Bonus Depreciation by State — Conformity Reference Table (2026).
100% federal §168(k) bonus depreciation is permanent under OBBBA. ~38 states inherit it via rolling IRC conformity; ~10 states decouple and require an add-back; the rest have no state income tax. Categorical reference, not a per-state rate sheet — confirm current-year treatment with your CPA.
Reviewed by Cost Seg Smart Editorial Team · Last reviewed: · 50 states + DC · 51 rows
The four conformity buckets
Every state's treatment of §168(k) bonus depreciation sits in one of four buckets. The table below uses these categories — not a "% of federal bonus allowed" column, which ages out every legislative session.
The 50-state conformity table
Filter to narrow. Source column links to each state's authoritative tax authority.
| State | Treatment | Primary citation | Source |
|---|---|---|---|
| Alabama (AL) | Conforms (rolling IRC adoption) — verify current year | Ala. Code §40-18-33 | DOR → |
| Alaska (AK) | No state personal income tax (corp tax conforms federally) | Alaska Stat. §43.20 | DOR → |
| Arizona (AZ) | Conforms (rolling IRC adoption) — verify current year | Ariz. Rev. Stat. §43-105 | DOR → |
| Arkansas (AR) | Decoupled (historically) — confirm current-year position with AR DFA | Ark. Code §26-51-428 | DOR → |
| California (CA) | Decoupled — §168(k) bonus add-back required (PIT + corp) §179 capped at $25K | R&TC §17024.5; R&TC §24355 | DOR → |
| Colorado (CO) | Conforms (rolling IRC adoption) — verify current year | Colo. Rev. Stat. §39-22-103 | DOR → |
| Connecticut (CT) | Decoupled (PIT) — federal §168(k) bonus add-back required for individuals CBT (corp) treatment differs — verify with DRS | Conn. Gen. Stat. §12-701(a)(20)(A)(ix) | DOR → |
| Delaware (DE) | Conforms (rolling IRC adoption) — verify current year | Del. Code Ann. tit. 30, §1101 | DOR → |
| Florida (FL) | No state personal income tax (corp tax decouples — verify) | Fla. Const. art. VII, §5; Fla. Stat. §220.13 | DOR → |
| Georgia (GA) | Static conformity — verify current IRC conformity date with GA DOR | Ga. Code §48-1-2 | DOR → |
| Hawaii (HI) | Decoupled — federal §168(k) bonus not allowed | Haw. Rev. Stat. §235-2.4 | DOR → |
| Idaho (ID) | Conforms (annual IRC update) — verify current-year conformity date | Idaho Code §63-3004 | DOR → |
| Illinois (IL) | Conforms (rolling IRC adoption) — verify current year | 35 ILCS 5/203 | DOR → |
| Indiana (IN) | Static conformity with §168(k) add-back — verify current year | Ind. Code §6-3-1-3.5 | DOR → |
| Iowa (IA) | Conforms (post-2020 tax reform) — verify current year | Iowa Code §422.3 | DOR → |
| Kansas (KS) | Conforms (rolling IRC adoption) — verify current year | Kan. Stat. Ann. §79-32,138 | DOR → |
| Kentucky (KY) | Static conformity with §168(k) add-back — verify current year | Ky. Rev. Stat. §141.010 | DOR → |
| Louisiana (LA) | Conforms (rolling IRC adoption) — verify current year | La. Rev. Stat. §47:287.701 | DOR → |
| Maine (ME) | Decoupled (partial) — Maine capital investment credit replaces bonus | Me. Rev. Stat. tit. 36, §5219-NN | DOR → |
| Maryland (MD) | Decoupled — federal §168(k) bonus add-back required | Md. Code Ann., Tax-Gen §10-210.1 | DOR → |
| Massachusetts (MA) | Decoupled (PIT) — federal §168(k) bonus add-back required for individuals Corp excise (CBT) treatment differs | Mass. Gen. Laws ch. 62, §1(c) | DOR → |
| Michigan (MI) | Conforms (rolling IRC adoption) — verify current year | Mich. Comp. Laws §206.12 | DOR → |
| Minnesota (MN) | Decoupled — 80% federal §168(k) bonus add-back, ratable subtraction over 5 years | Minn. Stat. §290.0131 | DOR → |
| Mississippi (MS) | Conforms (rolling IRC adoption) — verify current year | Miss. Code §27-7-15 | DOR → |
| Missouri (MO) | Conforms (rolling IRC adoption) — verify current year | Mo. Rev. Stat. §143.091 | DOR → |
| Montana (MT) | Conforms (rolling IRC adoption) — verify current year | Mont. Code Ann. §15-30-2110 | DOR → |
