Does used property qualify for bonus depreciation?

Certain used property may qualify when the acquisition and prior-use requirements are met. Used property is not automatically eligible merely because it is depreciable.

Does a building qualify for bonus depreciation?

A building structure with a longer recovery period generally does not qualify directly. A cost-segregation study may identify qualifying shorter-lived components.

Can bonus depreciation create a loss?

Bonus depreciation can affect taxable income and may contribute to a loss, but basis, at-risk, passive-loss, excess-business-loss, and net-operating-loss rules can limit or defer the result.

Do all states follow federal bonus depreciation?

No. State conformity varies, and some states require an addback or use a different recovery schedule.

Is 100% bonus depreciation permanent?

Under current law, yes. The One Big Beautiful Bill Act, signed July 4, 2025, made the 100% rate permanent for qualified property acquired after January 19, 2025. There is no scheduled phase-down, although Congress can change the law in the future.

Do you apply Section 179 or bonus depreciation first?

Section 179 is applied first. Bonus depreciation is then taken on the remaining basis, and regular MACRS depreciation applies to whatever basis is left after both.

2026 Depreciation Guide

Bonus Depreciation in 2026

Current federal rules, eligible property, placed-in-service timing, vehicle limits, cost segregation, state conformity, and recapture.

A guide by Taxstra Tax & Accounting · CPA-led tax strategy for business owners

Written by Bryan Martin, CPA, Managing Partner and Founder of Taxstra. Last updated August 30, 2026.

100% Bonus Depreciation

The current federal rule and why it no longer phases down

For 2026, this page uses a federal bonus-depreciation rate of 100% for qualifying property acquired after January 19, 2025 and placed in service under the applicable rules.

The One Big Beautiful Bill Act, signed July 4, 2025, made the 100% allowance permanent. Unlike the prior law that stepped the rate down each year, there is no scheduled phase-out for qualified property acquired and placed in service after January 19, 2025. Property tied to a binding written contract dated on or before that date generally stays on the old phase-down schedule.

The percentage alone does not determine the deduction. Property type, acquisition date, binding-contract history, placed-in-service date, business use, elections, basis, and loss limitations all require review.

Review IRS Publication 946

Bonus Depreciation Percentage by Year

Property period	Federal rate	Planning note
2022	100%	Prior-law full allowance
2023	80%	Prior-law phase-down
2024	60%	Prior-law phase-down
Early 2025 transition property	40%	Separate transition rules may apply
Qualified property acquired after January 19, 2025	100%	Permanent under current law; used for the 2026 examples below

Which Property Is Eligible?

Property	General treatment	Issue to review
MACRS property with a recovery period of 20 years or less	Potentially eligible	Confirm class life and exclusions
Certain computer software	Potentially eligible	Confirm Section 167 treatment
Qualified film, television, live theatrical, and sound-recording productions	Potentially eligible	Special definitions and dates apply
Certain used property	Potentially eligible	Acquisition and prior-use tests apply
Land	Not eligible	Land is not depreciable
Building structure with a longer recovery period	Not directly eligible	Cost segregation may identify shorter-lived components

New Property

New qualifying property may be eligible when the acquisition, placed-in-service, business-use, and statutory requirements are satisfied.

Used Property

Certain used property may qualify, but prior ownership, prior use, related-party, and acquisition rules must be checked. “New to you” is a useful shorthand, not the complete test.

Placed-in-Service Decision Tree

STEP 1
Was the property acquired under the current-law date rules?
Review purchase date and any binding written contract.
STEP 2
Is the property complete, ready, and available for its business use?
Payment or delivery alone may not establish placed-in-service status.
STEP 3
Is the property in an eligible class?
Confirm recovery period, exclusions, and special definitions.
STEP 4
Do elections or limitations change the result?
Review election-out treatment, business use, basis, and loss limitations.

Timing a year-end purchase? The placed-in-service date, not the payment date, controls the deduction year. Check the 2026 tax deadlines calendar before you commit.

Vehicle Limitations

Vehicle deductions depend on vehicle classification, business-use percentage, listed-property substantiation, luxury-auto limits, acquisition and placed-in-service dates, and recapture exposure if business use later drops. GVWR alone does not establish a full deduction.

Heavy Vehicles Over 6,000 Pounds

Trucks, vans, and SUVs with a gross vehicle weight rating above 6,000 pounds generally sit outside the luxury-auto dollar caps, so the business-use portion may be eligible for full bonus depreciation rather than a capped annual amount. Business-use, substantiation, and recapture rules still apply.

See the vehicles over 6,000 pounds guide

Cost Segregation Example

Hypothetical building allocation

Assume an engineering study identifies $200,000 of otherwise eligible shorter-lived components. At the configured 100% rate, the potential first-year bonus amount on those components is $200,000 before other limitations.

What the example does not prove

It does not establish the allocation, eligibility, placed-in-service date, current deductibility, state treatment, or after-tax value for a real property.

