7-Year MACRS Depreciation: Tables, Conventions, and Form 4562

Under 7-year MACRS depreciation, you write off the asset’s cost over eight tax years by multiplying its original cost basis by a fixed IRS percentage each year. The default schedule uses the 200% declining balance method with the half-year convention, producing these annual percentages: 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, 8.92%, 8.93%, and 4.46%.¹ A $10,000 desk placed in service in 2026 generates a $1,429 deduction in year one, $2,449 in year two, and so on down the line until the full cost is recovered by the end of year eight.

Before you build that schedule, check whether bonus depreciation or Section 179 lets you deduct the whole cost right away. For assets acquired after January 19, 2025, they often do.

What Belongs in the 7-Year Class

Property with a class life of 10 years or more but less than 16 years falls into the 7-year class under the General Depreciation System.² The most common examples are office furniture and fixtures — desks, file cabinets, safes — under asset class 00.11. The class also picks up farm machinery and equipment, grain bins, cotton ginning assets, fences used in farming, railroad track, motorsports entertainment complexes, and natural gas gathering lines placed in service after April 11, 2005.¹

One more category catches people off guard: any property without a designated class life that hasn’t been assigned to another recovery period by law defaults into the 7-year class.² Because misclassification changes every year’s deduction and can trigger audit adjustments, check the class-life tables in Publication 946 before defaulting to seven years.

The Default Method and Table

Under GDS, 7-year property uses the 200% declining balance method, which automatically switches to straight-line in the first year that straight-line produces a larger deduction.¹ The straight-line rate for a 7-year asset is 1/7 (about 14.29%); the 200% declining balance rate doubles that to 2/7 (about 28.57%) applied to the remaining undepreciated balance.

You don’t have to run those calculations yourself. Publication 946’s percentage tables bake in the declining balance rate, the convention, and the switchover point. Multiply each year’s table percentage by the asset’s original unadjusted cost basis:

Year 1: 14.29%
Year 2: 24.49%
Year 3: 17.49%
Year 4: 12.49%
Year 5: 8.93%
Year 6: 8.92%
Year 7: 8.93%
Year 8: 4.46%

These percentages always apply to original cost, not the declining balance. The eight figures add to 100%, recovering the asset’s full cost. Roughly 56% of the cost is written off in the first three years. That front-loading is why most businesses stick with the default rather than electing 150% declining balance or straight-line, both of which are available as irrevocable elections that apply to every 7-year asset placed in service that same tax year.

Half-Year vs. Mid-Quarter Convention

MACRS doesn’t care what month you actually started using the asset. The half-year convention treats every asset placed in service during the year as if it went into use at the year’s midpoint. Half a year of depreciation in year one, half a year in the final year, stretching a 7-year recovery period across eight tax years.³ It applies automatically unless the mid-quarter convention is triggered.

The mid-quarter convention kicks in when more than 40% of your total depreciable property basis for the year is placed in service during October through December. If you cross that threshold, every asset placed in service that year uses the mid-quarter convention, not just the Q4 purchases. Each asset is then treated as placed in service at the midpoint of its acquisition quarter. First-year percentages for 7-year property become:¹

Q1 (January–March): 25.00%
Q2 (April–June): 17.85%
Q3 (July–September): 10.71%
Q4 (October–December): 3.57%

A $10,000 asset placed in service in Q4 yields only a $357 first-year deduction under this convention, versus $1,429 under half-year. The schedule also extends to nine tax years for Q4 assets, since the small first-year deduction leaves more basis to recover at the tail. Practical takeaway: if you’re planning a large equipment purchase late in the year, run the 40% test first. Bunching too much basis into Q4 can penalize everything you bought that year.

Immediate Expensing: Bonus Depreciation and Section 179

Before you build a multi-year schedule at all, check whether you can write the asset off in year one. Two provisions allow that, and both changed under the One, Big, Beautiful Bill Act signed in July 2025.

Bonus Depreciation

For qualified property acquired after January 19, 2025, bonus depreciation is 100%. You deduct the full cost in the year the asset is placed in service.⁴ It applies to new and used 7-year MACRS assets as long as the qualified-property rules are met (generally, you can’t have used it previously, and it can’t come from a related party).⁵

Acquisition date matters. Property acquired before January 20, 2025, and placed in service in 2026 still follows the old phase-down schedule, which puts the rate at 20%.⁶ Document the acquisition date. The swing between 20% and 100% turns on it.