| Nebraska (NE) | Conforms (rolling IRC adoption) — verify current year | Neb. Rev. Stat. §77-2715 | DOR → |
| Nevada (NV) | No state personal or corporate income tax | Nev. Const. art. 10 | DOR → |
| New Hampshire (NH) | Decoupled (BPT) — federal §168(k) bonus not allowed under Business Profits Tax No broad personal income tax | N.H. Rev. Stat. §77-A:1 | DOR → |
| New Jersey (NJ) | Decoupled (PIT) — federal §168(k) bonus add-back required; CBT decouples differently | N.J. Stat. §54A:5-1; N.J. Stat. §54:10A-4(k)(2)(F) | DOR → |
| New Mexico (NM) | Conforms (rolling IRC adoption) — verify current year | N.M. Stat. §7-2-2 | DOR → |
| New York (NY) | Decoupled — federal §168(k) bonus add-back required for PIT and Article 9-A corp NYC has separate UBT add-back | N.Y. Tax Law §612(b)(36); N.Y. Tax Law §208(9)(b)(17) | DOR → |
| North Carolina (NC) | Decoupled — 85% federal §168(k) bonus add-back, ratable subtraction over 5 years | N.C. Gen. Stat. §105-130.5B | DOR → |
| North Dakota (ND) | Conforms (rolling IRC adoption) — verify current year | N.D. Cent. Code §57-38-01 | DOR → |
| Ohio (OH) | Decoupled (CAT) — Commercial Activity Tax is gross-receipts based; §168(k) does not apply No state personal income tax on rental income at the entity level | Ohio Rev. Code §5751 | DOR → |
| Oklahoma (OK) | Conforms (rolling IRC adoption) — verify current year | Okla. Stat. tit. 68, §2353 | DOR → |
| Oregon (OR) | Conforms (rolling IRC adoption) — verify current year | Or. Rev. Stat. §316.007 | DOR → |
| Pennsylvania (PA) | Decoupled (PIT) — Pennsylvania PIT has no depreciation deduction at the individual level; CNIT add-back rules differ Rental income reported on PA Schedule E uses cost recovery — verify with PA DOR | 72 P.S. §7301; 72 P.S. §7401 | DOR → |
| Rhode Island (RI) | Decoupled — federal §168(k) bonus add-back required | R.I. Gen. Laws §44-30-12 | DOR → |
| South Carolina (SC) | Conforms (rolling IRC adoption) — verify current year | S.C. Code §12-6-40 | DOR → |
| South Dakota (SD) | No state personal or corporate income tax | S.D. Const. art. 11 | DOR → |
| Tennessee (TN) | No state personal income tax on wages or rental income (Hall tax repealed 2021) Franchise & Excise Tax applies to entities | Tenn. Code §67-1-101 | DOR → |
| Texas (TX) | No state personal income tax (franchise tax applies to entities) | Tex. Const. art. VIII, §24 | DOR → |
| Utah (UT) | Conforms (rolling IRC adoption) — verify current year | Utah Code §59-10-103 | DOR → |
| Vermont (VT) | Conforms (rolling IRC adoption) — verify current year | Vt. Stat. tit. 32, §5811 | DOR → |
| Virginia (VA) | Static conformity (annual update bill required) — verify current-year IRC conformity date | Va. Code §58.1-301 | DOR → |
| Washington (WA) | No state personal or corporate income tax (B&O tax is gross-receipts) | Wash. Const. art. VII | DOR → |
| West Virginia (WV) | Conforms (rolling IRC adoption) — verify current year | W. Va. Code §11-21-9 | DOR → |
| Wisconsin (WI) | Decoupled — federal §168(k) bonus not allowed; state §179 cap differs | Wis. Stat. §71.22(4) | DOR → |
| Wyoming (WY) | No state personal or corporate income tax | Wyo. Const. art. 15 | DOR → |
| District of Columbia (DC) | Decoupled — federal §168(k) bonus not allowed for DC income tax | D.C. Code §47-1803.03 | DOR → |
Sources: each row's "DOR →" link goes to the cited state's official tax authority. Statute citations are pin-cites to the primary state code where available; verify the cited section is current before filing. Last reviewed: May 12, 2026. State conformity rules change annually — always confirm with your CPA and state DOR.
What "decoupled" actually changes
Decoupling does not deny the deduction. It defers the deduction across the asset's MACRS recovery period instead of allowing it all in Year 1. Two parallel depreciation books are maintained — a federal book that uses 100% bonus and a state book that uses standard MACRS without bonus.
