Car Depreciation Calculator

A car depreciation calculator estimates how much value a vehicle loses each year and what it is worth at any point. With the defaults, a new $35,000 car falls to $28,000 after year one, $20,230 after year three and $14,616 after year five, a loss of $20,384, about 34 cents for each of the 60,000 miles driven. Financing is a separate question for the Car Payment Calculator, and the Car Affordability Calculator turns a budget into a price range.

How car depreciation works

A car loses value for three reasons this calculator handles separately. Age does most of the work, and the loss is steepest at the start: once a new car becomes a used car, buyers stop paying a new-car price. Mileage reads as wear on the engine, transmission and interior. Condition covers everything a buyer can see or test, from dents to service records. A fourth force, the market, moves every car at once, which is why any estimate should be checked against current listings.

The car depreciation formula

Declining balance, the usual meaning of car depreciation, removes a percentage of what is left each year, so the dollar loss shrinks as the car ages. Straight-line removes the same dollar amount every year.

P is the price paid, S the end value, L the years to reach it and n the years since purchase. The mileage factor is 1 minus 0.5% per 1,000 miles above the baseline (plus 0.5% per 1,000 below), held between 0.75 and 1.25. The table compares the models on a $35,000 car: a 10-year straight line to a 10% end value, and custom rates of 25%, 15%, 12%, then 10% a year.

Straight-line keeps more value early and less at the end, the reverse of the steep-then-slow curve. It suits simple budgets; the curve or your own rates suit a market-style estimate.

Worked example: a new $35,000 car over five years

Enter $35,000, age 0 and 5 years with the defaults. Year one takes 20% ($35,000 × 0.80 = $28,000), and each later year takes 15% of what is left:

The car keeps 41.8% of its price and loses $20,383.83, or $4,076.77 a year, about $340 a month. At the 12,000-mile baseline and in Good condition there is no adjustment, so the estimate is $14,616, about 34 cents a mile over 60,000 miles. The yearly losses are $7,000, $4,200, $3,570, $3,034.50 and $2,579.33: the first year is about a third of the total.

Worked example: a three-year-old car bought for $22,000

Enter $22,000, age 3 and 4 years. The car's first year of life is behind it, so every year of ownership uses 15%:

At 15,000 miles a year the car runs 12,000 miles over the baseline in four years, so the mileage factor is 1 − 12 × 0.5% = 0.94, a drop of $689.05. Fair condition takes another 10%, $1,079.51. The estimate is $9,715.58, 44.2% of the price, after $12,284.42 of depreciation over 60,000 miles: about 20 cents a mile, against 34 cents for the new car.

Car value by year at four purchase prices

The default curve applied to new cars with no adjustments. The last column works for any price: multiply the price by the percentage.

How mileage moves the estimate

A new $35,000 car after five years in Good condition, with the default 0.5% per 1,000 miles and the 25% cap. Valuation guides use their own tables, so treat both settings as adjustable.

A low-mileage car keeps more value, but because age causes most of the loss, it costs more per mile: 61 cents at 6,000 miles a year against 20 cents at 24,000.

How much is my car worth right now?

Enter what you paid, the car's age when you bought it and the years since. Treat the result as a starting point:

1. Use your real mileage and an honest condition rating.
2. Check three to five current listings for the same year, model, trim and mileage near you.
3. Expect a dealer trade-in offer below private-sale prices, since the dealer must recondition and resell the car.
4. Subtract any loan payoff. A negative result means you owe more than the car is worth.

If listings disagree with the estimate, change the rates until the model matches what similar cars actually sell for near you. Demand differs from model to model, so the right rates for your car can sit well above or below the defaults.

