In 2025, depreciation rates showed mixed trends across different countries, reflecting changes in tax policies and investment incentives. In many OECD countries, the overall capital cost recovery slightly decreased due to the phasing out of temporary accelerated depreciation measures introduced during the pandemic. Businesses faced continued pressure from inflation and higher interest rates, which reduced the real value of deductions for long-term investments. Machinery and equipment generally received higher depreciation allowances compared to industrial buildings, which remained less favorable.
Several countries introduced new policies to boost investment. Germany implemented accelerated depreciation for machinery and equipment, allowing companies to write off a significant portion of asset costs each year. Special incentives were provided for electric vehicles and research investments, further increasing the effective depreciation rates for qualifying assets. The United States extended 100% bonus depreciation and offered new rules for domestic factories, making it easier for businesses to recover capital costs quickly.
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According to Procurement Resource, Depreciation Rates are expected to remain an important tool for promoting investment, with countries likely to continue using targeted incentives to support economic growth and business environment .
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In 2024, depreciation rates across countries showed significant variations due to changes in tax policies and economic conditions. In many OECD countries, the overall capital cost recovery slightly declined after the temporary accelerated depreciation measures introduced during the pandemic started phasing out. Businesses faced pressure from higher inflation and interest rates, which reduced the real value of capital allowances. Machinery and equipment generally received better treatment, with higher effective depreciation rates compared to industrial buildings, which remained lower.
Meanwhile, several countries introduced new or extended accelerated depreciation policies to encourage investment. China continued its one-off deduction policy for fixed assets under a certain value, allowing businesses to deduct the entire cost of eligible equipment in a single year. Brazil implemented accelerated depreciation for specific industrial machinery, allowing companies to claim a large portion of the asset’s value immediately and the rest the following year. These measures helped companies improve cash flow and make capital investments more attractive despite the broader economic uncertainty.
A depreciation rate refers to the percent rate at which an asset is depreciated or deflated across its estimated life. It may also be known as the percentage of a long-term investment done in an asset by a company, which the company can claim as tax-deductible expense across the useful life of the asset.
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