What is the depreciation rate for tools and equipment?

There is no single fixed depreciation rate for tools and equipment; it depends on whether you're figuring accounting/tax depreciation or fair market value decline, and on the specific asset's useful life.

For tax purposes, depreciation follows a set recovery period rather than a flat percentage that applies to everything. Shop machinery like table saws, planers, jointers, and dust collection systems is commonly assigned a multi-year recovery schedule (often around five years under many depreciation systems), while hand tools and hand-held power tools may fall under shorter or longer schedules depending on the classification used. This produces very different annual write-off percentages tool to tool, so the "rate" only means something once you know the asset's classification and depreciation method (straight-line versus accelerated).

For fair market value purposes, which matters most in estate, insurance, donation, or litigation contexts, depreciation is not calculated from a tax table at all. Instead, it reflects actual market conditions: the equipment's age, condition, brand reputation, maintenance history, and current demand among woodworkers, shops, and dealers. A well-maintained cast-iron table saw from a respected manufacturer can hold value far better than a tax schedule would suggest, while a heavily used or obsolete machine can be worth less than book value implies.

Because tax depreciation and true market value frequently diverge, a woodworking equipment appraisal grounded in comparable sales and condition assessment gives you a defensible number for whatever purpose you need it for, whether that's a Form 8283 donation, an estate filing, or an insurance claim. If you're wondering whether a specific older machine still carries meaningful value, our answer on whether old woodworking tools are worth anything covers that question directly.