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Calculate equipment depreciation for construction assets using multiple methods. Built for contractors, equipment managers, and construction accountants.
Calculator inputs
Enter measured project values. Results update only when you choose Calculate.
Method
A paid-off skid steer is not free. If you bought a CAT 262D in 2019 for $52,000 and you replace it in 2027 for $78,000, you owe yourself $26,000 in price escalation alone — that money has to come from billable hours between now and then. Equipment depreciation is how you translate that replacement reality into a per-hour rate that goes onto job costs.
The calculator runs straight-line depreciation, which is what most surety bonding agents and the AGC equipment cost reference both prefer for estimating. Tax depreciation under IRS Section 168 (MACRS) or Section 179 expensing is a different exercise — keep the books separate or you will end up bidding off your tax return instead of off real economics.
Use delivered cost, including freight, dealer prep, and any attachments billed at purchase. For salvage, look at completed Ritchie Bros or IronPlanet auctions for the same year and hours — not a dealer wholesale book that nobody actually pays.
A wheel loader on a busy aggregate yard might run 1,800 hours a year; the same machine at a small site contractor sees 600 to 800. Light utilization is the silent killer of equipment economics.
Basis divided by years gives annual depreciation; divide by realistic operating hours for the per-hour figure that goes into bids.
Add insurance (typically 1.5 to 3 percent of value annually), financing if applicable, yard storage, license/registration, and a replacement reserve. Fuel, filters, tires, and operator labor are operating costs and should sit on a separate line.
Because bid rates need to reflect economic reality across the asset life, not a tax election. Section 179 might wipe out the basis in year one for the IRS, but the machine still costs you the same $26,000 to replace seven years later.
Tax depreciation is bookkeeping. Replacement is reality. The day you go to repower or replace the unit, the cash has to be there, and the only place to fund that is hourly recovery while the machine is still running.
Treat the rebuild as a new basis: capitalize the rebuild cost, set a new useful life from the rebuild date (typically 60 to 70 percent of original life expectancy), and run depreciation forward from there.
The EquipmentWatch Rental Rate Blue Book and FHWA Equipment Watch are useful sanity checks, but they assume average utilization and Midwestern wage zones. Build your rate from your own purchase prices and your own annual hours; use the Blue Book to challenge the answer.
Separate plan workflow
This calculator solves one bounded formula from the inputs shown. BuildVision AI supports reviewed plan takeoff, complete-document CSV, and editable quote lines; the estimator owns pricing and final bid approval.