IRD Depreciation Rates 2025-26: Rate Finder + DV vs SL Method

When your business buys an asset that lasts more than a year, you usually can’t deduct the whole cost straight away. Instead you spread it across the asset’s life through depreciation. The hard part is finding the right rate and method. This guide shows you how to look up the rate, when to choose diminishing value versus straight line, and how the $1,000 low-value write-off can save you the paperwork entirely.

Want the rate without leaving this site? Our NZ depreciation rate finder covers 100+ of the most common IR265 asset classes — searchable, with DV and SL side by side.

What the Depreciation Rate Finder Does

IRD publishes a standard depreciation rate for almost every type of business asset, grouped by asset class and industry. Rather than read the full IR265 rate tables, you can use IRD’s online Depreciation Rate Finder. You answer a few questions about the asset and the industry it’s used in, and it returns:

• The diminishing value (DV) rate, and
• The straight line (SL) rate.

It will also feed into IRD’s depreciation calculator, which produces a year-by-year schedule of the amounts you can claim. This removes the guesswork: you don’t invent a rate, you use the one IRD has set for that asset class.

Finding the right asset category

The most common mistake is choosing too broad a category. A laptop, a point-of-sale terminal, and a server may all feel like “computers”, but IRD lists them under different classes with different rates and estimated useful lives. Match the description as closely as you can. If two categories could fit, the more specific one usually wins.

Diminishing Value vs Straight Line

There are two methods. You can use different methods for different assets and, under IRD’s current guidance, change method at the end of an income year. If you switch, start the next calculation from the asset’s adjusted tax value.

Diminishing value (DV)

DV applies a fixed percentage to the asset’s remaining book value each year. Because the book value falls over time, the dollar deduction shrinks each year — large early, small later.

• Best for assets that lose value fast: vehicles, phones, computers, tools.
• Front-loads your deductions, which helps cash flow when the asset is new.

Straight line (SL)

SL applies a fixed percentage to the original cost each year, giving the same deduction every year until the asset is fully written off.

• Best for assets with long, steady lives where value declines evenly.
• Simpler to forecast and reconcile.

IRD sets the DV and SL rates so the total depreciation over the asset’s life is the same; DV generally brings more of the deduction forward.

Worked example

You buy a $4,000 piece of equipment (GST-exclusive). Suppose IRD’s rates are 20% DV and 13.5% SL.

• DV year 1: 20% x $4,000 = $800. Year 2: 20% x ($4,000 - $800) = $640, and so on — each year is 20% of the shrinking balance.
• SL year 1: 13.5% x $4,000 = $540. Year 2: another $540, the same each year.

DV gives you $260 more in the first year. If you want bigger deductions early, choose DV. If you want predictability, choose SL.

The $1,000 Low-Value Asset Write-Off

You don’t have to depreciate small purchases at all. If an asset costs $1,000 or less, you can deduct the full cost in the year you buy it. For GST-registered businesses, that $1,000 test is on the GST-exclusive price.

This is the permanent threshold that applies in 2025-26. (A temporary $5,000 limit ran from 17 March 2020 to 16 March 2021 as a COVID-era measure, then dropped back to $1,000.)

Two traps to watch:

• Don’t split a single asset to get under $1,000. If items are bought together and function as one asset (for example, a desk and its fixed return), IRD treats the combined cost as one asset.
• Same supplier, same time, same type purchases can be grouped, so buying ten $200 chairs in one order may be treated as a $2,000 asset rather than ten write-offs.

Check Investment Boost Before Running the Schedule

For an eligible new asset first available for use on or after 22 May 2025, Investment Boost may give you an immediate deduction equal to 20% of the asset’s cost. You then apply the normal IRD depreciation rate to the remaining 80% as if that were the full depreciable cost. The rate finder still supplies the right DV and SL percentages; the boost changes the starting amount, not the rate.

The asset generally needs to be new or new to New Zealand and depreciable for tax purposes. Second-hand assets sourced in New Zealand and residential rental buildings are excluded. Check IRD’s current Investment Boost eligibility rules and keep evidence of when the asset became available for business use.

Pooling Low-Value Assets

For assets above the write-off threshold but still individually low in value, you can use the pool method: group them and depreciate the pool as a single asset using DV. This cuts the admin of tracking many small items separately. There are limits on the maximum cost of assets that can go into a pool, so check the current cap before you set one up.

Putting It Together

1. Check whether the asset costs $1,000 or less — if so, write it off in full and stop.
2. If it’s above $1,000, look up the DV and SL rate for its asset class in the depreciation rate finder.
3. Check whether Investment Boost applies before setting the depreciable starting amount.
4. Compare DV and SL timing, then keep the rate, method and schedule with your records. If you change method at a later year-end, continue from the adjusted tax value.

To model the year-by-year deductions for a specific asset, try our depreciation calculator. For the wider picture on claiming asset costs, see our guide to depreciation for business assets in New Zealand and, if you work from home, claiming home office expenses.