Rhode Island Bonus Depreciation: Permanently Disallowed, Self-Updating.
Rhode Island disallows bonus depreciation under the 2002 and 2003 federal acts "or any subsequent federal enactment" — language that automatically excludes future federal bonus regimes, including 2025's restored 100% bonus, without new legislation. There is no add-back to recover later; it is a flat, permanent disallowance.
Reviewed by Cost Seg Smart Editorial Team · Last verified against R.I. Gen. Laws §44-61-1 — depreciation of assets
The 30-second answer: Rhode Island has permanently disallowed federal bonus depreciation. R.I. Gen. Laws §44-61-1 disallows the 2002 and 2003 federal acts' bonus depreciation "or any subsequent federal enactment" — so future federal bonus regimes, OBBBA 2025 included, are excluded automatically, without Rhode Island having to legislate again.
There is no add-back-and-recover cycle here. Unlike some other decoupled states, Rhode Island depreciation is simply computed as it would have been before the 2002 act, in the year the asset is placed in service and every year after — the bonus is never allowed, so there is nothing to subtract back later.
On a representative Rhode Island 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, fully intact regardless of the Rhode Island answer.
Federal vs Rhode Island, Side by Side
For an individual investor's or Rhode Island business's cost-segregation-reclassified components:
| Tax provision | Federal (IRC) | Rhode Island |
|---|---|---|
| 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 | Disallowed permanently. §44-61-1 excludes the 2002/2003 acts' bonus "or any subsequent federal enactment" |
| Mechanism | Not applicable | Flat disallowance — no add-back cycle. Depreciation computed as it would have been before the 2002 act, permanently |
| Applies to | Not applicable | Business Corporation Tax (ch. 11), Bank Excise Tax (ch. 14), Personal Income Tax (ch. 30) — uniformly |
| Basis on disposition | Reflects federal depreciation including the bonus | Uses the Rhode Island non-bonus depreciation actually allowed (§44-61-1(b)) — differs from federal basis |
| Federal usability of the deduction | Subject to passive activity, at-risk, basis, and business-interest limits | Same federal limits govern the federal deduction; Rhode Island's disallowance applies independently |
Source: R.I. Gen. Laws §44-61-1; IRC §168(k). Federal bonus figures reflect current law; eligibility depends on acquisition and placed-in-service dates and elections.
"Or any subsequent federal enactment": why this disallowance never needs updating
Most decoupled states have to legislate every time Congress changes federal bonus depreciation rules — naming a specific act, a specific tax year, or a specific IRC subsection to exclude. Rhode Island's drafting is different, and it is worth pointing out precisely why. R.I. Gen. Laws §44-61-1 disallows bonus depreciation under the 2002 and 2003 federal acts "or any subsequent federal enactment."
That last clause is the whole story: it is broad enough to reach forward and automatically exclude any later federal bonus depreciation regime, including the 100% bonus restored by the One Big Beautiful Bill Act (OBBBA) effective 2025-01-19, without the Rhode Island legislature needing to pass anything new. Where other states' decoupling can lapse or need re-confirmation after a federal change, Rhode Island's disallowance is durable by its own text.
The practical result is a flat rule, not a timing rule: depreciation for Rhode Island purposes is computed as it would have been before the 2002 act, in the year the asset is placed in service and every year after. There is no addition to make in Year 1 and no later subtraction to track — the bonus simply never enters the Rhode Island calculation at all.
Illustrative numbers: a Rhode Island 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 | Rhode Island |
|---|---|---|
| Purchase price band | $250,000–$650,000 | Same property |
| Depreciable basis (20% land allocation) | $200,000–$520,000 | Same basis |
| Reclassified to 5/7/15-yr (9–32% of basis) | $18K–$165K | Disallowed — depreciation computed as if the 2002 act never happened |
| Year-1 treatment | $18K–$165K deducted (100% bonus, if eligible) | Pre-2002-act depreciation only — no bonus |
| Later-year treatment | Not applicable (already deducted) | Same pre-2002-act schedule continues every year — no add-back to unwind |
| Marginal tax rate | Up to 37% | Rhode Island individual income tax rate (verify current year with the RI Division of Taxation) |
| Illustrative Year-1 federal tax savings on reclassified components | ~$6,660–$61,570 (37% × $18K–$165K) | Fully intact — Rhode Island's disallowance has no federal effect |
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. Track the Rhode Island-adjusted basis separately from the federal basis from the year of purchase, since §44-61-1(b) governs basis on eventual disposition.
See a sample cost segregation report
Look at exactly what your Rhode Island 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 Rhode Island property
For a Rhode Island investor or business, the depreciation workflow is straightforward because there is no delayed amount to track over multiple years:
- 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.
