IRD Depreciation Rates: Rate Finder, DV vs SL and Low-Value Assets

Short answer: IRD depreciation rates are set by asset type and published in Inland Revenue’s rate finder and its IR265 list. A laptop is 50% diminishing value (DV) or 40% straight line (SL), hand and power tools are 67%, and a car is 30% DV or 21% SL. Assets costing $1,000 or less can usually be written off in full in the year you buy them. New assets first available for use on or after 22 May 2025 can also take Investment Boost’s 20% upfront deduction.

Depreciation lets you deduct the cost of a business asset over its useful life instead of all at once, which lowers the profit taxed at your income tax rates. The rates below are Inland Revenue’s, taken from the IR265 general depreciation rates list (March 2026 edition), and the worked examples use the 2027 tax year (1 April 2026 – 31 March 2027) for a sole trader with a 31 March balance date. Depreciation is one of the expense lines on your IR3 return; for everyday costs that you deduct in full, see self-employed expenses and receipts.

Where do I find IRD depreciation rates?

Use Inland Revenue’s depreciation rate finder and calculator. You search for the asset, pick the closest description, and it shows the DV and SL rates; the calculator then works out the deduction using either method.

Two limits apply. The finder covers assets other than buildings acquired on or after 1 April 2005, and buildings acquired on or after 19 May 2005. Anything older follows historic rates, which Inland Revenue publishes separately.

The IR265 PDF lists the same rates by industry and asset class. If an asset fits no class, Inland Revenue’s guide IR260, Depreciation: a guide for businesses explains how to choose or apply for a rate.

What are the depreciation rates for common sole-trader assets?

These are Inland Revenue’s general rates for some of the assets sole traders buy most often, as listed in IR265 and the rate finder. They apply to assets acquired in the 2006 and later tax years.

Asset	Diminishing value (DV)	Straight line (SL)
Laptop, notebook or personal computer	50%	40%
Hand tools (estimated useful life 3 years)	67%	67%
Power tools (estimated useful life 3 years)	67%	67%
Contractors’ and builders’ plant and equipment, default class (15.5 years)	13%	8.5%
Car (passenger vehicle carrying 12 people or fewer)	30%	21%

Vans, utes and trucks are goods vehicles, not passenger cars, so look them up in the rate finder rather than assuming the car rate. Specialist equipment often has its own line, with a different rate from the default class, so search for the exact item.

Should I use diminishing value or straight line?

Diminishing value gives you bigger deductions early; straight line gives you the same deduction every year. Both use the rate from the finder, and neither lets you deduct more than the asset cost.

• Diminishing value (DV): each year you apply the DV rate to the asset’s remaining tax value (its cost less depreciation already claimed). The deduction is largest in year one and shrinks after that, so the asset takes longer to be written down to nothing.
• Straight line (SL): each year you apply the SL rate to the original cost. The deduction is the same each year until the asset is fully depreciated.

Inland Revenue says you do not have to use the same method for every asset, and you can change method from one year to the next. DV often suits equipment that loses value fast, such as computers and tools, because it puts more of the deduction into the years when the cash went out.

Whichever you choose, the first-year claim is reduced if you owned the asset for only part of the year: you claim for the months you owned it, and IR260 shows how to count them. The examples below assume the asset was bought in April, the first month of the tax year, so a full year’s depreciation applies.

What is the low-value asset write-off?

If an asset costs $1,000 or less, you can usually deduct the whole cost in the year you buy it instead of depreciating it. The $1,000 threshold has applied to assets acquired from 17 March 2021, according to Inland Revenue’s claiming depreciation guidance.

Three conditions catch people out:

• GST: if you are GST registered, the $1,000 test uses the GST-exclusive cost. If you are not registered, it uses the GST-inclusive cost.
• Bulk buys: the write-off is not available for an asset bought from the same supplier at the same time as other assets that take the same depreciation rate. You cannot split one large order into several sub-$1,000 lines.
• Parts of a bigger asset: an item that will become part of a depreciable asset, such as a component for a machine you are building, is not a low-value asset in its own right.

If you later sell an asset you wrote off this way, the whole sale price is taxable income in the year you sell it. If you start using it mainly for private purposes, you have to account for that in your next return.

How does Investment Boost change depreciation?

Investment Boost lets you deduct 20% of the cost of a new asset in the year you buy it, and then depreciate the remaining 80% as normal. Inland Revenue’s Investment Boost page sets the conditions. The asset must be:

• new, or new to New Zealand (an asset used only overseas before counts);
• first available for your business to use on or after 22 May 2025; and
• depreciable for tax purposes. New commercial and industrial buildings also qualify, even though they cannot be depreciated.

It is optional, there is no value limit, and you claim it in the same year as that year’s normal depreciation. A second-hand asset bought in New Zealand does not qualify. For an asset of $1,000 or less, the low-value write-off already gives you 100% of the cost up front, so Investment Boost adds nothing there.

