Mississippi Bonus Depreciation: Its Own 100% Deduction, Independent of Federal Law.
Mississippi grants its own statutory 100% bonus depreciation, "notwithstanding any change to federal law," for business assets placed in service after December 31, 2022 — elected in lieu of ordinary MACRS. It matches the current federal 100% bonus today, but the two are legally independent.
Reviewed by Cost Seg Smart Editorial Team · Last verified against Miss. H.B. 1733 (2023) signed act amending §27-7-17
The 30-second answer: Mississippi grants its own, statutory 100% bonus depreciation — "notwithstanding any change to federal law" — for business assets placed in service after December 31, 2022 (Miss. Code Ann. §27-7-17(1)(f)(ii)(2)). It is elected in lieu of ordinary MACRS depreciation, and applies to any taxpayer, individual or corporate.
The distinction that matters: Mississippi's 100% happens to match the current federal bonus, because OBBBA also restored federal bonus to 100% — but the two are legally independent. A future federal phase-down would NOT reduce Mississippi's deduction, because Mississippi does not track the federal percentage; it guarantees its own.
On a representative Mississippi 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, matched at the Mississippi level by the state's own 100% election.
Why "Mississippi conforms" undersells what is actually true
The simplest possible answer to "does Mississippi allow bonus depreciation" is "yes, it conforms to federal law" — and today, that answer produces the right number. But it is the wrong explanation, and the difference matters the moment federal law changes again.
Mississippi does not simply adopt the federal §168(k) percentage. Miss. Code Ann. §27-7-17(1)(f)(ii)(2), as amended by H.B. 1733 (2023), grants Mississippi's OWN 100% bonus depreciation, applicable "notwithstanding any change to federal law," for business assets placed in service after December 31, 2022. This is a state-law guarantee, not a mirror of whatever the federal rate happens to be.
The two numbers line up today because OBBBA also restored the federal bonus depreciation rate to 100% for qualifying property. That coincidence is exactly what makes "Mississippi conforms" feel true — the math checks out right now. But federal bonus depreciation has a documented history of stepping down (from 100% toward 0% under the pre-OBBBA phase-down schedule) before OBBBA reversed course. If Congress lets bonus depreciation phase down again in the future, Mississippi's own 100% would be unaffected, because its statute does not derive its rate from the federal one at all.
One more piece worth knowing: while the RATE is Mississippi's own, the DEFINITIONS borrow from federal law at a fixed point in time. "Qualified property" and "qualified improvement property" take their meanings from §168(k) and §168(e)(6) of the Internal Revenue Code as those provisions existed on January 1, 2021 — a snapshot, not a rolling reference. And the deduction is elected in lieu of ordinary §168 depreciation, not automatic; a taxpayer chooses between the two.
Federal vs Mississippi, Side by Side
For an individual or corporate taxpayer's cost-segregation-reclassified components:
| Tax provision | Federal (IRC) | Mississippi |
|---|---|---|
| Bonus depreciation rate | 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 — a rate that has historically phased up and down | 100%, by Mississippi's own statute — "notwithstanding any change to federal law" (Miss. Code Ann. §27-7-17(1)(f)(ii)(2)) |
| Dependence on the federal rate | Not applicable | None. The two coincide today because both are 100%, but Mississippi's rate does not track federal changes |
| Definitions used | Current §168(k) / §168(e)(6) as in effect for the tax year | §168(k) / §168(e)(6) as those provisions existed on 2021-01-01 — a fixed reference point |
| Placed-in-service threshold | Varies by federal provision and date | Business assets placed in service after 2022-12-31 |
| Election required? | Federal bonus applies unless the taxpayer elects out | Taxpayer elects the state's 100% expensing in lieu of ordinary §168 depreciation |
| Individual/corporate split | Same §168(k) framework applies to both | None — the statute applies to any taxpayer with qualifying business assets |
Source: Miss. H.B. 1733 (2023) signed act amending §27-7-17; IRC §168(k). Sourced from the signed act text because the usual codified-statute mirrors were blocked at verification time; the codification into §27-7-17 was confirmed only by indexed snippet. Federal bonus figures reflect current law; eligibility depends on acquisition and placed-in-service dates and elections.
Illustrative numbers: a Mississippi 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, placed in service after 2022-12-31, and the Mississippi 100% election made:
| Line item | Federal | Mississippi |
|---|---|---|
| Purchase price band | $250,000–$650,000 | Same property |
| Depreciable basis (20% land allocation) | $200,000–$520,000 | Same basis; qualified property defined by 2021-01-01 IRC reference |
| Reclassified to 5/7/15-yr (9–32% of basis) | $18K–$165K | Same amount, eligible for the state's own 100% election |
| Year-1 treatment | $18K–$165K deducted (100% bonus, if eligible) | Same $18K–$165K deducted under Mississippi's own 100% election |
| If federal bonus phases down in a future year | Federal deduction would shrink with the lower percentage | Unaffected. Mississippi's 100% is independent of the federal rate |
| Illustrative Year-1 federal tax savings on reclassified components | ~$6,660–$61,570 (37% × $18K–$165K) | Matched at the Mississippi level by the state's own election, on Mississippi's tax rate |
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. The Mississippi election is a choice, not automatic — confirm it was made rather than assuming it.
See a sample cost segregation report
Look at exactly what your Mississippi 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 Mississippi property
For a Mississippi property owner electing the state's 100% deduction, the workflow runs on both the federal and Mississippi returns:
- Federal Form 4562: depreciation and amortization, including the §168(k) bonus deduction on eligible reclassified components. Flows to Schedule E (rental) or Schedule C (active business).