In Year 1, the federal-state delta produces an income addition on the state return (you're undoing the federal bonus for state purposes). In years 2 through 16, as the state-side MACRS schedule recovers basis, those amounts produce subtraction adjustments. Total lifetime depreciation is identical on both books — it's a timing difference.
For the federal-rule layer — the actual §168(k) statute, recovery periods, and qualifying-property tests — see the federal §168(k) rule reference at irsdepreciationrules.com.
Worked example: same $750K residential property, three states
Cost Seg Smart benchmark median (SFR 18.3% reclassification), 20% land allocation, 37% federal bracket, 100% bonus depreciation in Year 1. The federal column is identical for all three states; only the state book differs.
| Line item | Texas (no PIT) | Alabama (conforming) | California (decoupled) |
|---|---|---|---|
| Purchase price | $750,000 | $750,000 | $750,000 |
| Depreciable basis (after 20% land) | $600,000 | $600,000 | $600,000 |
| Reclassified basis (18.3% SFR) | $109,800 | $109,800 | $109,800 |
| Federal Year-1 deduction (100% bonus) | $109,800 | $109,800 | $109,800 |
| State Year-1 deduction (reclassified basis) | N/A | $109,800 (100% bonus flows) | ~$12,500 (MACRS, no bonus) |
| Federal Year-1 tax savings (37%) | ~$43,900 | ~$43,900 | ~$43,900 |
| State Year-1 tax savings | $0 | ~$5,500 (5%) | ~$1,200 (9.3% on $12,500) |
The decoupled-state Year-1 hit is smaller than it looks. In California's case, the deferred ~$9,000 of Year-1 state benefit recovers over years 2 through 16 as the state-side MACRS schedule depreciates the same $109,800 of basis. Total lifetime state deduction matches the federal deduction; only the timing differs.
CPA workflow for a non-conforming-state property
If your property is in a decoupled state, your CPA's workflow has five touch points beyond the standard federal Form 4562:
- Identify the state's bucket — rolling, static, decoupled, or no-tax. Use the table above as a starting point; confirm with the state DOR.
- Obtain the state's depreciation adjustment form — California uses FTB 3885A; New Jersey uses GIT-DEP; New York uses IT-225; Minnesota and North Carolina use state-specific schedules attached to their respective income tax returns.
- Compute parallel state basis for each cost-segregated component. Federal and state asset basis diverge from Year 1 forward; the state book carries higher basis because it didn't take the bonus.
- Track basis separately through disposition. At sale, recapture is computed on the federal book; the state book produces its own recapture amount, generally a different (smaller) number. The two reconcile through the §1250/§1245 calculation on the state return.
- Confirm passive-activity treatment is state-conforming. §469 passive-loss rules generally flow through to state returns unchanged, but a few states modify the application — verify your state's specific position.
For California specifically, see the California bonus depreciation guide for the full FTB 3885A workflow and Schedule CA Part I Section B mechanics.
Edge cases and recent changes
Selective non-conformity. Some states (e.g., Minnesota, North Carolina) decouple with a partial add-back — 80% in Minnesota's case, 85% in North Carolina's — rather than a full 100% add-back. The mechanics are the same as full decoupling, but the deferred amount is smaller.
PIT vs. corporate divergence. Several states decouple at the personal income tax level but conform (or partially conform) at the corporate income tax level. Connecticut, Massachusetts, and New Jersey are the most common examples. The treatment depends on which return your rental is filed against — Schedule E on individual return vs. corporate return.
Recent conformity legislation. Several states have considered updating their conformity in 2024–2025 legislative sessions; a few have moved the static conformity date without addressing §168(k) specifically. The table above reflects positions as of May 12, 2026; states with active budget bills should be verified directly with the cited DOR.
OBBBA didn't change state conformity. The One Big Beautiful Bill Act is a federal statute. It made 100% bonus depreciation permanent at the federal level, but it does not preempt state tax law. Conformity states gain permanent flow-through of 100% bonus; decoupled states continue their add-back rules unchanged unless their legislature acts.
Frequently asked
Which states do not conform to bonus depreciation?
As of May 2026, the states with active decoupling from federal §168(k) bonus depreciation include California, New York, New Jersey, Connecticut, Hawaii, Massachusetts (PIT), Maine (partial via capital investment credit), Maryland, Minnesota (80% add-back), New Hampshire (BPT), North Carolina (85% add-back), Pennsylvania (PIT — separate treatment), Rhode Island, Wisconsin, Arkansas (historically), Indiana, Kentucky, and the District of Columbia. State rules change annually — verify your state's current-year position with the cited DOR before filing.
Do I have to add back federal bonus depreciation on my state return?
