Bonus depreciation in Wisconsin
No — Wisconsin does not follow the federal bonus depreciation rules. 100% of the federal bonus deduction is added back to your Wisconsin 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
Wisconsin allows NO §168(k) bonus depreciation for individual income tax — 100% add-back in year one. Two separate conformity locks: general IRC conformity is static at December 31, 2022, and depreciation specifically is computed under the IRC in effect on January 1, 2014 (Wis. Stat. §71.98(3)), so neither TCJA's phased bonus nor OBBBA's permanent 100% bonus (P.L. 119-21 §70301) reaches Wisconsin — the 2025 Schedule I instructions list the OBBBA provision by name and then say it does not apply. Recovery is not a fixed multi-year add-back schedule: the taxpayer adds back total federal depreciation on Schedule I line 1b and subtracts depreciation recomputed on the (higher) Wisconsin basis on line 2b, every year until the asset is fully depreciated or disposed of, with any residual basis difference trued up as a gain/loss adjustment on sale. §179 is the exception and the practical workaround — Wis. Stat. §71.98(4) adopts IRC §§179–179E as in effect for the taxable year, and DOR confirms Wisconsin follows the same federal maximum dollar and business-income limitations, so a cost-seg STR owner can often shift 5/7/15-year personal property into §179 (subject to the active-trade-or-business requirement) even though bonus is fully disallowed.
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 Wisconsin return
- $250,000
- Wisconsin 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 Wisconsin allow bonus depreciation?
- No — Wisconsin does not follow the federal bonus depreciation rules. 100% of the federal bonus deduction is added back to your Wisconsin 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. Wisconsin allows NO §168(k) bonus depreciation for individual income tax — 100% add-back in year one. Two separate conformity locks: general IRC conformity is static at December 31, 2022, and depreciation specifically is computed under the IRC in effect on January 1, 2014 (Wis. Stat. §71.98(3)), so neither TCJA's phased bonus nor OBBBA's permanent 100% bonus (P.L. 119-21 §70301) reaches Wisconsin — the 2025 Schedule I instructions list the OBBBA provision by name and then say it does not apply. Recovery is not a fixed multi-year add-back schedule: the taxpayer adds back total federal depreciation on Schedule I line 1b and subtracts depreciation recomputed on the (higher) Wisconsin basis on line 2b, every year until the asset is fully depreciated or disposed of, with any residual basis difference trued up as a gain/loss adjustment on sale. §179 is the exception and the practical workaround — Wis. Stat. §71.98(4) adopts IRC §§179–179E as in effect for the taxable year, and DOR confirms Wisconsin follows the same federal maximum dollar and business-income limitations, so a cost-seg STR owner can often shift 5/7/15-year personal property into §179 (subject to the active-trade-or-business requirement) even though bonus is fully disallowed.
Sources
- Wis. Dept. of Revenue, 2025 Wisconsin Schedule I Instructions (Form I-128, R. 12-25), "Other Differences Between Federal and Wisconsin Law," item 1 (Depreciation-related Provisions) — Item 1(a)(i) recites the federal rule that "For property placed in service after January 19, 2025, 100% of all qualified property may be expensed under sec. 168(k), IRC. (Section 70301 of Public Law 119-21)." Item 1(b) then states: "Wisconsin – These provisions do not apply for Wisconsin. Depreci
- Wis. Dept. of Revenue, 2025 Schedule I Instructions, "Lines 1b and 2b - Depreciation" and "Who Must File" — Recovery mechanics: "you must first add back your federal depreciation by entering the federal amount on line 1b of Schedule I. You may then subtract the revised depreciation allowed for Wisconsin on line 2b." And: "An additional adjustment on Schedule I is required each year until the asset is f
- 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.