# How much will my car depreciation be?

Computes a car’s value after each year and the total depreciation, when it loses one percent of its value in the first year and another percent of the remaining value each later year.

- Page: https://www.acalculator.org/finance/car-depreciation-calculator
- JSON spec: https://www.acalculator.org/finance/car-depreciation-calculator.json
- Version: 484b4d53db36

## Default answer

Example with the default inputs (Price paid $35,000.00, Value lost in year 1 20%, Value lost each later year 15%, Years of ownership 5): A $35,000.00 car losing 20% in year 1 and 15% a year after that is worth $14,616.18 after 5 years.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| price | Price paid | What the car cost, or its value at the start. |
| first | Value lost in year 1 | The percent of the price the car loses in its first year. |
| later | Value lost each later year | The percent of the remaining value the car loses in each year after the first. |
| years | Years of ownership | How many years you keep the car. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| value | Value at the end | The car’s value after the years of ownership. |
| lost | Total depreciation | The price minus the value at the end. |
| lostPercent | Share of the price lost | Total depreciation as a percent of the price. |
| perYear | Average depreciation a year | Total depreciation divided by the years. |
| rate | Average yearly rate | The one yearly percent that gives the same value at the end: 1 − (value ÷ price)^(1 ÷ years). |

## Method

value after year 1 = price × (1 − first-year % ÷ 100); each later year, value = value × (1 − later % ÷ 100); depreciation = price − value.

## Assumptions

- You type the yearly percents; the page uses no market data. Look at prices of the same model at different ages to estimate them.
- The car loses the same percent of its remaining value every year after the first (declining balance), so the value never reaches 0 unless a rate is 100%.
- Mileage, condition, accidents and market swings are not included except through the percents you type.
- Percents are read to 10 decimal places; values are exact from there until the display, which rounds half up to the cent.

## Worked examples

1. price = $35,000.00, first = 20%, later = 15%, years = 5 gives value = $14,616.18, lost = $20,383.83, lostPercent = 58.2395%, perYear = $4,076.77, rate = 16.024396%. Source: IRS Publication 946, How To Depreciate Property, Which Depreciation Method Applies (declining balance methods), https://www.irs.gov/publications/p946, retrieved 2026-10-01.
2. price = $20,000.00, first = 10%, later = 10%, years = 3 gives value = $14,580.00, lost = $5,420.00, lostPercent = 27.1%, rate = 10%. Source: IRS Publication 946, How To Depreciate Property, Which Depreciation Method Applies (declining balance methods), https://www.irs.gov/publications/p946.
3. price = $12,500.00, first = 0%, later = 0%, years = 2 gives value = $12,500.00, lost = $0.00, rate = 0%. Source: IRS Publication 946, How To Depreciate Property, Which Depreciation Method Applies (declining balance methods), https://www.irs.gov/publications/p946.

## FAQ

### How is car depreciation calculated?

Take the price and remove the first-year percent, then remove the later-year percent from what is left, once for each later year. A $35,000 car losing 20% in year 1 and 15% a year after that is worth 35,000 × 0.80 × 0.85⁴ = $14,616.18 after 5 years.

### Why does the car never reach $0?

Each year it loses a percent of its remaining value, not of the price, so the yearly loss shrinks as the value falls. This is the declining balance pattern. Only a rate of 100% takes the value to 0.

### What percents should I use?

Your own estimate. The page uses no market data. Compare asking prices for the same model, trim and mileage at different ages: if a 3-year-old car sells for 60% of the new price, the average yearly rate is 1 − 0.6^(1/3), about 15.7%.

### Why use a separate first-year rate?

Many cars lose more value in their first year than in later years, so one rate for every year can understate the early drop. Set both boxes to the same percent for a single rate.

### What is the average yearly rate?

The one percent that, applied every year, gives the same value at the end: 1 − (value at the end ÷ price)^(1 ÷ years). For the example above it is about 16.02% a year.

### Is this the depreciation I can deduct on my taxes?

No. Tax depreciation of a business vehicle follows IRS rules (MACRS and its limits on passenger cars, in IRS Publication 946). This calculator estimates the market value of a car.

## Sources

- IRS Publication 946, How To Depreciate Property, Which Depreciation Method Applies (declining balance methods under MACRS), retrieved 2026-10-01. https://www.irs.gov/publications/p946
- Consumer Financial Protection Bureau, Auto loans (planning the cost of a car), retrieved 2026-10-01. https://www.consumerfinance.gov/consumer-tools/auto-loans/