Handout
Depreciation quick reference
Recovery periods, methods, conventions, bonus rates and 2026 limits. Print it.
Current as of the 2026 filing season. Confirm figures before relying on them; they change.
Recovery periods
| Property | GDS | ADS | Method | Bonus? |
|---|---|---|---|---|
| Computers, autos, light trucks | 5 | 5 | 200% DB | Yes |
| Distributive trades & services assets | 5 | 9 | 200% DB | Yes |
| Office furniture and fixtures | 7 | 10 | 200% DB | Yes |
| No class life assigned | 7 | 12 | 200% DB | Yes |
| Land improvements | 15 | 20 | 150% DB | Yes |
| Qualified improvement property | 15 | 20 | Straight line | Yes |
| Farm buildings | 20 | 25 | 150% DB | Yes |
| Water utility property | 25 | 50 | Straight line | No |
| Residential rental property | 27.5 | 30 | SL, mid-month | No |
| Nonresidential real property | 39 | 40 | SL, mid-month | No |
| Railroad grading / tunnel bore | 50 | 50 | Straight line | No |
| Land | n/a | n/a | Not depreciable | No |
Conventions
| Convention | Applies to | First-year effect |
|---|---|---|
| Half-year | Personal property, default | Six months regardless of month placed in service |
| Mid-quarter | All personal property if >40% of the year's personal property basis is placed in service in Q4 | Half of the quarter placed in service |
| Mid-month | All real property | Half of the month placed in service |
Bonus depreciation by placed-in-service date
| Placed in service | Rate |
|---|---|
| 2023 | 80% |
| 2024 | 60% |
| 1 – 19 January 2025 | 40% |
| On or after 20 January 2025 | 100% (permanent) |
| 2026 and forward | 100% |
Section 179 for tax years beginning in 2026
| Item | Amount |
|---|---|
| Maximum deduction | $2,560,000 |
| Phase-out threshold | $4,090,000 |
| Fully phased out at | $6,650,000 |
| Heavy SUV cap | $32,000 |
Recapture on disposition
| Component | Section | Federal treatment |
|---|---|---|
| 5 and 7-year personal property | 1245 | Ordinary income to extent of depreciation |
| 15-year land improvements | 1250 | Unrecaptured 1250 gain, 25% max |
| Building (27.5 / 39-year) | 1250 | Unrecaptured 1250 gain, 25% max |
| Gain above depreciation | 1231 | Long-term capital gain, plus NIIT if applicable |
When ADS is required
- Property used predominantly outside the United States
- Tax-exempt use and tax-exempt bond financed property
- Listed property used 50% or less in qualified business use
- Farming businesses electing out of the section 163(j) interest limitation
- Real property of an electing real property trade or business under section 163(j)(7) — also removes bonus eligibility
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Find out what your building is hiding.
A feasibility review is free and takes about twenty minutes. Bring the closing statement and the depreciation schedule; we will tell you plainly whether a study pays for itself.