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MACRS stands for modified accelerated cost recovery system. It is the tax depreciation system used in the United States to calculate asset depreciation. This system replaced the Accelerated Cost Recovery System (ACRS) in 1986 and applies to property placed into service after 1986. MACRS depreciation allows the capitalized cost of an asset to be recovered over a period, specified in the Internal Revenue Code, via annual deductions. MACRS allows for greater accelerated depreciation over longer time periods, which is beneficial to individuals and businesses as it allows them to deduct greater amounts at the beginning of an asset’s life, and relatively less later on.

See IRS Publication 946, How To Depreciate Property for more information on MACRS.

[Last updated in July of 2021 by the Wex Definitions Team]