This guide will illustrate how the MACRs depreciation benefit calculations are illustrated within the proposals Pricing section. You can now view a breakdown of the annual MACRs payments in the Pricing section. The guide will also detail the calculations used to achieve the year-over-year tax savings and depreciation benefit as shown in the Pricing section.

Calculation of the MACRS Depreciation Schedule

• To calculate the MACRS incentive there are a few components that must first be calculated.
• The Blended Tax is calculated as follows:
  • Blended Tax Rate = Federal Tax Rate + (1 - Federal Tax Rate)*State Tax Rate
  • Example: Federal Tax = 18%, State Tax Rate = 0%, Blended Tax Rate = 18%
• The Depreciation Basis is calculated as follows:
  • Depreciation Basis = Gross Cost - 0.5*ITC Amount
  • Example: Gross Cost = $100,000, ITC Amount = $30,000, Depreciation Basis = $85,000
• The Bonus is calculated as follows:
  • Bonus = Bonus % * Depreciation Basis
  • Example: Bonus = 80%, Depreciation Basis = $85,000, Bonus = $68,000
• The New Basis is calculated as follows:
  • New Basis = Depreciation Basis - Bonus
  • Example: Depreciation Basis = $85,000, Bonus = $68,000, New Basis = $17,000
• The Annual Tax Savings are calculated as shown in the table below:

Display of the MACRS Depreciation Schedule

Note: A tool tip is now displayed next to the Year 1 subtext. You can hover your cursor over this icon to view the depreciation basis, bonus amount (calculated as % of the depreciation basis), and new basis.

• You will also be able to view the Yearly Tax Savings amount below the Pricing Section. Each line item displays the percentage in savings for that year.

• The Standard Depreciation percentages are as follows:
  • Year 1 - 20% (+ any applicable bonuses)
  • Year 2 - 32%
  • Year 3 - 19.2%
  • Year 4 - 11.52%
  • Year 5 - 11.52%
  • Year 6 - 5.76%