New Hampshire Bonus Depreciation: The BPT Switches It Off Completely.
New Hampshire has no broad personal income tax — but the Business Profits Tax applies the Internal Revenue Code without §168(k) entirely. Unlike states that defer the bonus and recover it in later years, there is no add-back schedule here and no later subtraction. The deduction simply does not exist for BPT purposes.
Reviewed by Cost Seg Smart Editorial Team · Last verified against RSA 77-A:3-b — Adjustments; Internal Revenue Code Provisions, RSA 77-A:1 — BPT definitions and IRC date
The 30-second answer: New Hampshire has no broad personal income tax, so there is no individual return to reconcile bonus depreciation against. The tax that matters is the Business Profits Tax (BPT), and RSA 77-A:3-b(I) directs that the IRC be applied without section 168(k).
This is total, unconditional decoupling — not deferral. Unlike Minnesota's 80% add-back followed by a five-year subtraction, or Indiana's first-year add-back followed by negative adjustments, New Hampshire has no add-back schedule and no later recovery. The deduction simply never exists for BPT purposes.
On a representative New Hampshire single-family rental held in a BPT-taxable business (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, with no equivalent BPT-level acceleration, ever, for that same deduction.
Total decoupling, not deferred decoupling
Most of the decoupled states in this series soften the disallowance with a recovery mechanism: Minnesota adds back 80% of the federal bonus in Year 1 and returns it as a one-fifth subtraction in each of the next five years; Indiana's first-year add-back is followed by negative adjustments over the asset's remaining life. In both cases, the state-level benefit is deferred, not lost.
New Hampshire's Business Profits Tax works differently, and the difference is not a matter of degree. RSA 77-A:3-b(I) directs that the Internal Revenue Code "shall be applied without section 168(k)" for BPT purposes. There is no add-back to compute, because there is nothing to add back — §168(k) is treated as if it does not exist in the first place, for the entire life of the BPT calculation on that property. There is no later tax year in which a subtraction or negative adjustment brings any of it back.
This is a real and durable difference for anyone comparing New Hampshire to a state like Minnesota or Indiana: the BPT-level benefit that a cost segregation study would otherwise accelerate simply is not available, on any timeline. The federal benefit is untouched and remains the primary driver of the study's value.
A research note worth keeping, because it cost real time twice before the right section was found: the decisive text sits in RSA 77-A:3-b, titled Adjustments — a section easy to skip past. It is NOT in RSA 77-A:1 (the BPT's definitions section, whose only "bonus" hit refers to EMPLOYEE bonuses, an unrelated false-positive keyword match), and not in RSA 77-A:3 or RSA 77-A:4 (which cover different topics, including basis-increase transactions). And updating New Hampshire's IRC conformity date (RSA 77-A:1, XX(d), currently 2018-12-31) would not change this answer — the §168(k) carve-out in 77-A:3-b operates independently of that date.
Federal vs New Hampshire, Side by Side
For a business subject to the Business Profits Tax, on cost-segregation-reclassified components:
| Tax provision | Federal (IRC) | New Hampshire (BPT) |
|---|---|---|
| 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 | Excluded entirely. RSA 77-A:3-b(I): the IRC is applied without §168(k) |
| Recovery mechanism | Not applicable | None. No add-back schedule, no later subtraction — unlike Minnesota or Indiana |
| Individual income tax | Not applicable | No broad-based personal income tax exists to file bonus depreciation against |
| Recovery of the disallowed amount | Not applicable | Ordinary MACRS depreciation over the asset's class life — no acceleration, ever, at the BPT level |
| Federal usability of the deduction | Subject to passive activity, at-risk, basis, and business-interest limits | Same federal limits govern the federal deduction; New Hampshire's exclusion applies independently to the BPT |
Sources: RSA 77-A:3-b, RSA 77-A:1, IRC §168(k). Federal bonus figures reflect current law; eligibility depends on acquisition and placed-in-service dates and elections.
Illustrative numbers: a New Hampshire rental held in a BPT-taxable business
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 | New Hampshire (BPT) |
|---|---|---|
| Purchase price band | $250,000–$650,000 | Same property |
| Depreciable basis (20% land allocation) | $200,000–$520,000 | Same basis before the §168(k) exclusion |
| Reclassified to 5/7/15-yr (9–32% of basis) | $18K–$165K | §168(k) excluded entirely for BPT purposes |
| Year-1 treatment | $18K–$165K deducted (100% bonus, if eligible) | Ordinary MACRS depreciation only; no accelerated allowance |
| Later years | Not applicable (already deducted) | No recovery. Unlike Minnesota's five-year subtraction, nothing comes back |
| Illustrative Year-1 federal tax savings on reclassified components | ~$6,660–$61,570 (37% × $18K–$165K) | Permanently excluded at the BPT level; ordinary MACRS recovery instead |
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. Whether a given property or activity is subject to the BPT at all depends on the BPT's gross receipts and gross business profits thresholds, which your CPA should confirm.
See a sample cost segregation report
Look at exactly what your New Hampshire 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 New Hampshire property
For a New Hampshire business subject to the BPT, the workflow runs on the federal return and a separate BPT calculation:
- 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 federal business 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.
