What is MACRS depreciation?

MACRS depreciation is the tax depreciation system used in the United States. MACRS is an acronym for Modified Accelerated Cost Recovery System.

Under MACRS, fixed assets are assigned to a specific asset class. The Internal Revenue Service has published a complete set of depreciation tables for each of these classes. The classes are:

Class	Depreciation Period	Description
3-year property	3 years	Tractor units for over-the-road use, race horses over 2 years old when placed in service, any other horse over 12 years old when placed in service, qualified rent-to-own property
5-year property	5 years	Automobiles, taxis, buses, trucks, computers and peripheral equipment, office equipment, any property used in research and experimentation, breeding cattle and dairy cattle, appliances & etc. used in residential rental real estate activity, certain green energy property
7-year property	7 years	Office furniture and fixtures, agricultural machinery and equipment, any property not designated as being in another class, natural gas gathering lines
10-year property	10 years	Vessels, barges, tugs, single-purpose agricultural or horticultural structures, trees/vines bearing fruits or nuts, qualified small electric meter and smart electric grid systems
15-year property	15 years	Certain land improvements (such as shrubbery, fences, roads, sidewalks and bridges), retail motor fuels outlets, municipal wastewater treatment plants, clearing and grading land improvements for gas utility property, electric transmission property, natural gas distribution lines
20-year property	20 years	Farm buildings (other than those noted under 10-year property), municipal sewers not categorized as 25-year property, the initial clearing and grading of land for electric utility transmission and distribution plants
25-year property	25 years	Property that is an integral part of the water distribution facilities, municipal sewers
Residential rental property	27.5 years	Any building or structure where 80% or more of its gross rental income is from dwelling units
Nonresidential real property	39 years	An office building, store, or warehouse that is not residential property or has a class life of less than 27.5 years

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