Bonus depreciation is calculated before Section 179 or standard MACRS. If you take 100% bonus, there’s nothing left to depreciate.

Section 179

Section 179 lets you elect to deduct the cost of qualifying property, including 7-year MACRS assets, in the placed-in-service year rather than spreading it across the recovery period.⁷ The election is made property by property, with these guardrails:

For tax years beginning in 2026, the maximum deduction is $2,560,000 (inflation-adjusted from the $2,500,000 statutory base).
The deduction phases out dollar-for-dollar once total qualifying property placed in service that year exceeds $4,090,000.
The deduction can’t exceed aggregate taxable income from your active trades or businesses; any excess carries forward.
The property must be used more than 50% for business.

When both provisions apply, bonus depreciation runs first. Remaining basis, if any, can be expensed under Section 179 or depreciated on the standard MACRS schedule.

When the Alternative Depreciation System Is Required

Most businesses use GDS, but some situations force the Alternative Depreciation System. Under ADS, 7-year GDS property without a specific ADS designation generally uses a 12-year straight-line recovery, producing smaller, steadier write-offs.¹

ADS is mandatory for tax-exempt use property, property financed with tax-exempt bonds, tangible property used predominantly outside the United States, listed property used 50% or less for qualified business purposes, and farm property where the taxpayer elected out of the uniform capitalization rules for farming costs.¹ You can also elect ADS voluntarily; that election is irrevocable and applies to every asset in the same class placed in service that year.

The Listed Property Trap

Some 7-year assets are classified as listed property because they lend themselves to personal use. If you initially use listed property more than 50% for business and claim accelerated MACRS deductions or Section 179 expensing, but business use later drops to 50% or below, you have to recapture the excess depreciation. The excess is the difference between what you deducted and what you would have deducted under ADS straight-line from the start.¹ That amount is added back to income in the year business use drops, and you must use ADS straight-line for the remaining recovery period.

Track business-use percentages annually for any asset with a plausible personal-use component. This is the most common way depreciation quietly creates taxable income.

Selling or Disposing of the Asset

Sell, retire, or otherwise dispose of 7-year property before the recovery period ends and you still get a partial depreciation deduction for the year of disposal. Under the half-year convention, you receive half of that year’s full deduction. Under the mid-quarter convention, the fraction depends on the quarter of disposal.¹

Seven-year MACRS property is Section 1245 property. If you sell at a gain, the gain is treated as ordinary income up to the total depreciation you claimed; only gain beyond that is capital gain.⁸ Section 179 deductions and bonus depreciation count in the recapture calculation, so taking a full first-year write-off doesn’t shield you from recapture on a later sale. Report the sale on Form 4797.⁹

Where This Goes on Form 4562

For 7-year property placed in service during the current tax year, MACRS depreciation is reported in Part III, Section B of Form 4562, on Line 19c, column (g).² Enter the month and year placed in service, the cost basis, the 7-year recovery period, the method (200 DB), the convention (HY or MQ), and the calculated deduction. Section 179 deductions go in Part I. Bonus depreciation goes in Part II. Assets carrying over from prior years are reported in Part III, Section C, line 17.

Keep records of each asset’s original cost, placed-in-service date, convention, and cumulative depreciation. Those records are the first thing the IRS asks for in a depreciation audit.

1
Internal Revenue Service. Publication 946 (2025), How To Depreciate Property
2
Internal Revenue Service. Instructions for Form 4562 (2025)
3
eCFR. 26 CFR 1.168(d)-1 – Half-Year and Mid-Quarter Conventions
4
Internal Revenue Service. One, Big, Beautiful Bill Provisions
5
Internal Revenue Service. Additional First Year Depreciation Deduction (Bonus) – FAQ
6
Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One, Big, Beautiful Bill
7
Office of the Law Revision Counsel. 26 USC 179 – Election to Expense Certain Depreciable Business Assets
8
Office of the Law Revision Counsel. 26 USC 1245 – Gain From Dispositions of Certain Depreciable Property
9
Internal Revenue Service. About Form 4797, Sales of Business Property