Bonus depreciation in Delaware

The rule

Follows federal §168(k) bonus

No

Federal bonus added back in year one

80%

State §179 cap

Follows federal

Delaware is normally rolling-conformity, but H.B. 255 decoupled the PERSONAL income tax from OBBBA's 100% bonus for property placed in service after 12/31/2025, substituting the TCJA phase-down: TY2026 allows only 20% bonus, so 80% of the federal §168(k) deduction is disallowed in year one; TY2027 and later allow 0% (a full add-back). The disallowed amount is recovered through ordinary MACRS on the higher Delaware basis, not a fixed multi-year spread. The carve-out sunsets for property placed in service after 12/31/2030, when Delaware returns to federal rules. §179 was untouched — Delaware follows the federal dollar cap. Note the individual date differs from the corporate one (corporations decoupled from property placed in service after 1/19/2025).

What that costs, worked

Take a cost-segregation study that produces $250,000 of federal bonus depreciation and $50,000 of §179 in the first year — a realistic result on a single short-term rental.

Federal bonus depreciation

$250,000

Added back on the Delaware return

$200,000

Delaware taxable income is higher by

$200,000

A year-one figure. The state-side recovery of the added-back amount in later years is a separate schedule and is not modelled here.

Where this sits in the year

State conformity is the last thing that happens to a deduction, not the first. Before it matters, the property has to clear the seven-day average-stay test and the material participation tests, and the loss has to survive basis, at-risk, and the §461(l) cap — $256,000 single and $512,000 married filing jointly for 2026. The path is laid out in does my short-term rental qualify.

Common questions

Does Delaware allow bonus depreciation?

No — Delaware does not follow the federal bonus depreciation rules. 80% of the federal bonus deduction is added back to your Delaware taxable income in year one, so your state bill does not fall the way your federal bill does.

Does this change my federal deduction?

No. State conformity affects only your state return. The federal bonus deduction is unchanged — which is why a cost-segregation study can still be worth doing in a state that decouples, just for a smaller total benefit.

Is the added-back amount lost?

Not usually. States that require an add-back generally let you recover the amount through ordinary depreciation on the state's own schedule in later years. Delaware is normally rolling-conformity, but H.B. 255 decoupled the PERSONAL income tax from OBBBA's 100% bonus for property placed in service after 12/31/2025, substituting the TCJA phase-down: TY2026 allows only 20% bonus, so 80% of the federal §168(k) deduction is disallowed in year one; TY2027 and later allow 0% (a full add-back). The disallowed amount is recovered through ordinary MACRS on the higher Delaware basis, not a fixed multi-year spread. The carve-out sunsets for property placed in service after 12/31/2030, when Delaware returns to federal rules. §179 was untouched — Delaware follows the federal dollar cap. Note the individual date differs from the corporate one (corporations decoupled from property placed in service after 1/19/2025).