What Is the Depreciation Schedule for Computers Used for Business?

For U.S. federal tax purposes, computers used for business are depreciated under the Modified Accelerated Cost Recovery System (MACRS). The applicable recovery period and method depend on how the computer is classified and how it is used.

1) Standard depreciation rule for business computers

Recovery period: 5 years

Most computers, laptops, and peripheral equipment used in a trade or business are classified as 5-year property.

• Depreciated using MACRS
• Default method: 200% declining balance, switching to straight-line
• Convention: Half-year convention (in most cases)

2) MACRS depreciation percentages (5-year property)

If you use the standard MACRS method, the depreciation percentages are:

3) Section 179 expensing (often used for computers)

Instead of depreciating over 5 years, businesses may elect Section 179 to expense the full cost in the year placed in service.

2025 limits:

• Maximum §179 deduction: $2,500,000 (for 2026: $2,560,000)
• Phase-out threshold: $4,000,000 (for 2026: $4,090,000)
• Must be used more than 50% for business

Key notes:

• Computers qualify for §179
• Deduction limited to taxable business income
• Excess carries forward

4) Bonus depreciation (2025)

Bonus depreciation allows an additional first-year deduction, made permanent at 100% by the One Big Beautiful Bill Act

Bonus depreciation rate for 2025:

• 100% for computers acquired and placed in service after January 19, 2025
• 40% for property acquired before January 20, 2025 and placed in service in 2025
• You can elect 40% instead of 100% for the first tax year ending after January 19, 2025

Computers qualify as qualified property if:

• They have a recovery period of 20 years or less
• They are placed in service during the year

5) Special rule: Listed property (business vs. personal use)

Computers are no longer treated as listed property (change made in 2018).

This means:

• No strict substantiation rules like vehicles
• Still must allocate depreciation based on business-use percentage

Example:

If a laptop is used 80% for business, only 80% of the cost is depreciable.

6) How depreciation is reported

• Schedule C (sole proprietors)
• Form 4562 – Depreciation and Amortization
• Form 1120 / 1120-S / 1065 for entities

Summary

• Business computers are 5-year MACRS property
• Default method: 200% declining balance
• Can be fully expensed using Section 179
• Eligible for 100% bonus depreciation if acquired after January 19, 2025 (40% if acquired earlier and placed in service in 2025)
• Depreciation limited to business-use percentage
• Reported on Form 4562

‍Source:

IRC §168(e)(3)(B)(iv)

IRS Pub 946 – How To Depreciate Property

IRS Pub 946, Appendix A – Table A-1

IRC §179

IRS Pub 946 – Section 179

IRC §168(k)

Form 4562 & instructions

IRC §280F