Car Depreciation Calculator

How the car depreciation calculator works

Cars lose value as a share of what they are worth, so the loss is largest in dollars early on and shrinks each year. The calculator takes the price (new, or what you paid), how many years ago that was, and a yearly rate. Each year's value is last year's value × (1 − the rate). If you know a car loses more in its first year, type that as the first-year rate and the yearly rate for the years after.

Worked example: a $35,000 car at the 10.26% yearly rate is worth $31,409 after a year, $28,186 after two and $20,370 after five. It has lost $14,630, or $2,926 a year. Enter the miles you drive in a year and the calculator divides the loss by the miles: at 15,000 miles a year it is about $0.195 a mile.

Where the rate presets come from

The presets come from iSeeCars' 2026 study of more than 950,000 five-year-old used cars sold from March 2025 to February 2026. It compared each car's asking price with its MSRP, adjusted for inflation to 2026 dollars. On average the cars had lost 41.8%. By segment: trucks 34.2%, hybrids 35.4%, SUVs 44.9% and EVs 57.2%.

The calculator turns each five-year figure into the even yearly rate that gives the same loss: 41.8% over five years is 1 − 0.582^(1/5) = 10.26% a year. Real cars usually lose more in year one and less later, and a five-year average says nothing about one model in one town. For a car you are pricing, the asking prices of the same model, trim and mileage nearby beat any average. Use your own rate when you have one.

Depreciation per mile: the cost of driving your own car

For a sales rep who drives their own car, lost value is a cost of the territory, alongside fuel, tires and insurance. Divide the loss over a period by the miles driven in it and you get the depreciation part of the cost per mile, the number to hold up against a mileage reimbursement or a car allowance.

Miles also speed up depreciation: a car with high miles for its age sells for less, so a rep with a long territory may lose value faster than the average rate. Try a higher rate to see the range.

Tax depreciation for a business car (US, 2026)

If you are self-employed or own the business, the tax tab works out the yearly MACRS deduction for a car placed in service in 2026. IRS Publication 463 treats cars as 5-year property depreciated over six calendar years with the half-year convention. Above 50% business use the rates are 20%, 32%, 19.2%, 11.52%, 11.52% and 5.76%; at 50% or less the car must use straight line, 10%, 20%, 20%, 20%, 20% and 10%, and gets no bonus depreciation or section 179.

Each year's deduction is the lesser of cost × business use × the rate and the year's limit × business use. Rev. Proc. 2026-15 sets the limits for passenger automobiles, trucks and vans included, placed in service in 2026: $12,300, $19,800 and $11,900 for the first three years and $7,160 for each year after, with the first year raised to $20,300 when bonus depreciation applies. Vehicles rated over 6,000 lb gross vehicle weight are not passenger automobiles under Publication 946 and have no such limits. Basis left after the sixth year can be deducted in later years, up to $7,160 × business use a year.

Employees cannot deduct their car costs on a federal return under current rules in Publication 463 (with exceptions such as some reservists and fee-basis officials); for them a mileage reimbursement or allowance from the employer is the route.

What this calculator does not do

It does not price a specific car: condition, accident history, trim, miles and the local market decide that, and a dealer or a valuation guide will give a better number for one car. The tax tab leaves out bonus depreciation, section 179, the mid-quarter convention, a car bought in another year, trade-ins and recapture when business use falls. Use it to plan and to compare, and confirm the figures for a return.

Sources, read on 2026-10-26:

• iSeeCars: The Top 25 Cars That Hold Their Value Best (2026 study: 41.8% average five-year depreciation, by segment)
• IRS Rev. Proc. 2026-15: depreciation limits for passenger automobiles placed in service in 2026 (Tables 1 and 2)
• IRS Publication 463 (2025), chapter 4: MACRS for cars, the 50% business use rule, the reduction for personal use
• IRS Publication 946 (2025): passenger automobile definition (6,000 lb), MACRS tables A-1 and A-8

Working out the whole cost of the car? The cost per mile calculator adds fuel, insurance and upkeep, the mileage reimbursement calculator shows what the miles are worth at the IRS rate, and the mileage log template keeps the business-use record the tax tab asks for.

Related tools

• Mileage Reimbursement CalculatorAdd up business miles for a trip, a week of visits or a month, and see the reimbursement at the 2026 IRS rate or your company's own rate.Open the tool
• Cost per Mile CalculatorWork out what your car, van or pickup really costs per mile, from fuel, insurance, maintenance, depreciation and payments, and compare it with your mileage rate.Open the tool
• Mileage Log TemplateKeep a business mileage log with date, purpose, start and end odometer and miles, valued at the IRS standard rate, then print it or download a CSV.Open the tool
• Car Sales Tax CalculatorEstimate the sales tax on a new or used car, with trade-in credit, rebates and dealer fees, and the out-the-door price.Open the tool