Nevada Bonus Depreciation: No Income Tax, But Watch the Commerce Tax.
Nevada has no personal or corporate income tax, so there is no state return to add back or deduct federal §168(k) bonus depreciation. But a business with Nevada gross revenue over $4,000,000 in a fiscal year owes the Commerce Tax — and because that tax is levied on gross revenue, not net income, a cost segregation study cannot reduce it at any revenue level.
Reviewed by Cost Seg Smart Editorial Team · Last verified against NV Dept. of Taxation — Commerce Tax
The 30-second answer: Nevada has no personal or corporate income tax, so there is no Nevada return on which to add back or deduct federal bonus depreciation. An individual investor or a Nevada corporation claims the full federal Year-1 §168(k) bonus with no state-level income-tax reduction.
The nuance is Nevada's Commerce Tax, which reaches a business whose Nevada gross revenue exceeds $4,000,000 in a fiscal year, at rates that vary by industry. It is levied on gross revenue, not net income — and depreciation, of any kind, is not a Commerce Tax input. That means a cost segregation study does not reduce Commerce Tax liability at any revenue level, including for an operator well above the threshold.
On a representative Nevada 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. At the 37% federal top bracket, that is roughly $6,660–$61,570 of federal Year-1 tax savings — with $0 change to a Commerce Tax bill, whether one is owed or not.
Federal vs Nevada, Side by Side
For an individual investor's or Nevada business's cost-segregation-reclassified components:
| Tax provision | Federal (IRC) | Nevada |
|---|---|---|
| Bonus depreciation under §168(k) | 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 | No state return to add it back to. No personal or corporate income tax |
| Income tax on rental or business income | Ordinary or corporate rates apply | None. Nevada has no personal or corporate income tax (Nev. Const. art. 10) |
| Effect of depreciation on Commerce Tax | Not applicable | None, at any revenue level. Commerce Tax (NRS 363C) applies only above $4,000,000 of Nevada gross revenue in a fiscal year and is computed on gross revenue, not net income |
| Federal usability of the deduction | Subject to passive activity, at-risk, basis, and business-interest limits | Same federal limits govern the federal deduction; Nevada adds no state-level income-tax reduction |
| MACRS asset class lives | 5 / 7 / 15 / 27.5 / 39 yr per Rev. Proc. 87-56 | No Nevada income-tax return uses them; the federal schedule stands alone |
| Depreciation form filed with the state | Form 4562 → Schedule E (rental) or Schedule C (active business) | None. No personal or corporate income tax return to file |
Sources: Nevada Department of Taxation — Commerce Tax, IRC §168(k). Federal bonus figures reflect current law; eligibility depends on acquisition and placed-in-service dates and elections.
Why a Nevada cost segregation study doesn't touch a Commerce Tax bill
This is the point a growing Nevada business most often gets wrong, because in many other states, accelerating depreciation lowers something at the state level too. Nevada's Commerce Tax, under NRS 363C, applies to a business whose Nevada gross revenue exceeds $4,000,000 in a fiscal year, at rates that vary by industry classification. Gross revenue is the tax base — not net income, and not income after expenses.
Depreciation, whether it is straight-line MACRS over 39 years or 100% Year-1 bonus depreciation from a cost segregation study, is an expense deduction taken against net income. It is not part of the Commerce Tax calculation at all, so it cannot lower a Commerce Tax bill by any amount — one dollar or one hundred thousand. Below the $4,000,000 threshold, no Commerce Tax applies regardless of how the property depreciates. Above it, the Commerce Tax bill is identical whether or not a cost segregation study was ever performed.
None of this reduces the federal benefit. The full federal §168(k) Year-1 bonus is claimed on the federal return exactly as it would be anywhere else. The honest statement is narrower, and cuts the other way from "Nevada has no tax at all": a larger Nevada operator can genuinely owe Commerce Tax, and a cost segregation study will not change that number either up or down, because depreciation and gross revenue are simply not the same measurement.
Illustrative numbers: a Nevada 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 | Nevada |
|---|---|---|
| Purchase price band | $250,000–$650,000 | Same property |
| Depreciable basis (20% land allocation) | $200,000–$520,000 | No Nevada depreciation return |
| Reclassified to 5/7/15-yr (9–32% of basis) | $18K–$165K | Not applicable |
| Marginal tax rate | Up to 37% | 0% personal or corporate income tax |
| Illustrative Year-1 federal tax savings on reclassified components | ~$6,660–$61,570 (37% × $18K–$165K) | $0 change to Commerce Tax liability, whether or not one is owed |
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. If your business's Nevada gross revenue is at or near $4,000,000 in a fiscal year, confirm your Commerce Tax filing obligation with your advisor — none of the figures above change what is owed, because that tax is not computed from depreciation or net income.
See a sample cost segregation report
Look at exactly what your Nevada 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 Nevada property
For a Nevada investor or business, the depreciation workflow is federal-only, because there is no Nevada personal or corporate income tax return:
- 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), or the applicable 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. There is no Nevada equivalent.
- 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).
