The federal 100% bonus depreciation does not flow to every state. Some conform, some add it back and recover it on a schedule, some add it back and allow regular depreciation, and some never allow it and cap section 179 as well. The total deduction is the same; the timing and the basis at disposal differ, asset by asset.
Decoupling defers the deduction; it does not deny it.
Every state with an income tax starts from federal taxable income and then departs from it by statute. When the federal return takes 100% bonus depreciation and the state does not allow it, the state return adds the bonus back in the first year and allows the state's own depreciation over the asset's life. Total depreciation is the same in both places; the timing differs, and the difference is tracked asset by asset until disposal, when the state and federal adjusted bases differ and the gain differs with them. The 2025 act did not change any state's rule: a state's conformity is set by its own legislature, by adopting the Code as of a date (static conformity) or as it changes (rolling conformity), with specific decoupling provisions on top.
| Pattern | How it works | Examples, as of September 2026 | Effect on the state book |
|---|---|---|---|
| Conforms | Federal bonus flows through; the state depreciation is the federal depreciation | States with rolling conformity that have not decoupled from section 168(k), among them Colorado, Kansas and Louisiana | No adjustment |
| Adds back, recovers on a schedule | Bonus is added back in year one and subtracted in fixed fractions over later years | Connecticut (25% a year over four years); Minnesota (80% added back, one fifth a year over five years); North Carolina (85% added back, 20% a year over five years) | A state book with the addback and a subtraction schedule |
| Adds back, recovers by regular depreciation | Bonus is added back and the asset is depreciated for state purposes without it, over its MACRS life | Pennsylvania (for property placed in service after 27 September 2017); Illinois; New York (recomputed as if bonus did not exist); New Jersey | A state book at the federal method and life with bonus set to none |
| No bonus at all, and own section 179 limit | Bonus is never allowed; section 179 is capped at the state's own figure | California (section 179 limited to $25,000, phased out from $200,000); Massachusetts | A state book with no bonus and the state section 179 limit |
| Year | Federal depreciation | State depreciation (Table A-1, 7-year) | Addback (subtraction) |
|---|---|---|---|
| 2025 | 100,000.00 | 14,290.00 | 85,710.00 |
| 2026 | 0.00 | 24,490.00 | (24,490.00) |
| 2027 | 0.00 | 17,490.00 | (17,490.00) |
| 2028 | 0.00 | 12,490.00 | (12,490.00) |
| 2029 | 0.00 | 8,930.00 | (8,930.00) |
| 2030 | 0.00 | 8,920.00 | (8,920.00) |
| 2031 | 0.00 | 8,930.00 | (8,930.00) |
| 2032 | 0.00 | 4,460.00 | (4,460.00) |
| Total | 100,000.00 | 100,000.00 | 0.00 |
Depreciation detail with remaining lifeSchedule: Book · As of 30 Sep 2026 · Grouped by class
| Asset | Description | In service | Method | Life | Cost | Prior | 2026 YTD | Accumulated | Net book |
|---|---|---|---|---|---|---|---|---|---|
| 10120 | Nonresid. improvement, Bldg 2 | 06/2019 | SL | 39 | 312,000.00 | 52,666.67 | 6,000.00 | 58,666.67 | 253,333.33 |
| 10412 | Vertical machining center | 05/2023 | SL | 10 | 148,500.00 | 39,600.00 | 11,137.50 | 50,737.50 | 97,762.50 |
| 10577 | Delivery van, unit 7 | 09/2024 | SL | 5 | 58,900.00 | 15,706.67 | 8,835.00 | 24,541.67 | 34,358.33 |
| 10603 | Warehouse racking, aisle 3 | 01/2025 | SL | 7 | 24,300.00 | 3,471.43 | 2,603.57 | 6,075.00 | 18,225.00 |
| 10688 | Server cluster | 03/2026 | SL | 3 | 41,200.00 | 0.00 | 8,011.11 | 8,011.11 | 33,188.89 |
| 10240 | Office furniture, HQ 3rd floor | 06/2026 | SL | 7 | 9,600.00 | 0.00 | 457.14 | 457.14 | 9,142.86 |
| 09877 | Forklift, unit 3 | 04/2018 | SL | 7 | 31,750.00 | 31,750.00 | 0.00 | 31,750.00 | 0.00 |
| 10311 | Laptops (12), sales | 02/2024 | SL | 3 | 18,420.00 | 11,768.33 | 4,605.00 | 16,373.33 | 2,046.67 |
| Grand totals, 8 assets shown of 1,203 | 644,670.00 | 154,963.10 | 41,649.32 | 196,612.42 | 448,057.58 | ||||
Section 179 conformity is a separate question.
Most states allow the federal section 179 deduction as claimed, which is one reason to elect section 179 on property in those states rather than rely on bonus. A few set their own limit: California allows $25,000 with a phase-out starting at $200,000. A state can conform to section 179 and decouple from bonus, or the reverse, and the state book has to carry both settings.
Where the state book earns its keep.
A register that keeps one tax book has to carry every state difference as an off-book adjustment, year after year, and reconstruct it on disposal. A register with a state book records the state's method, convention, bonus treatment and section 179 limit once, computes the addback and the subsequent subtractions by year, and reports the state basis at disposal. Multi-state taxpayers need one state book per state where the difference is material, or a report that recomputes by state at filing time. The deferred tax article covers the second difference the state basis creates; the depreciation engine page describes the state book.
What to record on the asset.
- The state treatment of bonus for the asset's state: allowed, added back with a schedule, added back with regular depreciation, or never allowed.
- The state section 179 limit, where the state sets its own.
- The state method, life and convention, which usually match federal MACRS without bonus.
- The addback and subtraction schedule by year, and the state adjusted basis for the disposal report.
- For assets under section 168(n), the state treatment separately, because Delaware and the District of Columbia have already decoupled from it.
In Fixed Asset Desk: each asset carries a state book with the conformity setting per state; the federal-to-state difference report shows the addback and the recovery by year.
Sources: State revenue codes as summarised by Bloomberg Tax (State Conformity to Federal Bonus Depreciation), CohnReznick (OBBB Tax Law: How Does Your State Conform?) and Grant Thornton (State decoupling from OBBBA likely to continue into 2026, 9 December 2025); California Revenue and Taxation Code sections 17255 and 24356; Pennsylvania Act 72 of 2018. Checked 20 September 2026; state rules change each legislative session.