For a short-term rental, bonus depreciation may help create a loss, but the short-term rental tax loophole classification and material-participation tests determine whether that loss is nonpassive under Section 469.

Read the cost segregation guide

A study on your building type usually starts the numbers conversation: see the cost segregation guides by property type.

Section 179 vs. Bonus Depreciation

Issue	Bonus depreciation	Section 179
Selection	Generally applies by qualifying property class unless elected out	Generally elected asset by asset
Stacking order	Taken second, on the basis remaining after any Section 179 deduction	Taken first against the cost of the asset
Income limitation	No taxable-income limit; can create or increase a loss, subject to basis and loss-limitation rules	Limited to taxable business income; the disallowed amount carries forward
Annual dollar limit	No overall dollar cap	$2,560,000 limit for 2026; phase-out begins above $4,090,000 of purchases
Heavy SUV cap	No SUV-specific dollar cap for qualifying vehicles above 6,000 lbs GVWR	SUV deduction capped at $32,000 for 2026
State treatment	Frequently decoupled	May conform differently
Planning use	Broad acceleration for eligible classes	Targeted expensing and election control

State Conformity and Depreciation Recapture

State-Conformity Warning

States may decouple from the federal allowance, require an addback, or permit a different recovery schedule. Model each filing state separately.

Recapture and Future Sale

Accelerated depreciation reduces adjusted basis and can change the character and timing of gain on disposition. Model the exit before treating the current deduction as permanent savings.

2026 state bonus depreciation conformity tracker

Federal eligibility does not answer the state return. Compare individual and corporate treatment separately, including addbacks, recovery schedules, and current state guidance.

51 jurisdictions51 rows with official-source links9 filing-year confirmation flags24 with a decoupled treatmentReviewed 2026-08-30

Find a state or treatmentTreatment

51 jurisdictions shown

Alabama

Reviewed 2026-08-30

Individual treatment

Conforms

Follows the federal §168(k) and §168(n) deductions for 2026 to 2027.

Corporate treatment

Conforms

Follows the federal §168(k) and §168(n) deductions for 2026 to 2027.

Conformity notes and primary sources

Conformity: Rolling conformity; Alabama issued an OBBBA conformity summary

IRC provision: IRC §168(k) and §168(n)

Alabama’s official OBBBA summary identifies the permanent 100% bonus deduction and qualified production property deduction as provisions that flow into Alabama income tax.

Alabama Department of Revenue OBBBA executive summary

Alaska

Reviewed 2026-08-30

Individual treatment

No broad income tax

Alaska does not impose a broad individual income tax.

Corporate treatment

Primary-source review pending

A direct, current official statement of Alaska corporate treatment for §168(k) and §168(n) was not located.

Conformity notes and primary sources

Conformity: No broad individual income tax; corporate treatment unresolved from accessible current guidance

IRC provision: IRC §168(k) and §168(n)

Alaska has a corporate income tax, so the absence of an individual income tax does not answer the corporate return. No corporate result is inferred here.

Filing-year confirmation: Confirm 2026 to 2027 Alaska corporate §168(k) and §168(n) treatment from a current Department of Revenue instruction or statute before publishing a definitive corporate result.

Alaska Legislature history of the individual income tax Alaska Tax Division

Arizona

Reviewed 2026-08-30

Individual treatment

Decoupled

Recompute depreciation as though the federal bonus election had not been made. · Arizona depreciation schedule

Corporate treatment

Decoupled

Recompute depreciation as though the federal bonus election had not been made. · Arizona depreciation schedule · Form Arizona Form 120 adjustment schedules

Conformity notes and primary sources

Conformity: Selective conformity; Arizona requires a state depreciation computation

IRC provision: IRC §168(k) and §168(n)

Arizona’s conformity guidance and return instructions require state depreciation rather than allowing the federal bonus amount to flow through unchanged.

Arizona IRC conformity guidance Arizona Form 120 instructions

Arkansas

Reviewed 2026-08-30

Individual treatment

Decoupled

Federal bonus depreciation is not adopted; use the Arkansas depreciation computation. · State depreciation

Corporate treatment

Decoupled

Federal bonus depreciation is not adopted; use the Arkansas depreciation computation. · State depreciation

Conformity notes and primary sources

Conformity: Fixed-date and selective conformity to IRC §168

IRC provision: IRC §168(k) and §168(n)

Arkansas adopts specified portions of §168 rather than the current federal bonus provisions. Current official forms retain separate Arkansas depreciation adjustments.

Arkansas corporate income tax instructions Arkansas corporate income tax FAQs Arkansas 2025 individual forms

California

Reviewed 2026-08-30

Individual treatment

Decoupled

California does not conform to federal bonus depreciation; compute California depreciation separately. · California basis and depreciation

Corporate treatment

Decoupled

California does not conform to federal bonus depreciation; compute California depreciation separately. · California basis and depreciation

Conformity notes and primary sources

Conformity: Static conformity with express nonconformity to federal bonus depreciation

IRC provision: IRC §168(k) and §168(n)

California Publication 1001 identifies bonus depreciation as a federal to California difference. A separate California basis must be maintained through disposition.

