California does not conform to federal §168(k) bonus depreciation — STR investors get the full federal deduction with a 100% California add-back; SB 711 (Oct 2025) moved conformity to IRC Jan 1 2025 but explicitly excluded OBBBA. Cross-reference our all-50-states conformity guide to see how California lines up against every other US jurisdiction.
Modeled on a $150,000 federal §168(k) deduction. Run your own numbers in the Conformity Tool →
California STR investors keep the full federal IRS §168(k) deduction but must add back 100% on the state return
SB 711 (enacted October 1, 2025) advanced California's IRC conformity date from 1/1/2015 to 1/1/2025, but explicitly does not include OBBBA (P.L. 119-21). California continues to disallow IRS §168(k) for both PIT and CT purposes. On a $150,000 federal bonus deduction, a California STR investor at the 13.3% top marginal rate misses ~$19,950 in Year-1 state tax savings (the largest miss in the country). The federal deduction is unaffected. Recover deductions over MACRS life on state return. FTB Publication 1001 documents the modification.
The California statute and DOR authority
The bigger picture: §168(k) is one lever in a broader accelerated-depreciation strategy. See our accelerated depreciation explained guide for how MACRS, §168(k), and §179 stack for a real estate investor.
How this compares nationally
Of the 50 US states plus DC, 25 conform fully to federal §168(k), 2 (Minnesota and North Carolina) are partial conformers, and 24 are decoupled. See the full comparison in the 50-state conformity hub, or use the interactive Conformity Tool to compare California against any other state at any federal deduction amount.
Analyze a specific California property
Run any California STR listing through DepreciMax's $99 property report — line-item finish classification, calibrated to a formal cost seg study, includes California-specific state impact math.
Frequently asked questions
Does California conform to federal §168(k) bonus depreciation in 2026?
California is decoupled from federal §168(k) bonus depreciation. California does not conform to federal §168(k) bonus depreciation — STR investors get the full federal deduction with a 100% California add-back; SB 711 (Oct 2025) moved conformity to IRC Jan 1 2025 but explicitly excluded OBBBA.
What is the California bonus depreciation add-back rule?
California requires a 100% add-back of the federal §168(k) deduction on the California state return. SB 711 (enacted October 1, 2025) advanced California's IRC conformity date from 1/1/2015 to 1/1/2025, but explicitly does not include OBBBA (P.L. 119-21). California continues to disallow IRS §168(k) for both PIT and CT purposes. On a $150,000 federal bonus deduction, a California STR investor at the 13.3% top marginal rate misses ~$19,950 in Year-1 state tax savings (the largest miss in the country). The federal deduction is unaffected. Recover deductions over MACRS life on state return. FTB Publication 1001 documents the modification.
How much does California non-conformity cost a short-term rental investor?
On a $150,000 federal §168(k) deduction with California's 13.30% top marginal income tax and 100% state add-back, the Year-1 state tax miss is approximately $19,950. The federal Year-1 deduction of $150,000 is unaffected, producing ~$55,500 in federal Year-1 savings at the 37% federal bracket regardless of state.
Does California non-conformity kill the short-term rental loophole?
No. The STR loophole is a federal §469 mechanism. California's add-back rule only changes state-level Year-1 timing. The federal deduction and the federal STR loophole benefit are unaffected — an investor in California still captures the full federal Year-1 bonus depreciation deduction and can still offset W-2 income at the federal level.
Every state's §168(k) position, in one place
Interactive map, sortable table, and deep-dive guide for each of the 51 jurisdictions — post-OBBBA verified.
See the 50-state map →