Bonus depreciation in Oregon
No — Oregon does not follow the federal bonus depreciation rules. 100% of the federal bonus deduction is added back to your Oregon 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
CHANGED FOR 2026 — Oregon newly decoupled. SB 1507, signed April 9, 2026, advanced Oregon's IRC connection date from Dec. 31, 2023 to Dec. 31, 2025 but simultaneously disallowed §168(k). Section 7 adds to federal taxable income the difference between the §168(k) deduction allowable for the tax year and the deduction allowable under §168(k) as amended and in effect on Dec. 1, 2017; because that pre-TCJA version grants no bonus for property placed in service after 2019, the practical add-back for 2026 property is the entire federal bonus. It applies to property placed in service in tax years beginning on or after Jan. 1, 2026, and is recovered by a corresponding subtraction over the asset's remaining depreciable life (normal MACRS). §179 was not decoupled and still follows the federal cap. Oregon also did not decouple from §168(n) qualified production property — irrelevant to residential STR. A cost-segregation study on an Oregon STR placed in service in 2026 now produces a large federal/Oregon timing gap where 2025 had none.
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 Oregon return
- $250,000
- Oregon 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 Oregon allow bonus depreciation?
- No — Oregon does not follow the federal bonus depreciation rules. 100% of the federal bonus deduction is added back to your Oregon 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. CHANGED FOR 2026 — Oregon newly decoupled. SB 1507, signed April 9, 2026, advanced Oregon's IRC connection date from Dec. 31, 2023 to Dec. 31, 2025 but simultaneously disallowed §168(k). Section 7 adds to federal taxable income the difference between the §168(k) deduction allowable for the tax year and the deduction allowable under §168(k) as amended and in effect on Dec. 1, 2017; because that pre-TCJA version grants no bonus for property placed in service after 2019, the practical add-back for 2026 property is the entire federal bonus. It applies to property placed in service in tax years beginning on or after Jan. 1, 2026, and is recovered by a corresponding subtraction over the asset's remaining depreciable life (normal MACRS). §179 was not decoupled and still follows the federal cap. Oregon also did not decouple from §168(n) qualified production property — irrelevant to residential STR. A cost-segregation study on an Oregon STR placed in service in 2026 now produces a large federal/Oregon timing gap where 2025 had none.
Sources
- Oregon Dep't of Revenue, 2026 Summary of Legislation — SB 1507 — Read directly. States SB 1507 "disconnects Oregon tax laws from some of the federal tax code changes" and "disallows bonus depreciation for tax years 2026 and later," with other federal connections updated to Dec. 31, 2025 / Jan. 1, 2026. The bill is listed under both the Business Division and t
- Or. Laws 2026, SB 1507 § 7 (enrolled) — Add-back language, obtained via search of the enrolled text (OLIS was unreachable from this network, so the bill text itself was NOT read end-to-end): "there shall be added to federal taxable income for Oregon tax purposes the difference between the amount allowable as a deduction under Section 168
- 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.