California FTB Publication 1001

Colorado

Reviewed 2026-08-30

Individual treatment

Conforms

Colorado follows the federal deductions for §168(k) bonus and §168(n) qualified production property.

Corporate treatment

Conforms

Colorado follows the federal deductions for §168(k) bonus and §168(n) qualified production property.

Conformity notes and primary sources

Conformity: Rolling conformity; 2026 official legislative analysis confirms treatment

IRC provision: IRC §168(k) and §168(n)

Colorado’s official 2026 federal-tax-change report treats the federal deductions as flowing into the state base. A 2026 proposal to decouple did not become law.

Colorado 2026 federal tax law provisions report Colorado HB 26-1222 status

Connecticut

Reviewed 2026-08-30

Individual treatment

Decoupled

Add back 100% of federal bonus, then deduct 25% of the addition in each of the next four years. · 100% addback · 25% in each of four succeeding years · 4-year recovery

Corporate treatment

Decoupled

Maintain Connecticut basis and depreciation; federal bonus is not allowed unchanged. · Connecticut depreciation and basis · Form CT-1120 ATT

Conformity notes and primary sources

Conformity: Express addback and state recovery for individuals/PTEs; separate corporate basis

IRC provision: IRC §168(k) and §168(n)

The recovery mechanism differs by taxpayer type. Prior-year addback balances continue independently of the current federal deduction.

Connecticut bonus depreciation guidance Connecticut Form CT-1120 ATT Connecticut corporation tax information

Delaware

Reviewed 2026-08-30

Individual treatment

Decoupled

Delaware decoupled from the federal bonus provisions; state recovery details remain subject to 2026 forms. · 2026 Delaware guidance pending

Corporate treatment

Decoupled

Delaware decoupled from the federal bonus provisions; state recovery details remain subject to 2026 forms. · 2026 Delaware guidance pending

Conformity notes and primary sources

Conformity: Express 2026 decoupling enacted; implementing instructions pending

IRC provision: IRC §168(k) and §168(n)

HB 255 changed Delaware treatment. The status is enacted, but this tracker does not state a recovery schedule until Delaware publishes operative instructions.

Filing-year confirmation: Update the Delaware recovery method and forms when the Division of Revenue publishes 2026 implementation instructions.

Delaware Division of Revenue tax-season updates

District of Columbia

Reviewed 2026-08-30

Individual treatment

Decoupled

Add back depreciation exceeding the District allowance and maintain District basis. · District depreciation and basis · Form Schedule I

Corporate treatment

Decoupled

Add back depreciation exceeding the District allowance and maintain District basis. · District depreciation and basis · Form Combined Reporting schedules

Conformity notes and primary sources

Conformity: Express addback with separate District basis

IRC provision: IRC §168(k) and §168(n)

District forms require taxpayers to reverse excess federal depreciation and track the related District basis adjustment.

District Schedule I District combined reporting booklet

Florida

Reviewed 2026-08-30

Individual treatment

No broad income tax

Florida does not impose a broad individual income tax.

Corporate treatment

Decoupled

For qualifying property placed in service before January 1, 2027, add back federal bonus and recover the addition in sevenths; §168(n) is excluded. · 100% addback · One-seventh in the year of addition and each of the next six years · 7-year recovery

Conformity notes and primary sources

Conformity: No broad individual income tax; corporate statutory decoupling through 2026 to 2027

IRC provision: IRC §168(k) and §168(n)

Florida TIP 26C01-01 preserves its pre-OBBBA §168(k) reference for the covered period and excludes the new §168(n) deduction. Asset dates matter.

Florida TIP 26C01-01

Georgia

Reviewed 2026-08-30

Individual treatment

Decoupled

Use Georgia depreciation without federal §168(k) or §168(n). · Georgia depreciation · Form Georgia Form 4562

Corporate treatment

Decoupled

Use Georgia depreciation without federal §168(k) or §168(n). · Georgia depreciation · Form Georgia Form 4562

Conformity notes and primary sources

Conformity: Express statutory exclusion of IRC §168(k) and §168(n)

IRC provision: IRC §168(k) and §168(n)

Georgia’s IRC definition excludes both federal provisions. The state Form 4562 is used to compute the difference and maintain state basis.

Georgia federal tax changes Georgia Form 4562 Georgia Form IT-611 instructions

Hawaii

Reviewed 2026-08-30

Individual treatment

Decoupled

Hawaii does not allow the federal bonus deduction; compute Hawaii depreciation separately. · Hawaii depreciation

Corporate treatment

Decoupled

Hawaii does not allow the federal bonus deduction; compute Hawaii depreciation separately. · Hawaii depreciation

Conformity notes and primary sources

Conformity: Express nonconformity and separate Hawaii depreciation

IRC provision: IRC §168(k) and §168(n)

Hawaii has long required a state depreciation computation for bonus property. Current return instructions continue the separate-depreciation approach.