- Commerce Tax return (if applicable): required only if the business's Nevada gross revenue exceeds $4,000,000 in the fiscal year, computed independently of the depreciation reported above. Confirm the filing obligation and applicable industry rate with your advisor; the study does not change what is owed.
The reclassified schedule is the same engineered output regardless of state. In Nevada, it is used exactly once — on the federal return.
Form 3115 lookback on a Nevada 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.
In Nevada, the lookback is a federal-only calculation: there is no state income-tax return to restate, and the catch-up does not affect Commerce Tax liability for the same gross-revenue reason a current-year study does not.
See our full Form 3115 cost segregation guide for federal mechanics, partnership and LLC pass-through treatment, and timing rules.
Should you still do cost segregation in Nevada?
Usually yes, for the federal reasons alone — but go in with clear eyes about what a Nevada property or business does and does not gain at the state level:
- The full federal Year-1 bonus is intact, with no state add-back. Nevada has no personal or corporate income tax, so there is nothing to reduce the federal deduction at the state level. How much you use in the current year still depends on your passive-loss, at-risk, basis, and business-interest situation.
- It will not move a Commerce Tax number. The Commerce Tax is computed on gross revenue, not net income, and applies only above $4,000,000 of Nevada gross revenue in a fiscal year. No amount of accelerated depreciation changes it, whether you are above or below the threshold. If Commerce Tax relief is the goal, cost segregation is not the tool.
- Know your revenue trajectory. If your Nevada gross revenue is approaching $4,000,000, discuss your Commerce Tax filing obligation and applicable industry rate with your CPA independently of your depreciation planning — the two questions do not interact.
The nuance to flag with your CPA is exactly this split: the federal benefit is real and unaffected by anything at the Nevada level, and the Commerce Tax — where it applies — is real and equally unaffected by anything cost segregation does. Both are true at once, and neither is "no tax at all."
Frequently asked
Does Nevada allow bonus depreciation?
The question doesn't quite apply the way it does in most states. Nevada has no personal or corporate income tax, so there is no Nevada income tax return on which federal §168(k) bonus depreciation could be added back, disallowed, or separately allowed. An individual investor or a Nevada corporation claims the full federal Year-1 bonus on the federal return (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), and there is simply no parallel Nevada income-tax calculation to reconcile it against.
Does Nevada tax my rental income?
Not through a personal or corporate income tax — Nevada has neither. That is the whole of the good news at the state income-tax level. It is not, however, the whole of Nevada business taxation: a business whose Nevada gross revenue exceeds $4,000,000 in a fiscal year owes the Commerce Tax, at rates that vary by industry classification. The Commerce Tax is not an income tax and does not touch bonus depreciation, but it is a real Nevada tax bill some property owners and operating businesses will see.
Does a cost segregation study reduce my Nevada Commerce Tax bill?
No, at any revenue level. The Commerce Tax is computed on gross revenue, not net income, so it does not subtract depreciation — accelerated or straight-line — as an expense in the first place. A cost segregation study changes how quickly you depreciate an asset for federal income tax purposes; it does not change your Nevada gross revenue. Below the $4,000,000 threshold, no Commerce Tax is owed regardless. Above it, the Commerce Tax bill is the same whether or not a cost segregation study was ever performed, because depreciation is not a Commerce Tax input at all.
Who actually owes Nevada's Commerce Tax?
A business whose Nevada gross revenue exceeds $4,000,000 in a fiscal year, under NRS 363C. Rates vary by industry classification (NAICS-based), so two businesses with identical revenue can owe different amounts. This is a real threshold worth knowing before assuming "Nevada has no business tax" — it does, it is simply not an income tax and not something a depreciation study changes.
Is cost segregation still worth it in Nevada?
For the federal deduction, yes, and Nevada adds no state-level income-tax reduction to it because there is no state income tax to apply it against. The full federal §168(k) Year-1 bonus is claimed on the federal return, with no Nevada add-back. The honest caveat: if your business crosses $4,000,000 in Nevada gross revenue, you may owe Commerce Tax regardless of how you depreciate your property, because that tax is not computed from net income. Whether the current-year federal deduction is fully usable also still depends on federal passive-activity, at-risk, basis, and business-interest limits.
Can I use Form 3115 on a Nevada 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. Because Nevada has no personal or corporate income tax, there is no parallel state adjustment to reconcile; the catch-up is a federal-only calculation. It also does not affect Commerce Tax liability, for the same gross-revenue reason a current-year study does not.
What does a Nevada 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). None of that changes because the property sits in Nevada; what changes is that there is no Nevada income-tax return to file it against, and no reduction to a Commerce Tax bill regardless of revenue. The engine ships our own calibrated, nationally-recognized construction cost data.
Related guides
- Bonus depreciation by state: overview
- All 50 states: conformity reference table
- Washington bonus depreciation (no income tax, B&O gross-receipts tax)
- Wyoming bonus depreciation (no income tax, no gross-receipts tax)
- Texas bonus depreciation (no state income tax)
- Form 3115 cost segregation lookback: §481(a) mechanics
- What is cost segregation: the full primer
- Sample cost segregation reports