MACRS is the depreciation system for most US tax purposes. Each asset is assigned a recovery period by its asset class, a method (usually 200% declining balance switching to straight-line) and a convention (usually half-year), and depreciation follows the percentages in IRS Publication 946. Salvage value is ignored. Construction equipment generally falls in asset class 15.0, which is 5-year property under the general depreciation system.
Why it matters
MACRS front-loads deductions compared with straight-line book depreciation, so book and tax income differ every year until the asset is fully depreciated. Those differences need to be tracked, not mixed into the GAAP ledger.
Worked example
A $250,000 excavator placed in service in 2026 as 5-year property, half-year convention: 20% ($50,000) in year one, then 32%, 19.2%, 11.52%, 11.52% and 5.76% (illustrative). Book straight-line is $45,000 in year one, so the tax book carries a $5,000 difference.
Common mistakes
- Picking the wrong recovery period for the asset class.
- Ignoring the mid-quarter convention when most assets are bought late in the year.
How os.construction handles it
In the accounting preview, the asset register keeps a MACRS memo book, with Section 179 and bonus, beside book depreciation, and a book-vs-tax schedule compares them. Confirm asset classes with your tax advisor. See Fixed assets and equipment.