Hawaii bonus depreciation announcement Hawaii Form N-11 instructions

Idaho

Reviewed 2026-08-30

Individual treatment

Decoupled

Add back the federal bonus difference in the first year; deduct later Idaho-versus-federal depreciation differences. · Annual Idaho/federal depreciation difference

Corporate treatment

Decoupled

Add back the federal bonus difference in the first year; deduct later Idaho-versus-federal depreciation differences. · Annual Idaho/federal depreciation difference

Conformity notes and primary sources

Conformity: Express bonus-depreciation addition and later state recovery

IRC provision: IRC §168(k) and §168(n)

Idaho requires taxpayers to keep a separate state depreciation schedule until the property is fully recovered or disposed of.

Idaho bonus depreciation guidance Idaho Form 39R instructions Idaho income tax rule 322

Illinois

Reviewed 2026-08-30

Individual treatment

Decoupled

Reverse federal §168(k)/§168(n) amounts and compute the Illinois depreciation modification. · Illinois depreciation modification · Form IL-4562

Corporate treatment

Decoupled

Reverse federal §168(k)/§168(n) amounts and compute the Illinois depreciation modification. · Illinois depreciation modification · Form IL-4562

Conformity notes and primary sources

Conformity: Express addback and Illinois Form IL-4562 recovery

IRC provision: IRC §168(k) and §168(n)

The current IL-4562 instructions expressly address both §168(k) and §168(n). Continue tracking earlier Illinois basis adjustments.

Illinois Form IL-4562 instructions Illinois IL-4562 instruction PDF

Indiana

Reviewed 2026-08-30

Individual treatment

Decoupled

Add back federal bonus depreciation and maintain Indiana basis for later depreciation or disposition. · 100% addback · Indiana basis and depreciation

Corporate treatment

Decoupled

Add back federal bonus depreciation and maintain Indiana basis for later depreciation or disposition. · 100% addback · Indiana basis and depreciation

Conformity notes and primary sources

Conformity: Express state addback; Indiana maintains a separate adjusted basis

IRC provision: IRC §168(k) and §168(n)

Indiana Information Bulletin 118 expressly includes both §168(k) and §168(n) in the state decoupling rule.

Indiana Information Bulletin 118 Indiana individual add-backs

Iowa

Reviewed 2026-08-30

Individual treatment

Conforms

Iowa follows current federal depreciation, including §168(k) and §168(n), for 2026 to 2027.

Corporate treatment

Conforms

Iowa follows current federal depreciation, including §168(k) and §168(n), for 2026 to 2027.

Conformity notes and primary sources

Conformity: Rolling conformity; full federal depreciation conformity since 2021

IRC provision: IRC §168(k) and §168(n)

Iowa uses rolling federal conformity and no longer requires the former Iowa bonus-depreciation adjustment for property placed in service in tax years beginning on or after January 1, 2021.

Iowa rolling-conformity guidance Iowa Form IA 4562A instructions

Kansas

Reviewed 2026-08-30

Individual treatment

Partial / modified

Current Kansas statutes recognize federal §168(k); a direct current official statement on §168(n) was not located.

Corporate treatment

Partial / modified

Current Kansas statutes recognize federal §168(k); a direct current official statement on §168(n) was not located.

Conformity notes and primary sources

Conformity: Federal starting point and separate Kansas expensing statute; §168(n) not directly addressed in located guidance

IRC provision: IRC §168(k) and §168(n)

Kansas also offers a separate state expensing deduction under K.S.A. 79-32,143a. Do not treat that separate election as proof of §168(n) conformity.

Filing-year confirmation: Confirm Kansas treatment of IRC §168(n) from a current Department of Revenue instruction or enacted statute before describing Kansas as fully conforming.

Kansas K.S.A. 79-32,143a Kansas K.S.A. 79-32,117

Kentucky

Reviewed 2026-08-30

Individual treatment

Decoupled

Kentucky does not adopt the current federal bonus provisions; use Kentucky depreciation. · Kentucky depreciation

Corporate treatment

Decoupled

Kentucky does not adopt the current federal bonus provisions; use Kentucky depreciation. · Kentucky depreciation

Conformity notes and primary sources

Conformity: IRC §168 fixed to December 31, 2001

IRC provision: IRC §168(k) and §168(n)

Kentucky’s current statute fixes the applicable version of §168 at December 31, 2001, so neither the current §168(k) deduction nor new §168(n) deduction flows through.

Kentucky depreciation statute

Louisiana

Reviewed 2026-08-30

Individual treatment

Partial / modified

Louisiana offers an optional state 100% expensing deduction for qualifying property; later federal depreciation on the same basis is added back. · State election with later federal-depreciation addback

Corporate treatment

Partial / modified

Conformity notes and primary sources

Conformity: Fixed-date federal conformity plus elective Louisiana 100% expensing

IRC provision: IRC §168(k) and §168(n)

Louisiana’s result can equal a 100% first-year deduction, but it is a state election rather than simple conformity to federal §168(k) or §168(n). Qualification and basis tracking are separate.