Only in states that have decoupled from §168(k). In a rolling-conformity state, the federal §168(k) deduction flows through to your state return without adjustment. In a decoupled state, your CPA files an add-back on the state return in Year 1 (e.g., California Schedule CA Part I Section B; New York IT-225; New Jersey Schedule A) and then takes subtraction adjustments in later years as the asset depreciates on the state's MACRS schedule. The total lifetime deduction is the same — decoupling defers it across the asset's recovery period.
What states allow 100% bonus depreciation?
All states with rolling IRC conformity that have not specifically decoupled from §168(k) allow the federal 100% bonus deduction permanently reinstated by the One Big Beautiful Bill Act (OBBBA, signed July 2025). That includes most southern, midwestern, and mountain-west states — Alabama, Arizona, Colorado, Florida (no PIT), Illinois, Louisiana, Michigan, Missouri, Texas (no PIT), and roughly 35 others. The decoupled list above is what to verify; the default assumption for any state not on that list is rolling conformity.
Did the OBBBA change state conformity?
No. OBBBA is a federal statute. State conformity is governed by each state's own tax code and is not changed by federal legislation. What OBBBA did is make 100% bonus depreciation permanent at the federal level, which means rolling-conformity states will continue to flow 100% bonus through to their returns automatically, while decoupled states will continue to require add-backs. Several decoupled states have considered updating their conformity in 2024–2025 legislative sessions; check your state's most recent budget bill.
How does state non-conformity affect a cost segregation study?
Not at all on the engineering side — the same reclassification of basis into 5/7/15-year MACRS categories applies regardless of state. Where state non-conformity affects you is bookkeeping: your CPA maintains two depreciation schedules (federal and state), and asset basis tracks differently from Year 1 forward. The deferred state-side benefit is real but small relative to the federal benefit. Cost segregation in a non-conforming state remains a strong financial decision in nearly every case where it's a strong decision in a conforming state.
Why don't all states follow federal bonus depreciation rules?
Revenue. Federal bonus depreciation is a timing benefit that materially accelerates corporate and individual tax deductions. States that decouple do so because they don't want to give up the Year-1 revenue. California, in particular, has never conformed to §168(k) — not under TCJA, CARES Act, or OBBBA — because the policy stance has consistently been to preserve state revenue from federal acceleration programs. The deduction is not denied; it is recovered over the asset's MACRS life.
Where can I find my state's official position on bonus depreciation?
Each state's Department of Revenue publishes a guidance document or income tax instruction that addresses federal §168(k) conformity. The Source column in the table above links to each state's DOR. The most authoritative state-by-state resource outside of primary statutes is the Bloomberg Tax 50-state survey (subscription) and the AICPA state conformity tracker. Always confirm current-year treatment with your CPA before filing — secondhand summaries (including this page) can age out by the next legislative session.
Is this table current?
This table was last reviewed on May 12, 2026 and reflects state conformity positions known as of that date. State rules change yearly, sometimes retroactively. Cost Seg Smart reviews this page annually and after any major federal change. For any state with an active legislative session, verify with the cited DOR or your CPA before relying on this table for filing decisions.
Where to go next — primary sources
Researching the federal rule layer: the §168(k) statute, qualifying-property tests, and recovery-period mechanics live at irsdepreciationrules.com — the federal §168(k) rule reference. State conformity tables sit on top of that rule layer; the rule layer is what actually governs federal treatment.
Deep-diving a specific state: we maintain extended guides for the three largest decoupled states — California, New York, and New Jersey. Each guide includes the worked example, the state's depreciation adjustment form, and the §481(a) lookback mechanics for that jurisdiction.
Filing a study: the Cost Seg Smart engineered report includes federal Form 4562-ready schedules plus state-specific depreciation schedules for any decoupled state where your property sits. The CPA-Ready Guarantee covers free format revisions if your state preparer needs the schedule presented differently.
Related guides
- Bonus depreciation by state — overview
- California bonus depreciation — full mechanics + FTB 3885A workflow
- New York bonus depreciation — IT-225 add-back mechanics
- New Jersey bonus depreciation — PIT non-conforming, CBT conforms
- 100% bonus depreciation under OBBBA — what's permanent post-2025
- Form 3115 cost segregation lookback — §481(a) mechanics
- State tax rules for cost segregation — broader survey
- Sample cost segregation reports (23 PDFs)
- Audit defense scope — 13 IRS Pub 5653 quality elements
Final reminder: Last reviewed May 12, 2026. State conformity rules change annually, often retroactively. This table is a starting point for CPA conversations, not tax advice. Confirm current-year treatment with your CPA and the cited state agency before filing.