How much depreciation can I claim? Worked examples

The examples assume a GST-registered sole trader, so costs are GST-exclusive, and purchases in April 2026, which fall in the 2027 tax year.

Tools. You buy a cordless drill and driver kit for $640. It is under $1,000 and bought on its own, so you deduct the full $640 in the 2027 tax year. If you had instead bought three $400 drills from the same supplier at the same time, the low-value rule would not apply. You would depreciate the $1,200 at 67%, giving a deduction of $804 in the first year.

Laptop. You buy a new laptop for $2,400 and use it only for the business.

Option	Year 1 deduction	How it is worked out
DV at 50%, no Investment Boost	$1,200	$2,400 × 50%
SL at 40%, no Investment Boost	$960	$2,400 × 40% (then $960, then the last $480)
Investment Boost + DV at 50%	$1,440	$480 (20% of $2,400) + $960 (50% of the remaining $1,920)

With Investment Boost and DV, $960 of the laptop’s cost is left to depreciate from year two. That works out at $480 in year two, then half of what remains each year after.

Car. You buy a second-hand car for $18,000, and your records show 60% business use. Investment Boost does not apply because the car has already been used in New Zealand. At 30% DV, the year-one depreciation is $5,400, and you claim the business share: $5,400 × 60% = $3,240. If you use Inland Revenue’s kilometre rates for vehicle costs, read NZ mileage rates and vehicle expenses first, because your choice of method changes what you claim.

What happens when I sell or stop using an asset?

When you sell a depreciated asset, compare the sale price with its remaining tax value. If you sell for more, the excess, up to the total depreciation you have claimed, is taxable as depreciation recovered. If you sell for less, the shortfall can generally be deducted. IR260 covers the exceptions, including buildings.

Assets written off under the low-value rule are simpler: the whole sale price is income. Keep the purchase receipt for every asset and a note of the depreciation claimed each year, or you cannot work out the remaining tax value when you sell.

How do I keep asset records, and where does Keel fit?

You need the purchase receipt, the date the asset became available to use, its cost (GST-exclusive if you are registered), the rate and method you chose, and how much private use there is. Your accountant or the IRD calculator does the arithmetic; your job is to keep the evidence. Inland Revenue’s record keeping rules require records to be kept for at least 7 years from the end of the tax year they relate to, so keep an asset’s purchase receipt for 7 years after the last year it affects your return, such as the year you sell it.

Keel: Invoice Maker & Receipts, by Ilura Technology OÜ, is an iPhone app for that evidence. You can record receipts and expenses, keep them under the job they relate to, and log business mileage. Everything stays on the phone: no account, no bank connection, no cloud sync, and the App Store privacy label reads “Data Not Collected”.

Keel does not calculate depreciation, decide rates or file anything with Inland Revenue. It is a record keeper, not a compliance tool. It is free to use; Keel Lifetime is a one-time purchase ($249.99 USD; the App Store shows your local price) that adds accountant-ready exports and advanced reports, along with branding and premium templates. Keel on the App Store. More New Zealand guides are on the New Zealand hub.

Frequently asked questions

Where is the IRD depreciation rate finder? It is on ird.govt.nz under income tax for businesses, in the depreciation section: “Depreciation rate finder and calculator”. You search for your asset, choose the closest match and see its diminishing value and straight line rates. It covers non-building assets acquired on or after 1 April 2005 and buildings acquired on or after 19 May 2005.

What is the IRD depreciation rate for a laptop? Laptops, notebooks and personal computers are 50% diminishing value or 40% straight line under Inland Revenue’s IR265 general rates (March 2026 edition). On a $2,400 laptop that is a first-year deduction of $1,200 using DV, or $960 using SL. A new laptop may also qualify for Investment Boost’s 20% upfront deduction.

Can I claim an asset under $1,000 in full? Usually, yes. Since 17 March 2021 an asset costing $1,000 or less can be deducted in full in the year you buy it. Use the GST-exclusive cost if you are GST registered. The write-off does not apply to assets bought from the same supplier at the same time as others with the same depreciation rate.

Can I switch between diminishing value and straight line? Yes. Inland Revenue says you do not have to use the same method for every asset, and you can change method from one year to the next. Both methods use the rate from the rate finder. DV front-loads the deduction, while SL spreads it evenly over the asset’s life.

Do I depreciate the GST-inclusive or GST-exclusive price? If you are GST registered, depreciate the GST-exclusive cost, because you claim the GST back through your GST return. If you are not GST registered, use the GST-inclusive cost, since the GST is part of what the asset cost you. The same split applies to the $1,000 low-value asset test.

Does Investment Boost apply to second-hand assets? Only if the asset is new to New Zealand, such as equipment imported after being used overseas. An asset that has already been used in New Zealand does not qualify. It must also be first available for your business to use on or after 22 May 2025 and be depreciable, or be a new commercial or industrial building.

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This article is general information, not tax advice. Consult a qualified New Zealand tax professional.