MACRS overview
The Modified Accelerated Cost Recovery System (MACRS) is the default depreciation method for most property placed in service after 1986. MACRS assigns each asset a class life (3, 5, 7, 10, 15, 20, 25, 27.5, or 39 years) and a convention (half-year, mid-quarter, mid-month) that determines first- and last-year depreciation.
Class lives
3-year: tractors. 5-year: vehicles, computers, office machines, breeding cattle. 7-year: office furniture, agricultural machinery. 15-year: qualified improvement property. 20-year: farm buildings. 27.5-year: residential rental real estate. 39-year: commercial real estate (including most home offices).
Section 179 expensing
Section 179 lets you immediately expense the cost of qualifying tangible personal property up to an annual cap (over $1 million, indexed). The deduction phases out dollar-for-dollar above an investment threshold and cannot exceed taxable business income from any active trade or business. Section 179 is most useful when the business has positive taxable income that would absorb the full deduction.
Bonus depreciation
The special depreciation allowance (bonus depreciation) was 100% for property placed in service through 2022 and is phasing down 20 percentage points per year (80% for 2023, 60% for 2024, 40% for 2025, 20% for 2026, 0% for 2027). Unlike Section 179, bonus depreciation has no taxable-income limit and can create a loss.
Listed property
Listed property — passenger autos, certain other transportation, and property used for entertainment — must be used more than 50% for business to qualify for accelerated depreciation. Failing the 50% test triggers straight-line depreciation, no Section 179, and a recapture computation if business use later drops below 50%.
What the publication does not say
IRS publications are summaries, not the law. They do not cite every controlling regulation, and they routinely omit edge cases that would make the discussion harder to read. For close calls, escalate from the publication to the underlying Internal Revenue Code section, the related Treasury regulations, the relevant revenue rulings or revenue procedures, and (if the dollars warrant) the leading court cases. The IRS-published Internal Revenue Manual and the Audit Techniques Guides — also free on IRS.gov — provide the agency's internal procedural perspective, which often clarifies how the publication's rules play out in an examination.