Louisiana Bonus Depreciation: Corporate Flows Through, Individuals Must Elect for 2025+.
Louisiana corporate depreciation carries no §168(k) add-back and flows straight through federally. For individuals, tax years beginning on or after January 1, 2025 replace the old automatic pass-through with a new elective Louisiana deduction — with its own add-back recapture if you make it.
Reviewed by Cost Seg Smart Editorial Team · Last verified against La. R.S. §47:297.25 — elective bonus deduction (individuals, 2025+), La. R.S. §47:287.71 — corporate modifications
The 30-second answer: Louisiana corporate depreciation flows straight through the federal §168(k) bonus with no add-back (La. R.S. §47:287.71). Individuals get a different, newer answer.
What changed for individuals in 2025: for tax years beginning on or after January 1, 2025, bonus depreciation is no longer an automatic pass-through — it is now an elective Louisiana deduction under new §47:297.25, with its own add-back so federal depreciation on the same property isn't counted twice. Before 2025, it simply flowed through with no separate step. Never assume the election was made without checking.
On a representative Louisiana single-family rental (the single-family rental band we publish, 9–32% of depreciable basis reclassified, 16% representative), the reclassified components alone generate an estimated $18K–$165K of federal Year-1 depreciation — roughly $6,660–$61,570 of federal Year-1 tax savings at the 37% top bracket, available to a Louisiana individual for 2025+ only if the §47:297.25 election is actually made.
The trap: this looks like decoupling, and it is the opposite
A quick search of Louisiana's current individual income tax statutes for "bonus depreciation" turns up La. R.S. §47:297.25. Read in isolation, and especially compared against how add-back provisions are usually worded in states like Indiana or Minnesota, it can look like a disallowance — a provision that takes federal bonus depreciation away for state purposes.
It is the opposite. §47:297.25 is a brand-new elective 100% expensing regime, enacted in December 2024 as part of Louisiana's broader flat-tax overhaul, effective for tax years beginning on or after January 1, 2025. Rather than automatically letting the federal §168(k) figure flow through (the old rule) or automatically adding it back (a true decoupling rule), Louisiana now requires an individual taxpayer to affirmatively elect the deduction.
Two details matter once the election is on the table. First, "qualified property" for purposes of the election takes its meaning from the Internal Revenue Code as it existed on 2024-01-01 — a fixed historical reference point, not current federal law, so the definition does not automatically track future federal changes. Second, once the election is made, regular federal depreciation claimed on that same property in later years is added back to Louisiana income, which is the mechanism that keeps the deduction from being effectively counted twice across the property's life.
The practical rule for anyone preparing a Louisiana individual return for 2025 or later: never assume the §47:297.25 election was made just because the taxpayer claimed federal bonus depreciation. Confirm it was actually elected, and confirm the property qualifies under the 2024-01-01 IRC reference, before telling a client they have a Louisiana-level deduction.
Federal vs Louisiana, Side by Side
For cost-segregation-reclassified components, split by taxpayer type and tax year:
| Taxpayer / period | Federal (IRC) | Louisiana |
|---|---|---|
| Corporation (any tax year) | 100% may apply to qualified property acquired and placed in service after January 19, 2025, subject to §168(k) eligibility, related-party/prior-use, binding-contract, and election rules | Flows straight through. No add-back in the corporate modifications list (La. R.S. §47:287.71) |
| Individual, before tax year 2025 | Same federal §168(k) rules as above | Automatic pass-through via federal AGI, no separate Louisiana step |
| Individual, tax years beginning 2025-01-01+ | Same federal §168(k) rules as above | Elective under La. R.S. §47:297.25; qualified property pinned to the IRC as of 2024-01-01; regular depreciation added back in later years once elected |
| Federal usability of the deduction | Subject to passive activity, at-risk, basis, and business-interest limits | Same federal limits govern the federal deduction; Louisiana's corporate pass-through and individual election apply independently |
Sources: La. R.S. §47:297.25, La. R.S. §47:287.71, IRC §168(k). Federal bonus figures reflect current law; eligibility depends on acquisition and placed-in-service dates and elections.
