Bonus depreciation in Idaho
No — Idaho does not follow the federal bonus depreciation rules. 100% of the federal bonus deduction is added back to your Idaho 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
Idaho is fully decoupled from §168(k) and stayed decoupled after OBBBA: H.B. 559 (signed Feb. 10, 2026) advanced the IRC conformity date to Jan. 1, 2026 but expressly preserved the bonus-depreciation exception, so 100% of the federal bonus is added back in year one; Idaho then recomputes depreciation on the un-reduced basis and the taxpayer takes annual subtractions over the asset's remaining recovery period (and on disposition, via a different Idaho basis), but the subtractions are forfeited entirely if the year-one addition was never made. §179 is not among the Idaho decoupling adjustments in §63-3022O, so Idaho follows the federal §179 dollar cap — this is the weaker leg of the row, inferred from statutory absence plus Tax Commission guidance rather than a line-item read of the full §63-3022 modification list.
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 Idaho return
- $250,000
- Idaho 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 Idaho allow bonus depreciation?
- No — Idaho does not follow the federal bonus depreciation rules. 100% of the federal bonus deduction is added back to your Idaho 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. Idaho is fully decoupled from §168(k) and stayed decoupled after OBBBA: H.B. 559 (signed Feb. 10, 2026) advanced the IRC conformity date to Jan. 1, 2026 but expressly preserved the bonus-depreciation exception, so 100% of the federal bonus is added back in year one; Idaho then recomputes depreciation on the un-reduced basis and the taxpayer takes annual subtractions over the asset's remaining recovery period (and on disposition, via a different Idaho basis), but the subtractions are forfeited entirely if the year-one addition was never made. §179 is not among the Idaho decoupling adjustments in §63-3022O, so Idaho follows the federal §179 dollar cap — this is the weaker leg of the row, inferred from statutory absence plus Tax Commission guidance rather than a line-item read of the full §63-3022 modification list.
Sources
- Idaho Code § 63-3022O (Adjustment — Property Acquired After September 10, 2001) — "the adjusted basis of depreciable property, depreciation, and gains and losses from sale, exchange, or other disposition of depreciable property acquired after December 31, 2009, shall be computed without regard to subsection (k) of section 168" — read via FindLaw's reproduction of the Idaho Code
- Idaho Admin. Code r. 35.01.01.125 (IDAPA 35.01.01.125), Adjustments to Taxable Income — Bonus Depreciation — Confirms the mechanics: year-one addition of the full federal bonus, then "in the subsequent taxable years the taxpayer is entitled to the Idaho subtractions for the additional depreciation computed for Idaho income tax purposes that exceeds the amount of depreciation claimed for federal income tax
- 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.