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, and our equipment valuation guides walk through how condition, brand, and market demand shape a defensible value.