Home › Calculators › Tax Amortization Benefit Calculator

Tax Amortization Benefit Calculator

Calculate the tax amortization benefit (TAB) of an acquired intangible asset under Section 197, with the TAB factor, fair value and year-by-year tax savings, and compare MACRS and straight-line depreciation for equipment.

Updated November 4, 2026. Free, no sign-up; everything runs in your browser and nothing you type is stored.

Tax amortization benefit calculator (Section 197)

Value before tax benefit: PV of the asset's after-tax cash flows ($)Tax rate (%)Discount rate (%)Amortization life (years)Timing

Tax amortization benefit (TAB)

–

–TAB factor

–Fair value including TAB

–Annuity factor PVIFA(r, n)

–Tax amortization

–Tax saving

Depreciation calculator: MACRS vs straight-line

Asset cost ($)MACRS class (half-year)Straight-line life (years)

Tax amortization benefit: what it is

When a business buys another company's assets (or makes a Section 338 or 336(e) election), it can amortize the price paid for intangibles such as customer relationships, trademarks, non-compete agreements and goodwill straight-line over 15 years under Internal Revenue Code Section 197. The tax saving from those deductions has value of its own, the tax amortization benefit (TAB), which valuation analysts add when they value an intangible asset for purchase price allocation.

TAB formula

TAB factor = 1 ÷ [1 − (t ÷ n) × PVIFA(r, n)], where t is the tax rate, n the amortization period (15 years), r the discount rate and PVIFA the present value of $1 a year for n years. Fair value = pre-tax-benefit value × TAB factor. Because the deductions are based on the fair value itself, the formula solves for it in one step.

Example: an intangible worth $10,000,000 before the tax benefit, at a 25% tax rate and 10% discount rate. PVIFA(10%, 15) = 7.6061, so the factor is 1 ÷ (1 − 0.25 ÷ 15 × 7.6061) = 1.1452, fair value is $11,451,710 and the TAB is $1,451,710. Mid-year timing gives a slightly higher benefit. The discount rate should match the asset's risk, typically near the company's WACC or the asset's own required return.

Depreciation

Tangible business property is depreciated instead of amortized. Under MACRS, the federal default, 5-year property (computers, cars, light trucks) is deducted at 20%, 32%, 19.2%, 11.52%, 11.52% and 5.76% using the half-year convention, so it takes six tax years. Straight-line depreciation spreads the cost evenly: (cost − salvage value) ÷ useful life, which is what most companies use in their financial statements. Section 197 intangibles always use 15-year straight-line for tax.

Common questions

What is a tax amortization benefit?

The present value of the tax savings from amortizing an acquired intangible asset, added to its value in a purchase price allocation.

What is the TAB formula?

TAB factor = 1 ÷ [1 − (tax rate ÷ n) × PVIFA(discount rate, n)], with n = 15 years for Section 197 intangibles.

Over how many years are intangibles amortized for tax?

15 years, straight-line, under IRC Section 197.

What is the TAB on a $10 million intangible?

About $1.45 million at a 25% tax rate and 10% discount rate (end-of-year timing).

What are MACRS rates for 5-year property?

20%, 32%, 19.2%, 11.52%, 11.52% and 5.76% with the half-year convention (IRS Publication 946).

Sources

General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.