Louisiana bonus-depreciation FAQ Louisiana R.S. 47:287.71 Louisiana Title 47 income-tax laws

Maine

Reviewed 2026-08-30

Individual treatment

Decoupled

Add back the federal bonus amount and claim depreciation under Maine’s pro-forma computation. · Maine pro-forma depreciation

Corporate treatment

Decoupled

Add back the federal bonus amount and claim depreciation under Maine’s pro-forma computation. · Maine pro-forma depreciation

Conformity notes and primary sources

Conformity: Express addback and pro-forma state depreciation; former state credit repealed for 2025+

IRC provision: IRC §168(k) and §168(n)

The older Maine capital-investment credit is not available for tax years beginning after 2024. Continue state-basis tracking for existing property.

Maine Form 1120ME instructions Maine bonus depreciation guidance Maine 2026 individual forms

Maryland

Reviewed 2026-08-30

Individual treatment

Partial / modified

Generally decoupled from federal bonus; qualifying manufacturing property may receive different treatment. · Maryland modification and state basis · Form 500DM where applicable

Corporate treatment

Partial / modified

Generally decoupled from federal bonus; qualifying manufacturing property may receive different treatment. · Maryland modification and state basis · Form 500DM where applicable

Conformity notes and primary sources

Conformity: Federal bonus decoupling with a fact-specific manufacturing exception

IRC provision: IRC §168(k) and §168(n)

Maryland’s manufacturer exception is asset- and taxpayer-specific. The new §168(n) qualified production property deduction should not be assumed to satisfy Maryland’s separate exception.

Filing-year confirmation: Apply the Maryland manufacturing exception only after confirming the taxpayer and property meet the state definition; do not map federal §168(n) eligibility directly to the Maryland exception.

Maryland Administrative Release 38 Maryland Tax Alert 24-2020 Maryland 2026 filing-season changes

Massachusetts

Reviewed 2026-08-30

Individual treatment

Partial / modified

§168(k) remains disallowed. §168(n) is disallowed for 2026 and follows federal law beginning in 2027. · Massachusetts depreciation for disallowed federal amounts

Corporate treatment

Partial / modified

§168(k) remains disallowed. §168(n) is disallowed for 2026 and follows federal law beginning in 2027. · Massachusetts depreciation for disallowed federal amounts

Conformity notes and primary sources

Conformity: Express §168(k) decoupling; §168(n) changes between 2026 and 2027

IRC provision: IRC §168(k) and §168(n)

The placed-in-service year and which federal subsection produced the deduction are essential. A single “conforms/does not conform” label would be misleading for Massachusetts.

Massachusetts corporate federal differences Massachusetts TIR 26-4 Massachusetts adjusted gross income guidance

Michigan

Reviewed 2026-08-30

Individual treatment

Partial / modified

For individuals and flow-through entities, Michigan retains the pre-OBBBA phaseout: 20% federal bonus in 2026 and 0% in 2027; §168(n) is disallowed. · Michigan adjustment and basis tracking

Corporate treatment

Decoupled

Michigan corporate income tax is fully decoupled from §168(k) and §168(n). · Michigan depreciation and basis

Conformity notes and primary sources

Conformity: Express OBBBA decoupling; individual legacy phaseout differs from corporate treatment

IRC provision: IRC §168(k) and §168(n)

Michigan’s 2026 notice separates individual/flow-through treatment from corporate income tax treatment. Do not use the 20% individual figure on a corporate return.

Michigan OBBBA decoupling notice Michigan corporate bonus-depreciation FAQ

Reviewed 2026-08-30

Individual treatment

No broad income tax

New Hampshire does not impose a broad individual income tax.

Corporate treatment

Partial / modified

The Business Profits Tax expressly disallows §168(k); a direct official 2026 statement on §168(n) was not located. · New Hampshire depreciation adjustment for §168(k)

Conformity notes and primary sources

Conformity: No broad individual income tax; Business Profits Tax expressly excludes §168(k)

IRC provision: IRC §168(k) and §168(n)

The Business Profits Tax applies beyond conventional C corporations. The statute directly resolves §168(k), but this tracker does not infer §168(n) treatment from silence.

Filing-year confirmation: Confirm New Hampshire Business Profits Tax treatment of IRC §168(n) from 2026 legislation or Department of Revenue Administration instructions.

New Hampshire RSA 77-A:3-b New Hampshire Business Profits Tax statutes

New Jersey

Reviewed 2026-08-30

Individual treatment

Decoupled

New Jersey does not follow the federal bonus deduction; calculate New Jersey depreciation and basis separately. · New Jersey depreciation and basis

Corporate treatment

Decoupled

New Jersey does not follow the federal bonus deduction; calculate New Jersey depreciation and basis separately. · New Jersey depreciation and basis

Conformity notes and primary sources

Conformity: Express decoupling and separate New Jersey depreciation

IRC provision: IRC §168(k) and §168(n)

New Jersey’s official decoupling guidance and current CBT instructions require reversal of federal bonus depreciation and state basis tracking.

