Bonus depreciation in Georgia
No — Georgia does not follow the federal bonus depreciation rules. 100% of the federal bonus deduction is added back to your Georgia taxable income in year one, so your state bill does not fall the way your federal bill does.
The rule
- Follows federal §168(k) bonus
- No
- Federal bonus added back in year one
- 100%
- State §179 cap
- Follows federal
Georgia has never adopted §168(k) at any percentage (nor §168(n)), so 100% of the federal bonus is added back. The mechanic is a gross swap rather than a named bonus line: the taxpayer adds back ALL federal depreciation on the other-addition line of Form 500 Schedule 1 and subtracts Georgia-basis depreciation computed on a Georgia Form 4562 on the other-subtraction line, recovering the difference over the asset's ordinary MACRS life. Georgia is static-conformity — H.B. 1199 moved the date to the IRC as of 1/1/2026 for tax years beginning on or after 1/1/2025 — and it conforms to the increased federal §179(b) dollar cap but not to §179 for qualified real property. Georgia also applies the §461(l) excess business loss limit to income recomputed after the §168(k) disallowance, and gain/loss on sale differs from federal because the Georgia basis is higher.
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 Georgia return
- $250,000
- Georgia taxable income is higher by
- $250,000
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 Georgia allow bonus depreciation?
- No — Georgia does not follow the federal bonus depreciation rules. 100% of the federal bonus deduction is added back to your Georgia 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. Georgia has never adopted §168(k) at any percentage (nor §168(n)), so 100% of the federal bonus is added back. The mechanic is a gross swap rather than a named bonus line: the taxpayer adds back ALL federal depreciation on the other-addition line of Form 500 Schedule 1 and subtracts Georgia-basis depreciation computed on a Georgia Form 4562 on the other-subtraction line, recovering the difference over the asset's ordinary MACRS life. Georgia is static-conformity — H.B. 1199 moved the date to the IRC as of 1/1/2026 for tax years beginning on or after 1/1/2025 — and it conforms to the increased federal §179(b) dollar cap but not to §179 for qualified real property. Georgia also applies the §461(l) excess business loss limit to income recomputed after the §168(k) disallowance, and gain/loss on sale differs from federal because the Georgia basis is higher.
Sources
- Ga. Dep't of Revenue, "Income Tax Federal Tax Changes" — Other Georgia Coupling and Decoupling Provisions — Read verbatim from the DOR page source. "Georgia has also not adopted the following: 30%, 50%, and 100% bonus depreciation rules, I.R.C. Section 168(k)." The same page lists §168(n) as not adopted, describes "the 168(k) disallowance" in the §461(l) ordering discussion, and gives the add-federal-
- O.C.G.A. §48-1-2(14), as amended by Ga. H.B. 1199 (signed Mar. 20, 2026) — Conformity updated to the IRC as enacted on or before Jan. 1, 2026, for tax years beginning on or after Jan. 1, 2025. That H.B. 1199 continues the §168(k) and §168(n) decoupling while adopting the increased §179(b) maximum is from firm alerts (BDO, Warren Averett, Aprio), not read from the bill text
- docs/05-tax-reference.md §6 — state conformity shifts yearly — a maintained feed re-checked against current DOR guidance, not a fixed fact
- docs/05a-tax-deep-dive.md §R — year-one add-back signal only; the state-side recovery schedule (state depreciation on the added-back basis) is deferred to the depreciation engine
State conformity shifts from year to year. These figures are maintained against current Department of Revenue guidance, and the citation above is what they were checked against — verify before relying on them for a filing. Model your own year.