing. DDB front-loads deductions, which is worth more in present-value terms when you can reinvest the tax savings. The "PV of tax shield" column makes that visible. If you can deduct faster, the deduction is bigger in real terms — even though the nominal total is identical.
FAQ
Does this match MACRS?
Not exactly. MACRS is the US tax-specific depreciation system with IRS-published class lives and conventions (half-year, mid-quarter). This tool uses the three classical accounting methods, which are close to MACRS for some asset classes (5-year property uses a DDB-like pattern with a half-year convention) and different for others. For US tax filing, use the IRS tables directly.
Why does DDB stop at salvage value?
Because once book value reaches salvage value, you can't depreciate further. The DDB method naturally tapers off as the balance approaches the floor, but for some asset lives it can hit the floor before the end of the period — in which case the remaining years are zero.
Can I switch methods mid-life?
Under US GAAP, you can change method if it's a better representation of the asset's economic life, but the change requires disclosure. Under US tax law, MACRS doesn't allow mid-life switching for most property. This calculator always starts at year 1 with the chosen method.
Methodology
SL: (cost − salvage) / life, same each year. DDB: book × (2/life) each year, with book clamped to salvage floor. SYD: (cost − salvage) × (remaining life / sum of years). Sum of years = life × (life + 1) / 2. Tax shield = annual depreciation × marginal tax rate. PV = Σ shield / (1+disc)t. Source: standard intermediate-accounting textbook (e.g. Kieso, Weygandt, Warfield).