New Jersey bonus-depreciation decoupling New Jersey CBT-100U instructions

New Mexico

Reviewed 2026-08-30

Individual treatment

Primary-source review pending

A direct current official statement resolving individual §168(k) and §168(n) treatment was not located.

Corporate treatment

Conforms

New Mexico’s official OBBBA fiscal analysis treats §168(k) and §168(n) deductions as flowing into corporate income tax.

Conformity notes and primary sources

Conformity: Federal starting point; corporate OBBBA effect confirmed, individual effect not directly resolved

IRC provision: IRC §168(k) and §168(n)

Personal income tax begins with federal adjusted gross income, but that starting point alone is not used here to infer the absence of a 2026 state modification.

Filing-year confirmation: Confirm 2026 to 2027 New Mexico individual treatment of IRC §168(k) and §168(n) from a current PIT instruction or enacted adjustment statute.

New Mexico legislative OBBBA analysis New Mexico personal income-tax overview

New York

Reviewed 2026-08-30

Individual treatment

Decoupled

Reverse federal §168(k) and §168(n) deductions and claim New York depreciation. · New York depreciation and basis · Form IT-225 / applicable depreciation schedules

Corporate treatment

Decoupled

Reverse federal §168(k) and §168(n) deductions and claim New York depreciation. · New York depreciation and basis · Form CT-399

Conformity notes and primary sources

Conformity: Express state modification for federal bonus depreciation

IRC provision: IRC §168(k) and §168(n)

Current individual and corporate instructions identify the required federal to New York depreciation modifications. New York Notice N-26-1 specifically addresses qualified production property.

New York Form CT-399 instructions New York Form IT-225 instructions New York Notice N-26-1

Reviewed 2026-08-30

Individual treatment

Partial / modified

Oklahoma permits a state 100% expensing election for qualifying property; it is not simple federal bonus conformity. · Oklahoma expensing election and basis rules

Corporate treatment

Partial / modified

Oklahoma permits a state 100% expensing election for qualifying property; it is not simple federal bonus conformity. · Oklahoma expensing election and basis rules

Conformity notes and primary sources

Conformity: State elective immediate expensing; federal §168(n) treatment not directly resolved

IRC provision: IRC §168(k) and §168(n)

The state election may produce an immediate deduction, but federal and Oklahoma eligibility should be tested separately. Located official materials did not directly resolve new §168(n).

Filing-year confirmation: Confirm Oklahoma treatment of IRC §168(n) and the current state election mechanics from 2026 return instructions before describing the state as fully conforming.

Oklahoma Form 512 packet Oklahoma Tax Commission tax documents

Oregon

Reviewed 2026-08-30

Individual treatment

Decoupled

Oregon disallows federal bonus depreciation for 2026 to 2027; implementing recovery instructions are pending. · Oregon guidance pending

Corporate treatment

Decoupled

Oregon disallows federal bonus depreciation for 2026 to 2027; implementing recovery instructions are pending. · Oregon guidance pending

Conformity notes and primary sources

Conformity: Express decoupling for tax years beginning on or after January 1, 2026

IRC provision: IRC §168(k) and §168(n)

Oregon enacted decoupling effective for tax years beginning in 2026. This row does not invent a recovery schedule before the Department of Revenue publishes operative forms.

Filing-year confirmation: Update Oregon forms and recovery mechanics when the Department of Revenue releases complete 2026 instructions.

Oregon 2026 legislation summary Oregon Tax Professional Liaison Meeting, May 2026

Pennsylvania

Reviewed 2026-08-30

Individual treatment

Decoupled

Pennsylvania personal income tax uses its own depreciation rules rather than the federal bonus amount. · Pennsylvania depreciation and basis

Corporate treatment

Decoupled

Add back federal bonus depreciation and claim Pennsylvania depreciation under the corporate rules. · 100% addback · Pennsylvania depreciation and basis

Conformity notes and primary sources

Conformity: Separate Pennsylvania depreciation; express addback of §168(k) and §168(n)

IRC provision: IRC §168(k) and §168(n)

The computation differs between personal income tax and corporate net income tax, but neither permits the federal bonus deduction unchanged. Act 45 of 2025 expressly addresses §168(n).

Pennsylvania corporate net income tax audit manual Pennsylvania Act 45 of 2025 guidance Pennsylvania personal income-tax property guide

Rhode Island

Reviewed 2026-08-30

Individual treatment

Decoupled

Compute depreciation and basis as though federal bonus depreciation had not been enacted. · Pre-bonus depreciation and Rhode Island basis

Corporate treatment

Decoupled

Compute depreciation and basis as though federal bonus depreciation had not been enacted. · Pre-bonus depreciation and Rhode Island basis

Conformity notes and primary sources

Conformity: Express statutory disallowance of federal bonus depreciation

IRC provision: IRC §168(k) and §168(n)

Rhode Island’s statute broadly disallows bonus depreciation enacted under federal law. Current return instructions carry the related state modification.

