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MACRS Property Class and Recovery Period Reference for Manufacturers

Assigning the right MACRS class decides how fast a machine or building is written off for tax. This reference lists each recovery period with the method, convention and the manufacturing assets that usually fall into it.

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Recovery period	Method (general depreciation system)	Convention	Typical examples
3-year	200% declining balance	Half-year or mid-quarter	Tractor units for over-the-road use, certain manufacturing tools in specific asset classes
5-year	200% declining balance	Half-year or mid-quarter	Computers and peripheral equipment, automobiles, light trucks, copiers
5-year	200% declining balance	Half-year or mid-quarter	Property used in research and experimentation
7-year	200% declining balance	Half-year or mid-quarter	Office furniture and fixtures, most production machinery and equipment not assigned another class
7-year	200% declining balance	Half-year or mid-quarter	Railroad track, agricultural machinery and equipment
10-year	200% declining balance	Half-year or mid-quarter	Vessels, barges, tugs, single purpose agricultural structures
15-year	150% declining balance	Half-year or mid-quarter	Land improvements such as fences, roads, sidewalks, parking lots, landscaping
15-year	Straight line	Half-year or mid-quarter	Qualified improvement property, qualified leasehold and restaurant improvements (current law)
20-year	150% declining balance	Half-year or mid-quarter	General purpose farm buildings, municipal sewers
25-year	Straight line	Mid-month	Water utility property
27.5-year	Straight line	Mid-month	Residential rental property
39-year	Straight line	Mid-month	Nonresidential real property such as factories, warehouses and office buildings (building shell)
Land	Not depreciable	Not applicable	Land itself, including the cost of clearing and grading to acquire it
Alternative system	Straight line over class life	As applicable	Required for tax-exempt use property, foreign use property and certain listed property

Recovery periods follow IRS Publication 946 and its asset class tables. A building's cost segregation study can move some components into shorter classes. Special depreciation rules (Section 179 and bonus depreciation) change the timing of the deduction but not the class. Confirm the asset class for your NAICS activity before assigning.

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How to use the table

Find the asset in the examples column, then read across for the recovery period, method and convention. Your fixed asset register should carry a separate tax book with the class code, placed in service date and convention, so the depreciation run matches the return. If your asset does not appear, check the asset class tables in Publication 946, which classify by business activity as well as asset type.

Conventions that change the first year

The half-year convention treats all assets as placed in service at mid-year. If more than 40 percent of the year's depreciable basis (excluding real property) is placed in service in the last quarter, the mid-quarter convention applies and the first year deduction falls. Real property uses the mid-month convention instead.

Half-year: default for personal property
Mid-quarter: triggered by the 40 percent last-quarter test
Mid-month: nonresidential and residential real property
Section 179 amounts are removed before running the 40 percent test

Common mistakes

Plants often depreciate everything on book life and never maintain a tax book, which makes bonus depreciation and Section 179 elections hard to audit later. Another error is putting the whole building into 39-year property when parts qualify as land improvements or qualified improvement property. A cost segregation study, done by qualified engineers, is the usual way to support that split.

Frequently Asked Questions

What MACRS class is most manufacturing machinery?

Most production machinery falls in 7-year property unless its asset class assigns another period. Computers and research property are generally 5-year. Confirm the specific asset class in IRS Publication 946 for your industry, because the activity-based tables can override the general guess.

Are factory buildings 39-year property?

The building shell of a nonresidential factory is 39-year straight line property. Components that are really land improvements or qualified improvement property can be shorter, and a cost segregation study can support that. Land is never depreciable.

Does bonus depreciation change the class?

No. Bonus depreciation and Section 179 change how much you deduct in the first year, not the MACRS recovery period. Any remaining basis is still depreciated over the original class.

Which convention applies to equipment bought in December?

If December purchases push more than 40 percent of the year's depreciable personal property basis into the last quarter, the mid-quarter convention applies to all that year's additions. That gives a much smaller first year deduction for the December items.

If your ERP asset module only carries one depreciation book, Netray can help design a tax book and reporting that ties to the return.

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