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Accelerated depreciation method that expenses more in earlier years.
Formula: Book Value × Rate
Usage: Best for assets that lose value quickly (like technology or vehicles).
Double Declining: Uses 200% of the straight-line rate.
Fill in the form on the left and click Calculate to see your depreciation schedule.
The declining balance method comes in multiple variants, distinguished by the multiplier applied to the straight-line rate. The two most common are 150% declining balance and 200% declining balance (the latter also known as double declining balance, or DDB). For a $15,000 piece of machinery with a 7-year useful life, the straight-line rate is 14.29%. Under 150% DB, the annual rate is 21.43% (1.5 × 14.29%). Under 200% DB, it is 28.57% (2.0 × 14.29%). In year one, 150% DB produces $3,214 in depreciation while 200% DB produces $4,286 on the same asset — a $1,072 difference that accumulates significantly over the asset's early years.
The US tax code (MACRS) uses 200% DB for 3-, 5-, 7-, and 10-year property classes and 150% DB for 15- and 20-year property. The choice is not arbitrary: shorter-lived assets like vehicles, computers, and office furniture are assigned the more aggressive 200% rate because they genuinely lose the most value quickly. Longer-lived assets like land improvements (15 years) and farm buildings (20 years) use 150% DB, reflecting slower but still front-loaded depreciation. See our double declining balance calculator to model the 200% method specifically.
The formula is straightforward: Annual Depreciation = DB Rate × Beginning Book Value. The DB rate is (Factor / Useful Life), where Factor is 1.5 for 150% DB or 2.0 for 200% DB. For a $10,000 asset with a 5-year useful life using 150% DB:
The switch to straight-line in year 4 occurs because $1,715 (SL on remaining balance) exceeds $1,029 (30% × $3,430 = DB amount). Always switch when straight-line produces a larger deduction to ensure the asset is fully depreciated by end of useful life.
From a tax planning perspective, declining balance is almost always preferred over straight-line when the business has taxable income to offset — the time value of money makes earlier deductions more valuable. A $5,000 tax deduction in year one (reducing taxes paid now) is worth more than $5,000 in deductions spread equally over 5 years, because the present value of future deductions is less than their nominal amount.
For financial reporting purposes, the preference may flip. Many businesses use straight-line for book purposes (producing smoother, lower expenses in early years that support better-looking GAAP income) while using accelerated methods for tax purposes — a common and entirely legal difference between book and tax accounting. The resulting deferred tax liability is disclosed on the balance sheet and normalizes over the asset's life.
For US federal tax purposes, MACRS is the required method — individual taxpayers and businesses cannot freely choose their own rates or methods for most tangible assets. MACRS incorporates the declining balance method with the automatic SL switch, plus the half-year and mid-quarter conventions that allocate partial-year depreciation at the start and end of the recovery period. For assets outside the MACRS system — such as assets depreciated for financial reporting, international tax, or specific industries — the declining balance method as calculated here gives you the same economic output that MACRS approximates: maximized early-year deductions, declining annual expenses, and full recovery of the cost basis over the asset's useful life.