Illustrative numbers: a Louisiana single-family rental
Using the single-family residential (SFR) band we publish — 9–32% of depreciable basis reclassified into 5/7/15-year property, 16% representative — on a property priced between $250,000 and $650,000, with a 20% residential land allocation, and 100% federal bonus depreciation for eligible components under current law:
| Line item | Federal | Louisiana (individual, 2025+) |
|---|---|---|
| Purchase price band | $250,000–$650,000 | Same property |
| Depreciable basis (20% land allocation) | $200,000–$520,000 | Same basis, subject to the 2024-01-01 IRC "qualified property" reference |
| Reclassified to 5/7/15-yr (9–32% of basis) | $18K–$165K | Available only if the §47:297.25 election is made |
| Year-1 treatment | $18K–$165K deducted (100% bonus, if eligible) | Same amount, IF elected; nothing if not elected |
| Later years, if elected | Not applicable | Regular federal depreciation on the same property added back to avoid double-counting |
| Illustrative Year-1 federal tax savings on reclassified components | ~$6,660–$61,570 (37% × $18K–$165K) | Louisiana benefit is conditional on the election — confirm before assuming it applies |
Figures are illustrative and use the site's published SFR reclassification band; your result depends on your basis, land allocation, bracket, component mix, and eligibility. Whether the full federal deduction is usable in the current year still depends on your passive-loss, at-risk, basis, and business-interest situation. This table applies to a Louisiana individual for tax years beginning 2025-01-01 or later; a corporation gets automatic pass-through with no election required, and a pre-2025 individual return follows the old automatic-pass-through rule.
See a sample cost segregation report
Look at exactly what your Louisiana study delivers: the component-by-component 5/7/15-year schedule, the Form 4562-ready numbers, and the documentation your CPA files. Real reports are our best answer to "is this legit?"
Forms your CPA files for a Louisiana property
The federal-side paperwork is the same for every Louisiana property owner; what differs is the Louisiana-level step, by taxpayer type:
- Federal Form 4562: depreciation and amortization, including the §168(k) bonus deduction on eligible reclassified components. Flows to Schedule E (rental), Schedule C (active business), or the corporate return.
- Schedule E (or Schedule C): the accelerated federal deduction reduces federal taxable income in Year 1, subject to the federal passive-loss, at-risk, basis, and business-interest limits.
- Louisiana corporate return: no add-back; the federal figure flows straight through per §47:287.71.
- Louisiana individual return, tax years 2025-01-01+: the §47:297.25 election must be affirmatively made to claim the deduction at the Louisiana level, and regular federal depreciation on the same property is added back in later years once elected.
- Form 3115 §481(a) section: included only if this is a federal lookback method change on a property placed in service in a prior year (see below).
The reclassified schedule is the same engineered output for every filing; what changes for a 2025-and-later individual return is that the Louisiana-level benefit now requires an extra, affirmative step rather than arriving automatically.
Form 3115 lookback on a Louisiana property
If the property was placed in service in a prior tax year and depreciation was reported using a non-segregated method, a federal Form 3115 (Application for Change in Accounting Method) may allow a current-year §481(a) catch-up adjustment for the accelerated depreciation you missed, generally without amending prior returns. This is often the single biggest acceleration mechanism in cost segregation. Any catch-up dollars are illustrative and depend on placed-in-service date, prior depreciation claimed, bonus eligibility, land allocation, and component mix.
The federal §481(a) catch-up is the primary lever and remains subject to the federal passive-loss, at-risk, and basis limits. A Louisiana corporation's catch-up flows through automatically with no add-back. A Louisiana individual filing for tax years 2025-01-01 or later needs the §47:297.25 election to get a Louisiana-level benefit on the catch-up amount — confirm the election was made rather than assuming it.
See our full Form 3115 cost segregation guide for federal mechanics, partnership and LLC pass-through treatment, and timing rules.
Should you do cost segregation in Louisiana?
Yes, for both corporations and individuals — the study is what generates the reclassified schedule either way, and both taxpayer types stand to benefit:
- The full federal Year-1 bonus is intact for everyone. Louisiana does not reduce the federal deduction; the study's federal benefit is unaffected by any of this.
- A corporation gets Louisiana pass-through automatically, no election, no add-back mechanism to track.
- An individual filing for 2025 or later must make the §47:297.25 election to get the Louisiana-level benefit — this should be discussed with a CPA at filing time, not assumed to have happened by default.
The nuance to flag loudest with your CPA: Louisiana's individual rules changed materially for 2025, and the change reads, on a quick search, like the opposite of what it actually is. Confirm the election status for any Louisiana individual return before stating what their Louisiana-level bonus depreciation position is.
Frequently asked
Does Louisiana allow bonus depreciation?
Yes, but the mechanism now depends on whether the taxpayer is a corporation or an individual, and on the tax year. Corporate: yes, unchanged — Louisiana's corporate modifications list at La. R.S. §47:287.71 carries no §168(k) add-back, so federal bonus depreciation flows straight through. Individual: for tax years beginning on or after 2025-01-01, it is no longer an automatic pass-through — it is now an elective Louisiana deduction under new §47:297.25 that the taxpayer must affirmatively claim.
