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HOME › GLOSSARY › MACRS · VOLUME I · 2026 EDITION
GLOSSARY ENTRY · DEFINED TERM

MACRS

The Modified Accelerated Cost Recovery System — the depreciation method required by IRC §168 for most tangible property placed in service after December 31, 1986. Assigns a class life and recovery period to each asset and applies a method (declining-balance or straight-line) and convention (half-year, mid-quarter, or mid-month).

STATUTE BASIS · IRC §168 · Rev. Proc. 87-56

In context

MACRS replaced the Accelerated Cost Recovery System (ACRS) under the Tax Reform Act of 1986. Every depreciable property placed in service since January 1, 1987 — equipment, vehicles, buildings, land improvements, and the components reclassified through cost segregation — depreciates under MACRS unless the property qualifies for the Alternative Depreciation System (ADS).

The MACRS framework is three decisions:

  1. Recovery period — 3, 5, 7, 10, 15, 20, 25, 27.5, or 39 years, determined by the asset’s class life under Rev. Proc. 87-56
  2. Method — declining-balance (200% for 3-, 5-, 7-, 10-year property; 150% for 15-, 20-year) switching to straight-line in the year that produces a larger deduction, or straight-line throughout for real property
  3. Convention — half-year (most personal property), mid-quarter (when >40% of year’s basis placed in Q4), or mid-month (all real property)

Every cost segregation study, every §168(k) bonus depreciation calculation, every Form 3115 method change starts with the MACRS classification.

See /macrs/ for the full topic hub.