Business use: IRS depreciation limits for 2025 and 2026

Tax depreciation is a separate number. If you deduct actual expenses for a business car, the IRS caps yearly depreciation on passenger automobiles, including trucks and vans, rated 6,000 pounds or less (Rev. Proc. 2026-15 and Rev. Proc. 2025-16):

The caps are multiplied by the business-use percentage (IRS Publication 946). Bonus depreciation, restored at 100% by P.L. 119-21 for property acquired after January 19, 2025, and Section 179 both require more than 50% business use; otherwise the car is depreciated straight-line over the alternative depreciation system's recovery period. The bonus cap is the regular cap plus $8,000.

Example: a $35,000 car placed in service in 2026 at 60% business use has a $21,000 business basis. With bonus depreciation the first-year deduction is capped at 60% of $20,300, or $12,180. Without it, five-year MACRS allows 20% of $21,000, or $4,200, below the scaled $7,380 cap. Vehicles over 6,000 pounds follow other rules; confirm details with a tax professional.

The standard mileage rate and depreciation per mile

With the standard mileage rate, depreciation is built in. The 2026 business rate is 72.5 cents a mile (Notice 2026-10), raised to 76 cents for miles on or after July 1, 2026 (Announcement 2026-11); 2025 was 70 cents. The part treated as depreciation, which reduces the car's basis per business mile, was 26 cents for 2022, 28 for 2023, 30 for 2024, 33 for 2025 and 35 for 2026.

Example: 12,000 miles at 60% business use is 7,200 business miles, which in 2026 reduce the basis by 7,200 × $0.35 = $2,520. That matters when you sell and figure the gain or loss. The IRS sets its rates from an annual study of the fixed and variable costs of running a car, so its 35 cents is a useful yardstick next to the 34 cents a mile in the first example.

How to use this calculator and who it is for

Enter the price, the age at purchase and the years since purchase, or the years ahead you want to see. Choose Typical curve, Straight-line for an equal-dollar budget, or Custom rates, then add miles and condition. The result card shows the value, total and yearly loss and cost per mile; the schedule lists every year, and the Business use panel shows the IRS caps and basis reduction. It is built for shoppers weighing new against used, owners deciding when to sell, borrowers checking their equity, and gig drivers who need the tax limits.

Key terms

• Declining balance: removes a fixed percentage of the remaining value each year.
• Straight-line: removes the same dollar amount each year.
• Residual value: the expected value at the end of a period, the basis of lease pricing.
• Negative equity: owing more on the loan than the car is worth.
• Basis: for taxes, cost minus depreciation claimed, used to figure gain or loss on a sale.

What changes the result, and tips to slow depreciation

• Age at purchase. A new car pays for the first-year drop; a three-year-old car starts on the flatter part of the curve.
• Miles and condition. Keeping mileage near the baseline, a documented service history and fixed small dents support the upper end of the range.
• How long you keep it. On the default curve year eight costs $1,584 against $7,000 in year one, so keeping a car longer spreads the big drop over more years.
• The rates themselves. The defaults are example assumptions; adjust them when comparable listings say otherwise.

Limitations and related calculators

The model does not know your make, model, trim, region or accident history, and the market can move used prices across the board. The tax panel covers only first-year depreciation for cars of 6,000 pounds or less, assumes the half-year convention and no Section 179 election, and is not tax advice. For loans with a trade-in use the Auto Loan Calculator, for leasing the Car Lease Calculator, for other assets the Depreciation Calculator, and for reimbursements the Mileage Reimbursement Calculator.

Sources

Market depreciation has no official rate, so the curve, mileage and condition settings are labeled assumptions. Tax figures:

• IRS, Rev. Proc. 2026-15: 2026 passenger automobile limits and the $8,000 bonus increase.
• IRS, Rev. Proc. 2025-16: 2025 passenger automobile limits.
• IRS, Notice 2026-10: 2026 mileage rates and the 2022 to 2026 depreciation portions.
• IRS, Announcement 2026-11 (IRB 2026-29): 76 cents from July 1, 2026.
• IRS, 2026 rate announcement: 72.5 cents, up 2.5 cents from 2025.
• IRS, Publication 946: business-use test, ADS fallback and scaled limits.