Rhode Island General Laws §44-61-1 Rhode Island Form RI-1040 instructions Rhode Island Form RI-1120C booklet

South Carolina

Reviewed 2026-08-30

Individual treatment

Decoupled

Use South Carolina depreciation without federal §168(k) or §168(n). · South Carolina depreciation and basis

Corporate treatment

Decoupled

Use South Carolina depreciation without federal §168(k) or §168(n). · South Carolina depreciation and basis · Form SC1120 adjustment schedules

Conformity notes and primary sources

Conformity: Express exception to IRC conformity for §168(k) through §168(n)

IRC provision: IRC §168(k) and §168(n)

Current South Carolina corporate instructions expressly describe the conformity exception as covering §168(k) through §168(n).

South Carolina Form SC1120 instructions South Carolina IRC conformity update South Carolina federal conformity exceptions

South Dakota

Reviewed 2026-08-30

Individual treatment

No broad income tax

South Dakota does not impose a broad individual income tax.

Corporate treatment

No broad income tax

South Dakota does not impose a broad corporate income tax.

Conformity notes and primary sources

Conformity: No broad individual or corporate income tax

IRC provision: IRC §168(k) and §168(n)

Federal depreciation does not create a South Dakota broad income-tax deduction. Specialized taxes, including bank franchise tax, require separate analysis.

South Dakota tax types South Dakota sales and use tax guide

Tennessee

Reviewed 2026-08-30

Individual treatment

No broad income tax

Tennessee does not impose a broad individual income tax.

Corporate treatment

Partial / modified

For franchise/excise tax, §168(k) follows the pre-OBBBA phaseout: 20% bonus in 2026 and 0% in 2027. §168(n) is disallowed. · Tennessee franchise/excise depreciation adjustments

Conformity notes and primary sources

Conformity: No broad individual income tax; franchise/excise tax retains pre-OBBBA phaseout

IRC provision: IRC §168(k) and §168(n)

Tennessee’s entity-level excise tax can apply to pass-through entities as well as corporations. The taxpayer’s federal property year and state entity classification both matter.

Tennessee franchise/excise Notice 25-36 Tennessee franchise and excise tax manual

Texas

Reviewed 2026-08-30

Individual treatment

No broad income tax

Texas does not impose a broad individual income tax.

Corporate treatment

Partial / modified

Texas franchise tax is not a net-income tax. For reports due in 2026, federal bonus depreciation may enter cost of goods sold only for qualifying assets associated with producing goods. · COGS-limited franchise-tax deduction

Conformity notes and primary sources

Conformity: No broad individual income tax; franchise-tax cost-of-goods-sold treatment is limited

IRC provision: IRC §168(k) and §168(n)

Depreciation is not a general Texas franchise-tax deduction. The COGS rule is activity- and asset-specific and should not be presented as broad federal conformity.

Texas franchise-tax COGS FAQ Texas franchise-tax report information and instructions

Utah

Reviewed 2026-08-30

Individual treatment

Conforms

Utah starts with current federal adjusted gross income and does not enumerate a §168(k) or §168(n) reversal.

Corporate treatment

Conforms

Utah starts with current federal taxable income and does not enumerate a §168(k) or §168(n) reversal.

Conformity notes and primary sources

Conformity: Current federal starting point with no enumerated bonus-depreciation adjustment

IRC provision: IRC §168(k) and §168(n)

This classification rests on the current statutory federal starting points and adjustment lists, not on a separate Utah bonus-depreciation publication.

Filing-year confirmation: Recheck Utah’s 2026 return instructions when final forms publish because no standalone Tax Commission notice expressly addressing OBBBA §168(k) and §168(n) was located.

Utah individual income-tax code Utah corporate income-tax code Utah Tax Commission forms and publications

Vermont

Reviewed 2026-08-30

Individual treatment

Decoupled

Vermont disallows §168(k) and §168(n), then permits recovery under the non-bonus depreciation schedule. · Normal depreciation without federal bonus

Corporate treatment

Decoupled

Vermont disallows §168(k) and §168(n), then permits recovery under the non-bonus depreciation schedule. · Normal depreciation without federal bonus

Conformity notes and primary sources

Conformity: Express 2026 decoupling enacted in Act 164

IRC provision: IRC §168(k) and §168(n)

Act 164 expressly addresses both federal provisions and preserves basis recovery through the otherwise applicable depreciation method.

