What is my depreciation recapture?

How it works

1. Adjusted basis = original cost basis − depreciation taken.
2. Gain = sale price − selling costs − adjusted basis. An empty selling costs box counts as $0.
3. Depreciation recapture = the smaller of the gain and the depreciation taken.
4. Rest of the gain = gain − recapture (section 1231 gain, taxed as a long-term capital gain).
5. Three federal taxes for 2026, each by the regular tax or the Schedule D Tax Worksheet below:
   • T0 = regular tax on your other taxable income.
   • T1 = tax on other income + recapture. A building: the worksheet with net capital gain = recapture and unrecaptured section 1250 gain = recapture. Equipment: the regular tax (the recapture is ordinary income).
   • T2 = tax on other income + gain. A building: the worksheet with net capital gain = gain and unrecaptured section 1250 gain = recapture. Equipment: the worksheet with net capital gain = rest of the gain and no unrecaptured section 1250 gain.
6. Tax on the depreciation recapture = T1 − T0. Tax on the rest of the gain = T2 − T1. Total federal tax on the sale = T2 − T0.
7. Average rate on the recapture = (T1 − T0) ÷ recapture × 100, shown only when the recapture is more than $0.

Regular tax. Taxable income under $100,000: the IRS Tax Table, which is the rate schedule applied to the middle of the income’s row, rounded to whole dollars with halves rounded up. The rows are $0 to $5 (middle $2.50), $5 to $15 ($10), $15 to $25 ($20), then $25 wide up to $3,000 and $50 wide from $3,000 (a row includes its lower end). From $100,000: the 2026 rate schedule exactly, with no rounding.

2026 rate schedules (Rev. Proc. 2025-32 section 4.01; each rate applies above its floor):

Schedule D Tax Worksheet (2025 instructions, with no qualified dividends, no Form 4952 and no 28% rate gain). TI is taxable income, G the net capital gain, U the unrecaptured section 1250 gain. With G = $0 the tax is the regular tax on TI.

• Line 1 = TI; line 9 = line 10 = G; line 12 = smaller of G and U; line 13 = line 10 − line 12.
• Line 14 = line 1 − line 13 (at least 0). Line 16 = smaller of line 1 and the 0% threshold. Line 17 = smaller of lines 14 and 16.
• Line 18 = line 1 − line 10 (at least 0). Line 19 = smaller of line 1 and the floor of the 32% bracket (the income taxed below 25%). Line 20 = smaller of lines 14 and 19. Line 21 = larger of lines 18 and 20. Line 22 = line 16 − line 17 (taxed at 0%).
• If line 1 equals line 16, skip to line 44. Line 23 = smaller of line 1 and line 13; line 24 = line 22; line 25 = line 23 − line 24 (at least 0).
• Line 27 = smaller of line 1 and the 15% threshold. Line 28 = line 21 + line 22. Line 29 = line 27 − line 28 (at least 0). Line 30 = smaller of lines 25 and 29. Line 31 = line 30 × 15%.
• Line 32 = line 24 + line 30. If line 1 equals line 32, skip to line 44. Line 33 = line 23 − line 32; line 34 = line 33 × 20%.
• If U is $0, skip to line 44. Line 35 = smaller of G and U; line 38 = line 10 + line 21 − line 1 (at least 0); line 39 = line 35 − line 38 (at least 0); line 40 = line 39 × 25%.
• Line 44 = regular tax on line 21. Line 45 = line 31 + line 34 + line 40 + line 44. Line 46 = regular tax on line 1. The tax is the smaller of lines 45 and 46. Skipped lines count as $0.

2026 thresholds (Rev. Proc. 2025-32 section 4.03):

Rules:

• Every amount is $0 or more, at most $1,000,000,000,000.
• Depreciation taken more than the original cost basis gives no answer: "The depreciation taken cannot be more than the original cost basis."
• A loss gives no answer: "The sale is at a loss: the sale price less selling costs is below the adjusted basis, so no depreciation is recaptured." A gain of exactly $0 gives $0 everywhere, with no average rate.
• A tax that is not $0 but is too small to show as a number (under about 2.5 × 10⁻³²⁴ dollars, which only amounts typed far below a cent can give) gives no answer: "The amounts are too small to show a tax." Nothing is too large to show within these limits.
• The arithmetic is exact on the decimals you type. Money shows to the cent and the rate to at most 2 decimals (trailing zeros dropped), with halves rounded up (away from zero), from the exact value.

Figures that change each year

When the data is out of date

After April 15, 2027 the page keeps using the 2026 rates and says so above the result.

Assumptions

• Held more than 1 year. A building was depreciated by the straight-line MACRS method (residential rental or nonresidential real property placed in service after 1986), so none of its recapture is ordinary income.
• The sale is the only capital gain or section 1231 transaction of the year; other taxable income is all ordinary (wages, interest, rent), with no qualified dividends.
• Federal income tax only: no 3.8% net investment income tax and no state tax.

Worked examples by hand

A rental house, single, $80,000 of other taxable income. Cost basis $300,000, depreciation $50,000, sold for $400,000 with $20,000 of costs. Adjusted basis = $250,000; gain = 400,000 − 20,000 − 250,000 = $130,000; recapture = $50,000; rest = $80,000.

• T0: $80,000 is in the Tax Table row $80,000 to $80,050; tax at $80,025 = 1,240 + 12% × 38,000 + 22% × 29,625 = 12,317.50, so $12,318.
• T1: taxable income $130,000, G = U = $50,000. Line 13 = 0, line 18 = 80,000, line 19 = 130,000, line 21 = 130,000, line 39 = 0. Tax on $130,000 = 17,966 + 24% × 24,300 = $23,798. Recapture tax = 23,798 − 12,318 = $11,480 (22.96% of $50,000).
• T2: taxable income $210,000, G = $130,000, U = $50,000. Line 13 = 80,000; line 21 = 130,000; line 30 = 80,000 at 15% = 12,000; line 39 = 0. Line 45 = 23,798 + 12,000 = 35,798; line 46 = 43,656. T2 = $35,798. Tax on the rest = $12,000; total = $23,480.

The Publication 544 truck (equipment), single, $50,000 of other taxable income. Adjusted basis = 10,000 − 6,160 = $3,840; gain = 7,000 − 3,840 = $3,160, all recapture. T0: row $50,000 to $50,050, tax at $50,025 = $5,755. T1: $53,160, row $53,150 to $53,200, tax at $53,175 = 6,410.50, so $6,411. Recapture tax = $656; nothing else is taxed.

A large sale, married filing jointly, $300,000 of other taxable income. Cost basis $600,000, depreciation $200,000, sold for $1,000,000: gain $600,000, recapture $200,000, rest $400,000. T0 = $57,196. T1: line 21 = 403,550; line 38 = 200,000 + 403,550 − 500,000 = 103,550; line 39 = 96,450 at 25% = 24,112.50; line 44 = tax on $403,550 = 82,048; T1 = $106,160.50. Recapture tax = $48,964.50 (24.48%). T2: line 31 = 210,150 × 15% = 31,522.50; line 34 = 189,850 × 20% = 37,970; line 40 = 24,112.50; T2 = $175,653. Tax on the rest = $69,492.50; total = $118,457.

A gain smaller than the depreciation, head of household, no other income. Cost basis $260,000, depreciation $40,000, sold for $250,000: gain = 250,000 − 220,000 = $30,000, all recapture. Taxable income $30,000 is under the $66,200 0% threshold, so line 1 = line 16 and the worksheet skips to line 44: tax on $30,000 (row middle $30,025) = 1,770 + 12% × 12,325 = $3,249, at 10.83%.