What changed for individuals in Louisiana starting in 2025?
Before 2025, an individual's federal §168(k) bonus depreciation simply flowed through federal adjusted gross income onto the Louisiana return, with no separate Louisiana step. For tax years beginning on or after January 1, 2025, that automatic pass-through is gone. Instead, La. R.S. §47:297.25 creates an elective Louisiana deduction: an individual must affirmatively elect it, "qualified property" is defined by reference to the Internal Revenue Code as it existed on 2024-01-01 (not current law), and once the election is made, regular federal depreciation claimed on that same property in later years is added back to Louisiana income — a built-in mechanism so the deduction is not effectively counted twice.
If a keyword search finds §47:297.25 and it looks like Louisiana decoupled, is that right?
No, and this is exactly the trap. A search for "bonus depreciation" in the current individual statute turns up §47:297.25, and reading it in isolation can look like a decoupling add-back — the kind of provision that disallows federal bonus rather than granting a state-level one. It is the opposite: §47:297.25 is a NEW ELECTIVE 100% EXPENSING REGIME, enacted in December 2024 alongside Louisiana's broader flat-tax overhaul. For a taxpayer who makes the election, it is practically equivalent to the old automatic pass-through — but it is legally an affirmative state election, not an automatic conformity rule, and it should never be assumed to have been made without confirming it.
Do I need to do anything differently if I'm an individual filing for 2025 or later?
Yes — confirm whether the §47:297.25 election was actually made before assuming the individual has Louisiana bonus depreciation at all. Unlike the pre-2025 automatic pass-through, this is now an affirmative choice, and "qualified property" for the election is defined by reference to the Internal Revenue Code as it existed on 2024-01-01, which is a fixed historical reference rather than a rolling one. If the election is made, remember that regular federal depreciation claimed on the same property in later years must be added back to Louisiana income, so the deduction isn't taken twice.
Does the 2025 change affect Louisiana corporations too?
No. Corporate treatment is unchanged by the 2025 legislation. La. R.S. §47:287.701 defines federal law as the Internal Revenue Code "as amended," and the operative modifications list at §47:287.71 contains no §168(k) add-back for corporations. A corporation's Louisiana depreciation continues to flow straight through from the federal figure, with no election required and no recapture-style add-back mechanism.
Is cost segregation still worth it in Louisiana?
Yes, for both taxpayer types, though the individual side now requires one extra step. A corporation gets the full federal Year-1 bonus with automatic Louisiana pass-through, exactly as before. An individual gets the full federal Year-1 bonus on the federal return regardless, and can also get the Louisiana-level benefit — but only by making the §47:297.25 election, and only for property meeting the 2024-01-01 IRC definition of qualified property. Whether the full federal deduction is usable in the current year still depends on federal passive-activity, at-risk, basis, and business-interest limits.
Can I use Form 3115 on a Louisiana property I bought years ago?
Often, yes, at the federal level. If the property was placed in service in a prior tax year and depreciation was reported using a non-segregated method, a federal Form 3115 (Application for Change in Accounting Method) may allow a current-year §481(a) catch-up for the accelerated depreciation you missed, generally without amending prior returns. Any catch-up dollars are illustrative and depend on placed-in-service date, prior depreciation, bonus eligibility, land allocation, and component mix. For a Louisiana corporation, the catch-up flows through automatically. For a Louisiana individual filing for 2025 or later, whether the catch-up gets a Louisiana-level benefit depends on the same §47:297.25 election described above — confirm it was made rather than assuming it.
What does a Louisiana cost segregation study rely on for its numbers?
The study reclassifies building components into IRS-recognized MACRS class lives (5, 7, and 15-year) per Rev. Proc. 87-56, using an engineering-based methodology that follows the IRS Cost Segregation Audit Techniques Guide (Publication 5653). The reclassified components may then qualify for federal §168(k) bonus depreciation on the federal return (100% for qualified property acquired and placed in service after January 19, 2025, subject to eligibility and election rules). For a Louisiana corporation, that bonus flows through automatically. For a Louisiana individual filing for 2025 or later, the Louisiana-level benefit requires an affirmative election under §47:297.25. The engine ships our own calibrated, nationally-recognized construction cost data.
Related guides
- Bonus depreciation by state: overview
- All 50 states: conformity reference table
- Mississippi bonus depreciation (own state-law 100% deduction)
- Oklahoma bonus depreciation (elective state regime)
- Form 3115 cost segregation lookback: §481(a) mechanics
- What is cost segregation: the full primer
- Sample cost segregation reports