Changing Your Accounting Method: Business Depreciation (2025 IRS Guide)

This guide covers “Changing Your Accounting Method” within business depreciation. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 946 (2025), How To Depreciate Property, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Context for these rules

If you deducted an incorrect amount of depreciation in any year, you may be able to make a correction by filing an amended return for that year. See Filing an Amended Return next. If you are not allowed to make the correction on an amended return, you may be able to change your accounting method to claim the correct amount of depreciation. See Changing Your Accounting Method, later.

Changing Your Accounting Method

Generally, you must get IRS approval to change your method of accounting. You must generally file Form 3115 to request a change in your method of accounting for depreciation.

The following are examples of a change in method of accounting for depreciation.

• A change from an impermissible method of determining depreciation for depreciable property if the impermissible method was used in two or more consecutively filed tax returns.

• A change in the treatment of an asset from nondepreciable to depreciable or vice versa.

• A change in the depreciation method, period of recovery, or convention of a depreciable asset.

• A change from not claiming to claiming the special depreciation allowance if you did not make the election to not claim any special allowance.

• A change from claiming a 50% special depreciation allowance to claiming a 100% special depreciation allowance for qualified property acquired and placed in service by you after September 27, 2017 (if you did not make the election under section 168(k)(10) to claim a 50% special depreciation allowance).

Changes in depreciation that are not a change in method of accounting (and may only be made on an amended return) include the following.

• An adjustment in the useful life of a depreciable asset for which depreciation is determined under section 167.

• A change in use of an asset in the hands of the same taxpayer.

• Making a late depreciation election or revoking a timely valid depreciation election (including the election not to deduct the special depreciation allowance). If you elected not to claim any special depreciation allowance, a change from not claiming to claiming the special depreciation allowance is a revocation of the election and is not an accounting method change. Generally, you must get IRS approval to make a late depreciation election or revoke a depreciation election. You must submit a request for a letter ruling to make a late election or revoke an election.

• Any change in the placed in service date of a depreciable asset.

See sections 1.446-1(e)(2)(ii)(d) and 1.446-1(e)(2)(iii) of the regulations for more information and examples.

IRS approval.

If your change in method of accounting for depreciation is described in Revenue Procedure 2025-23, on page 1476 of Internal Revenue Bulletin 2025-24; or Revenue Procedure 2019-43, on page 1107 of Internal Revenue Bulletin 2019-48, as modified, amplified, and superseded by Revenue Procedure 2022-14, on page 502 of Internal Revenue Bulletin 2022-7, as modified, amplified, and superseded by Revenue Procedure 2023-34, on page 1207 of Internal Revenue Bulletin 2023-28, you may be able to get approval from the IRS to make that change under the automatic change request procedures generally covered in Revenue Procedure 2015-13 on page 419 of Internal Revenue Bulletin 2015-5. If you do not qualify to use the automatic procedures to get approval, you must use the advance consent request procedures generally covered in Revenue Procedure 2015-13. Also, see the Instructions for Form 3115 for more information on getting approval, including lists of scope limitations and automatic accounting method changes.

Additional guidance.

For additional guidance and special procedures for changing your accounting method, automatic change procedures, amending your return, and filing Form 3115, see Revenue Procedure 2015-13 on page 419 of Internal Revenue Bulletin 2015-5, available at IRS.gov/irb/2015-05_IRB#RP-2015-13; Revenue Procedure 2019-43 on page 1107 of Internal Revenue Bulletin 2019-48, available at IRS.gov/irb/2019-48_IRB#REV-PROC-2019-43; Revenue Procedure 2022-14 on page 502 of Internal Revenue Bulletin 2022-7, available at IRS.gov/irb/2022-7_IRB#REV-PROC-2022-14; Revenue Procedure 2023-34 on page 1207 of Internal Revenue Bulletin 2023-28, available at IRS.gov/irb/2023-28_IRB#REV-PROC-2023-24; and Revenue Procedure 2025-23 on page 1476 of Internal Revenue Bulletin 2025-24, available at IRS.gov/irb/2025-24_IRB#REV-PROC-2025-23.

Section 481(a) adjustment.

If you file Form 3115 and change from an impermissible method to a permissible method of accounting for depreciation, you can make a section 481(a) adjustment for any unclaimed or excess amount of allowable depreciation. The adjustment is the difference between the total depreciation actually deducted for the property and the total amount allowable prior to the year of change. If no depreciation was deducted, the adjustment is the total depreciation allowable prior to the year of change. A negative section 481(a) adjustment results in a decrease in taxable income. It is taken into account in the year of change and is reported on your business tax returns as “other expenses.” A positive section 481(a) adjustment results in an increase in taxable income. It is generally taken into account over 4 tax years and is reported on your business tax returns as “other income.” However, you can elect to use a 1-year adjustment period and report the adjustment in the year of change if the total adjustment is less than $50,000. Make the election by completing the appropriate line on Form 3115.

If you file a Form 3115 and change from one permissible method to another permissible method, the section 481(a) adjustment is zero.

Table 1-1. Purpose of Form 4562

• This table describes the purpose of the various parts of Form 4562. For more information, see Form 4562 and its instructions.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

• Publication 946 (2025), How To Depreciate Property: Overview of Depreciation — How Do You Correct Depreciation Deductions? — Changing Your Accounting Method — Internal Revenue Service; 2025 edition.

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.