- New Hampshire Business Profits Tax return: the IRC is applied without §168(k) per RSA 77-A:3-b(I) — the reclassified components recover under ordinary MACRS depreciation instead, with no later recovery of the excluded amount.
- 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 filings; the BPT return simply computes depreciation as though §168(k) never existed.
Form 3115 lookback on a New Hampshire 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. For a New Hampshire business subject to the BPT, the catch-up year's bonus-eligible portion is excluded from the BPT the same way an ordinary Year-1 bonus would be, per RSA 77-A:3-b(I), with no later BPT-level recovery of the excluded amount.
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 New Hampshire?
Usually yes, but weigh the two levels honestly rather than assuming the BPT will eventually catch up the way some other decoupled states do:
- The full federal Year-1 bonus is intact, and New Hampshire's BPT rule does not touch the federal return at all. How much you use in the current year still depends on your passive-loss, at-risk, basis, and business-interest situation.
- There is no BPT-level catch-up to expect later. Unlike Minnesota's five-year subtraction or Indiana's negative adjustments, the excluded amount here simply never returns — plan around the federal benefit as the whole state-relevant story.
- The Form 3115 lookback still captures missed federal years, generally without amending prior returns, if the property was placed in service in a prior year without cost segregation.
The nuance to flag with your CPA is not to search past it: confirm whether the property or activity is held in a BPT-taxable business at all, and if it is, treat the §168(k) exclusion as permanent rather than expecting a later-year recovery that this statute does not provide.
Frequently asked
Does New Hampshire allow bonus depreciation?
Not for the Business Profits Tax, and there is no add-back-then-recovery cycle the way some decoupled states run one. RSA 77-A:3-b(I) directs that the Internal Revenue Code shall be applied without section 168(k) for BPT purposes — the special depreciation allowance is switched off entirely, permanently, with no later subtraction or negative adjustment that brings it back.
Is New Hampshire's decoupling the same as Minnesota's 80% add-back, just at a different percentage?
No, and this is the most important distinction on this page. Minnesota adds back 80% of the federal bonus in Year 1 and recovers it as a one-fifth subtraction in each of the next five years — a timing difference. New Hampshire's decoupling has no recovery mechanism at all: the IRC is applied "without section 168(k)" for BPT purposes, full stop. There is no add-back schedule to track and no later year in which the disallowed amount comes back. The BPT deduction for that property is computed as if §168(k) never existed, permanently.
If New Hampshire has no personal income tax, why does bonus depreciation matter here at all?
Because the Business Profits Tax is a separate tax that reaches business income regardless of the absence of a broad personal income tax. New Hampshire has no broad-based tax on wages or on business income filed through an individual return, so there is no individual income tax return on which bonus depreciation could be added back or claimed. But a business — including one an individual owns and operates — that meets the BPT's gross receipts threshold files a BPT return, and it is that return, not an individual income tax filing, where the §168(k) carve-out applies.
Where in the New Hampshire statutes is the bonus depreciation carve-out actually located?
In RSA 77-A:3-b, a section titled Adjustments that cross-references the Internal Revenue Code provisions applied for BPT purposes. This is worth naming specifically because it is easy to miss: the carve-out is NOT in RSA 77-A:1 (the BPT's definitions section — its only hit for "bonus" refers to EMPLOYEE bonuses, an unrelated false-positive match), and it is not in RSA 77-A:3 or RSA 77-A:4 (which cover different topics, including basis-increase transactions). A search that stops at those more obvious-sounding sections will conclude, incorrectly, that no carve-out exists.
Does updating New Hampshire's Internal Revenue Code conformity date change the bonus depreciation answer?
No. RSA 77-A:1, XX(d) sets New Hampshire's IRC conformity date at December 31, 2018, but the §168(k) carve-out in RSA 77-A:3-b operates independently of that date — it is a specific, standing exclusion rather than something tied to which year's version of the Code New Hampshire has adopted. Even if the conformity date were updated to match current federal law, the bonus depreciation exclusion would remain in force unless RSA 77-A:3-b itself were amended.
Is cost segregation still worth it in New Hampshire?
Usually yes, primarily for the federal benefit, which New Hampshire's BPT rule does not touch. The federal §168(k) bonus is claimed in full on the federal return. For BPT purposes, the reclassified components generally recover under ordinary depreciation over their MACRS lives instead of a Year-1 acceleration — permanently, not temporarily. Whether cost segregation is worth it should weigh the federal acceleration (real and immediate) against the fact that the BPT-level acceleration this study would otherwise unlock simply is not available.
Can I use Form 3115 on a New Hampshire 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 business subject to the BPT, the catch-up year's bonus-eligible portion is excluded from the BPT calculation the same way an ordinary Year-1 bonus would be, per RSA 77-A:3-b(I) — with no later BPT-level recovery.
What does a New Hampshire 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 New Hampshire, the Business Profits Tax applies the Code without §168(k) entirely — the study's federal value is unaffected, but its BPT-level acceleration does not exist. The engine ships our own calibrated, nationally-recognized construction cost data.
Related guides
- Bonus depreciation by state: overview
- All 50 states: conformity reference table
- Minnesota bonus depreciation (decoupled, deferred not lost)
- Indiana bonus depreciation (decoupled, first-year add-back)
- Form 3115 cost segregation lookback: §481(a) mechanics
- What is cost segregation: the full primer
- Sample cost segregation reports