Vermont Act 164 as enacted Vermont H.933 bill status Vermont income-tax statute

Virginia

Reviewed 2026-08-30

Individual treatment

Decoupled

Recompute Virginia depreciation as though the federal bonus provisions did not apply. · Virginia depreciation and basis

Corporate treatment

Decoupled

Recompute Virginia depreciation as though the federal bonus provisions did not apply. · Virginia depreciation and basis

Conformity notes and primary sources

Conformity: Continuing statutory exception for federal bonus depreciation

IRC provision: IRC §168(k) and §168(n)

Virginia’s annual conformity guidance retains bonus depreciation as an exception. Taxpayers must preserve Virginia basis for later depreciation and disposition.

Virginia Tax Bulletin 26-1 Virginia draft Form 500 instructions

Washington

Reviewed 2026-08-30

Individual treatment

No broad income tax

Washington does not impose a broad individual income tax.

Corporate treatment

No broad income tax

Washington’s B&O tax is imposed on gross receipts without a general depreciation deduction.

Conformity notes and primary sources

Conformity: No broad individual or corporate net-income tax; B&O tax is gross receipts based

IRC provision: IRC §168(k) and §168(n)

Washington’s capital-gains excise tax and B&O tax are not broad net-income taxes. Federal bonus depreciation does not flow into a general state income-tax base.

Washington tax structure Washington B&O tax

West Virginia

Reviewed 2026-08-30

Individual treatment

Conforms

West Virginia adopted the 2025 federal changes, so §168(k) and §168(n) flow through for 2026 to 2027.

Corporate treatment

Conforms

West Virginia adopted the 2025 federal changes, so §168(k) and §168(n) flow through for 2026 to 2027.

Conformity notes and primary sources

Conformity: Rolling conformity; 2026 legislation adopts federal changes made in 2025

IRC provision: IRC §168(k) and §168(n)

The current individual and corporate statutes, together with 2026 conformity legislation, incorporate the relevant federal changes.

West Virginia Code §11-21-9 West Virginia Code §11-24-3 West Virginia SB 400 enrolled

Wisconsin

Reviewed 2026-08-30

Individual treatment

Decoupled

Wisconsin does not adopt federal §168(k) or §168(n); compute Wisconsin depreciation separately. · Wisconsin depreciation and basis · Form Schedule I or entity adjustment schedules

Corporate treatment

Decoupled

Wisconsin does not adopt federal §168(k) or §168(n); compute Wisconsin depreciation separately. · Wisconsin depreciation and basis · Form Wisconsin corporate adjustment schedules

Conformity notes and primary sources

Conformity: Static conformity; current instructions expressly exclude §168(k) and §168(n)

IRC provision: IRC §168(k) and §168(n)

Wisconsin generally uses a January 1, 2014 version of the Code for these provisions. Current Schedule I instructions explicitly state that the OBBBA changes to both provisions do not apply.

Wisconsin Schedule I instructions Wisconsin pass-through tax FAQ

Wyoming

Reviewed 2026-08-30

Individual treatment

No broad income tax

Wyoming does not impose a broad individual income tax.

Corporate treatment

No broad income tax

Wyoming does not impose a broad corporate income tax.

Conformity notes and primary sources

Conformity: No broad individual or corporate income tax

IRC provision: IRC §168(k) and §168(n)

Federal depreciation does not flow into a Wyoming broad income-tax return. Industry-specific severance, property, and sales/use taxes remain separate.

Wyoming Legislative Service Office tax report Wyoming State Auditor financial report

State treatment can diverge by taxpayer type. A federal Section 168(k) deduction, a new Section 168(n) deduction, and an older addback balance may follow different state rules. Use the linked return instructions for the entity and filing year at issue.

Hypothetical Calculation

Asset cost	$120,000
Documented business use	80%
Eligible business-use basis	$96,000
Configured federal rate	100%
Potential federal bonus amount before limitations	$96,000

Frequently Asked Questions

The current federal rate used by this page is 100% for qualifying property covered by the post-January 19, 2025 rules. Acquisition, placed-in-service, property-type, election, and limitation rules still apply.

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Authoritative Sources

Citations reflect U.S. federal tax law as of the article's last reviewed date.

Related Taxstra resources

Continue with the services, planning tools, and explainers most relevant to this topic.

Bonus Depreciation in 2026

100% Bonus Depreciation

Bonus Depreciation Percentage by Year

Which Property Is Eligible?

New Property

Used Property

Placed-in-Service Decision Tree

Was the property acquired under the current-law date rules?

Is the property complete, ready, and available for its business use?

Is the property in an eligible class?

Do elections or limitations change the result?

Vehicle Limitations

Heavy Vehicles Over 6,000 Pounds

Cost Segregation Example

Hypothetical building allocation

What the example does not prove

Section 179 vs. Bonus Depreciation

State Conformity and Depreciation Recapture

State-Conformity Warning

Recapture and Future Sale

2026 state bonus depreciation conformity tracker

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Hypothetical Calculation

Frequently Asked Questions

Related Depreciation Guides

Model the Deduction and the Exit

Authoritative Sources

Related Taxstra resources