- 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.
- Mississippi individual or corporate return: the taxpayer elects Mississippi's own 100% expensing under §27-7-17(1)(f)(ii)(2) in lieu of ordinary §168 depreciation, for qualifying assets placed in service after 2022-12-31.
- 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 both books; the difference is that Mississippi's 100% is a deliberate election under its own statute, not an automatic pass-through of whatever the federal percentage is.
Form 3115 lookback on a Mississippi 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 it remains subject to the federal passive-loss, at-risk, and basis limits. For Mississippi, whether the catch-up year's components can use the state's own 100% election depends on the same placed-in-service (after 2022-12-31) and definitional (2021-01-01 IRC reference) tests described above.
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 Mississippi?
Yes — and the state-level answer here is more durable than in most conforming states:
- The full federal Year-1 bonus is intact. Nothing about Mississippi's statute reduces the federal deduction. How much you use in the current year still depends on your passive-loss, at-risk, basis, and business-interest situation.
- Mississippi's own 100% is not tied to the federal rate. Even if federal bonus depreciation phases down in a future tax year, a taxpayer electing Mississippi's §27-7-17(1)(f)(ii)(2) deduction is unaffected — it is a state-law guarantee, not a mirror.
- The Form 3115 lookback still captures missed federal years. If the property was placed in service in a prior year and depreciated without cost segregation, the federal §481(a) catch-up may be available, generally without amending prior returns.
The nuance to flag with your CPA is the election, not the rate: Mississippi's 100% is available, but it must be affirmatively chosen in lieu of ordinary §168 depreciation — walk through both paths before filing.
Frequently asked
Does Mississippi allow bonus depreciation?
Yes — and more than that, Mississippi grants its OWN 100% bonus depreciation by state statute, "notwithstanding any change to federal law." This is Miss. Code Ann. §27-7-17(1)(f)(ii)(2), as amended by H.B. 1733 (2023). It applies to any taxpayer, individual or corporate, with business assets placed in service after December 31, 2022, and it is elected in lieu of ordinary MACRS depreciation.
Isn't Mississippi's bonus depreciation just the same as the federal §168(k) bonus?
It coincides with the federal amount today, but it is legally a different, independent thing — and that distinction matters for the future, not just today. Mississippi's 100% is a STATE-LAW GUARANTEE that does not track the federal bonus depreciation percentage. Because OBBBA also restored 100% federal bonus, the two rates happen to be the same number right now. If Congress later phases federal bonus depreciation back down — the way §168(k) previously stepped down from 100% toward 0% before OBBBA reversed it — Mississippi's own 100% would NOT be reduced, because it does not derive its rate from the federal one.
What does 'qualified property' mean for the Mississippi deduction if it's independent of federal law?
The definitions, as opposed to the rate, are pinned to a fixed point in federal law rather than floating with current federal law or with Mississippi's own separate glossary. Qualified property and qualified improvement property take their meanings from §168(k) and §168(e)(6) of the Internal Revenue Code as those provisions existed on January 1, 2021. So the definitional plumbing borrows from federal law at a fixed historical date, while the 100% RATE itself is Mississippi's own statutory guarantee, independent of whatever the federal percentage is in any given year.
Is the Mississippi 100% deduction automatic, or does the taxpayer have to choose it?
It is a choice, not an automatic default. The taxpayer elects between Mississippi's 100% expensing and ordinary §168 depreciation for the property in question. This matters because ordinary depreciation and 100% expensing produce very different deduction timing, and the election should be made deliberately as part of tax planning rather than assumed to apply by default.
Does the Mississippi deduction apply differently to individuals and corporations?
No — the statute applies to any taxpayer with business assets placed in service after 2022-12-31, and no individual/corporate distinction is drawn. Both taxpayer types elect between the state's 100% expensing and ordinary §168 depreciation on the same terms.
Is cost segregation still worth it in Mississippi?
Yes, and arguably more durably so than in most states, precisely because Mississippi's 100% deduction is independent of federal law. A cost segregation study reclassifies building components into 5, 7, and 15-year property, which is exactly the kind of property Mississippi's own 100% expensing election is built for. Even in a future year where the federal bonus percentage has stepped down, a Mississippi taxpayer who elects the state deduction is not tied to that federal number — the study's value at the Mississippi level is comparatively insulated from federal bonus phase-downs.
Can I use Form 3115 on a Mississippi 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. The federal §481(a) mechanics are the primary lever; separately, whether the Mississippi 100% election is available for the catch-up year's components should be confirmed against the December 31, 2022 placed-in-service threshold and the 2021-01-01 qualified-property definitions.
What does a Mississippi 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). Those reclassified components are exactly the kind of property Mississippi's own §27-7-17(1)(f)(ii)(2) 100% expensing election covers for assets placed in service after 2022-12-31 — a state-law guarantee independent of the current federal bonus percentage, elected in lieu of ordinary MACRS. The engine ships our own calibrated, nationally-recognized construction cost data.
Related guides
- Bonus depreciation by state: overview
- All 50 states: conformity reference table
- Louisiana bonus depreciation (corporate flows through, individual election for 2025+)
- Oklahoma bonus depreciation (own elective regime)
- Form 3115 cost segregation lookback: §481(a) mechanics
- What is cost segregation: the full primer
- Sample cost segregation reports