- Rhode Island return (Personal Income Tax ch. 30, Business Corporation Tax ch. 11, or Bank Excise Tax ch. 14, as applicable): depreciation computed under §44-61-1 as if the 2002 act's bonus depreciation, and every subsequent federal bonus enactment, never applied.
- 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 federal claims the Year-1 bonus while Rhode Island never allows it, this year or any future year.
Form 3115 lookback on a Rhode Island 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 Rhode Island, the catch-up year's depreciation is computed the same way as any other year under §44-61-1 — without regard to any bonus depreciation enactment, past or future — so there is no separate Rhode Island add-back or recovery calculation layered on top.
See our full Form 3115 cost segregation guide for federal mechanics, partnership and LLC pass-through treatment, and timing rules.
Should you skip cost segregation in Rhode Island? No.
Rhode Island's permanent disallowance has zero effect on the federal return, which is where the dominant benefit sits. The math still favors doing the study, for three reasons:
- The full federal Year-1 bonus is intact. Rhode Island's disallowance is a state-return matter only; the full §168(k) bonus is claimed on the federal return exactly as it would be anywhere else. How much you use in the current year still depends on your passive-loss, at-risk, basis, and business-interest situation.
- There is nothing to add back or unwind on the Rhode Island return. The self-updating "or any subsequent federal enactment" clause means this rule needs no re-verification after a future federal change — it is a permanent, flat disallowance by design.
- 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 basis tracking: because Rhode Island depreciation never includes the bonus, the Rhode Island-adjusted basis will differ from the federal basis over the life of the property, and §44-61-1(b) governs which figure applies on eventual disposition.
Frequently asked
Does Rhode Island allow bonus depreciation?
No, and it is a permanent, flat disallowance rather than a timing difference. R.I. Gen. Laws §44-61-1 disallows bonus depreciation under the 2002 and 2003 federal acts "or any subsequent federal enactment." An individual or business still 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), but for Rhode Island purposes depreciation is computed as it would have been before the 2002 act, with no bonus ever entering the calculation.
What does "or any subsequent federal enactment" mean, and why does it matter?
It means Rhode Island's disallowance is self-updating. Most decoupled states name a specific federal provision or tax year and have to pass new legislation every time Congress changes bonus depreciation rules. Rhode Island's statute instead disallows the 2002 and 2003 acts' bonus depreciation "or any subsequent federal enactment" — language broad enough to automatically exclude any later federal bonus regime, including the 100% bonus restored by the One Big Beautiful Bill Act (OBBBA) in 2025, without the Rhode Island legislature needing to act again.
Is there a Rhode Island add-back that I recover later, like in some other decoupled states?
No. This is a real difference worth understanding clearly. Some decoupled states (Minnesota, Maine) require the federal bonus to be added back in Year 1 and then recovered through subtractions in later years. Rhode Island does not work that way: there is no add-back-then-recover schedule at all. Depreciation is simply computed as it would have been before the 2002 act — in the year the asset is placed in service and every year after. The bonus is never allowed, so there is nothing later to subtract back.
Does this disallowance apply to individuals, corporations, and banks the same way?
Yes. §44-61-1 applies uniformly across the Business Corporation Tax (chapter 11), the Bank Excise Tax (chapter 14), and the Personal Income Tax (chapter 30) — the same non-bonus depreciation rule governs all three.
What happens to basis when the property is eventually sold?
Basis on disposition uses the Rhode Island non-bonus depreciation actually allowed under §44-61-1(b) — not the larger federal depreciation that included the bonus. Because Rhode Island never allowed the bonus in the first place, the Rhode Island-adjusted basis differs from the federal basis, and that difference should be tracked from the year of purchase rather than reconstructed later.
Is cost segregation still worth it in Rhode Island?
Yes, for the federal benefit. Rhode Island's permanent disallowance has zero effect on the federal return — the full federal §168(k) bonus is still claimed there. Only the Rhode Island-side depreciation schedule differs, computed as it would have been before the 2002 act. 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 Rhode Island 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. Because Rhode Island never allows bonus depreciation for any year, the Rhode Island-side depreciation for that same property continues under the pre-2002-act calculation regardless of the federal catch-up.
Related guides
- Bonus depreciation by state: overview
- All 50 states: conformity reference table
- Maine bonus depreciation (decoupled, full add-back with capped recovery)
- Massachusetts bonus depreciation
- Form 3115 cost segregation lookback: §481(a) mechanics
- What is cost segregation: the full primer
- Sample cost segregation reports