MACRS (Modified Accelerated Cost Recovery System)

Definition

MACRS is the standard depreciation system used in the United States for most tangible business property placed in service after 1986, as established by the Tax Reform Act of 1986. It assigns assets to specific recovery period classes (such as 5-year, 7-year, 15-year, or 39-year property) and uses predetermined depreciation rates to calculate annual deductions. Cost segregation studies rely on MACRS classifications to reclassify building components into shorter recovery periods and accelerate tax deductions.