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State by state: bonus depreciation and the Airbnb tax strategy

The federal write-off works the same in every state. Your state return is a separate question. Some states follow federal bonus depreciation, some make you add it back, and some have no income tax at all.

What this means in dollars

Take a $200,000 year one write-off. In a state that follows federal rules with a 5% top rate, that is about $10,000 of state tax saved on top of the federal savings. In a state that does not follow, the state savings this year are about $0. You get the deduction back slowly on your state return over the years. In a state with no income tax, there is nothing to save and nothing to add back.

“Follows” means your state return takes the federal deduction as is. “Adds it back” means you put the bonus back into state income this year and deduct it over time. The federal savings do not change either way.

No state income tax on wages (9)

No state savings and no add back. The federal savings are the whole story.

  • AlaskaNo state tax on wages.
  • FloridaNo state tax on wages.
  • NevadaNo state tax on wages.
  • New HampshireNo state tax on wages.No tax on wages. Its business profits tax can reach some owners.
  • South DakotaNo state tax on wages.
  • TennesseeNo state tax on wages.
  • TexasNo state tax on wages.
  • WashingtonNo state tax on wages.
  • WyomingNo state tax on wages.

Follows federal bonus depreciation (16)

Your state return follows the federal write-off, so you save state tax too.

  • AlabamaTop rate about 5%.
  • ArizonaTop rate about 2.5%.Conformed in 2026.
  • ColoradoTop rate about 4.4%.A 2026 bill to add it back did not pass.
  • IowaTop rate about 3.8%.Has followed since 2021.
  • KansasTop rate about 5.58%.
  • LouisianaTop rate about 3%.
  • MichiganTop rate about 4.25%.
  • MississippiTop rate about 4%.
  • MissouriTop rate about 4.7%.
  • MontanaTop rate about 5.65%.
  • NebraskaTop rate about 4.55%.
  • New MexicoTop rate about 5.9%.Follows for 2026. Decouples starting in 2027.
  • North DakotaTop rate about 2.5%.
  • OklahomaTop rate about 4.5%.
  • UtahTop rate about 4.5%.
  • West VirginiaTop rate about 4.82%.Restored in 2026.

Partly follows (4)

Part of the bonus counts this year. The rest comes back over later years.

  • DelawareTop rate about 6.6%. About 20% of the bonus allowed in year one.For property placed in service in 2026, only a 20% bonus. 0% from 2027.
  • MinnesotaTop rate about 9.85%. About 20% of the bonus allowed in year one.Adds back 80% and lets you deduct it over the next 5 years.
  • North CarolinaTop rate about 3.99%. About 15% of the bonus allowed in year one.Adds back 85% and lets you deduct it over the next 5 years.
  • OhioTop rate about 2.75%. About 17% of the bonus allowed in year one.Adds back 5/6 and lets you deduct it over the next 5 years.

Does not follow bonus depreciation (22)

You add the bonus back on your state return. State savings this year are about $0, and you recover it over the years.

  • ArkansasTop rate about 3.9%.
  • CaliforniaTop rate about 13.3%.Does not allow bonus depreciation at any percentage.
  • ConnecticutTop rate about 6.99%.Adds it all back, then lets you deduct 25% a year over the next 4 years.
  • District of ColumbiaTop rate about 10.75%.
  • GeorgiaTop rate about 5.19%.
  • HawaiiTop rate about 11%.
  • IdahoTop rate about 5.3%.
  • IllinoisTop rate about 4.95%.
  • IndianaTop rate about 2.95%.
  • KentuckyTop rate about 3.5%.
  • MaineTop rate about 7.15%.
  • MarylandTop rate about 6.5%.
  • MassachusettsTop rate about 9%.Top rate shown includes the 4% surtax on income over about $1M.
  • New JerseyTop rate about 10.75%.Allows at most a 30% bonus, so 100% bonus is not allowed.
  • New YorkTop rate about 10.9%.
  • OregonTop rate about 9.9%.Decouples starting in 2026. A referendum could reverse it.
  • PennsylvaniaTop rate about 3.07%.
  • Rhode IslandTop rate about 5.99%.
  • South CarolinaTop rate about 6%.
  • VermontTop rate about 8.75%.
  • VirginiaTop rate about 5.75%.
  • WisconsinTop rate about 7.65%.

Rules change

States change these rules almost every session. Several changed in 2026. Each state also has its own take on loss limits. Check your state with your CPA before you buy.

Want to see your own numbers? The Aurelian calculator adds your state and the yearly cap.

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Sources

Last checked October 31, 2026. Top rates are approximate and leave out local taxes.

Educational, not tax advice. Tax rules change and depend on your income, filing status, hours, how the property is used and your state. Nothing here is a promise of any deduction or tax result. BNB Portfolio is not a CPA firm, law firm, real estate broker or lender. We work with licensed agent partners and CPAs.

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