This is a common surprise — Idaho generally has rolling IRC conformity but has statutorily excluded §168(k) since 2001 via Idaho Code §63-3004. STR investors claiming federal bonus must compute Idaho depreciation as if §168(k) did not exist and report the difference on Form DBDA (Deferred Bonus Depreciation Addition). At Idaho's 5.3% flat rate, the Year-1 state miss on a $150,000 federal deduction is ~$7,950. See the full 50-state conformity map to compare Idaho's treatment to every other US jurisdiction.
Modeled on a $150,000 federal §168(k) deduction. Run your own numbers in the Conformity Tool →
Four Idaho STR markets rank in the DepreciMax Top 50 — the state carve-out surprises investors
The DepreciMax 2026 STR Bonus Depreciation Study ranks 197 US STR markets by median bonus-eligible percentage. Idaho punches well above its population weight, contributing four markets to the Top 50:
- Driggs, ID (#7) — Teton Valley cabin market on the west slope of the Tetons. Very low land ratios (large lots with modest raw-land value), heavy 15-year land-improvement density on newer builds.
- McCall, ID (#37) — Payette Lake resort market. Cabin and lakefront property with dock and boathouse content adding to 15-year land improvements.
- Coeur d'Alene, ID (#39) — Panhandle lake market. Mix of urban and lakefront STRs; higher land ratios than Driggs but strong FF&E density on furnished rentals.
- Sandpoint, ID (#49) — Lake Pend Oreille resort market. Similar profile to Coeur d'Alene with slightly lower land ratios.
Every one of these investors gets the same surprise on Form 40: Idaho quietly decouples from §168(k) despite otherwise rolling IRC conformity. The federal §168(k) deduction is unaffected — the Idaho state layer requires an add-back on Form DBDA.
Idaho Code §63-3004 — the quiet §168(k) carve-out
Idaho Code §63-3004 defines Idaho's IRC conformity for income tax purposes. Idaho is technically a "rolling" conformity state — it adopts the IRC as amended, without needing legislative action each year. But §63-3004 contains an explicit §168(k) exception that has been in place since 2001.
The practical effect: Idaho updates for every other IRC change automatically, but §168(k) is a permanent statutory carve-out. When TCJA restored 100% bonus in 2017, Idaho did not follow. When TCJA started phasing bonus down in 2023, Idaho was already at 0%. When OBBBA restored 100% bonus permanently in July 2025, Idaho again did not follow. The §168(k) exception in §63-3004 is the reason.
The Idaho State Tax Commission's Form DBDA (Deferred Bonus Depreciation Addition) is the compliance mechanism. Taxpayers compute Idaho depreciation as if §168(k) did not exist, report the current-year addition on Form DBDA, and take subsequent-year subtractions on the same form as Idaho depreciation catches up.
How much the Idaho add-back costs at three deduction sizes
Idaho's flat 5.3% rate applies uniformly, so the Year-1 state miss scales linearly. Three example STR purchase scenarios across the four Top-50 Idaho markets:
| Federal §168(k) deduction | Federal Y1 savings (37%) | ID Y1 state miss (5.3%) | Combined Y1 net |
|---|---|---|---|
| $50,000 (small Sandpoint cabin, ~$250K purchase) | $18,500 | -$2,650 | $15,850 |
| $150,000 (mid-tier Driggs / McCall, ~$700K) | $55,500 | -$7,950 | $47,550 |
| $500,000 (luxury Coeur d'Alene lakefront, ~$1.7M) | $185,000 | -$26,500 | $158,500 |
The Year-1 state miss is deferred, not lost. Idaho depreciation exceeds federal in years 2 through the property's MACRS life and the taxpayer recovers the deferred deduction as a Form DBDA subtraction. Run any purchase price through the Idaho Conformity Tool.
The "rolling conformity" trap — why Idaho catches investors off-guard
Investors and even some CPAs mistakenly assume that rolling-IRC-conformity states automatically adopt all federal depreciation provisions. The reality is more nuanced. Several rolling-conformity states have statutory carve-outs for specific IRC sections:
- Idaho — rolling IRC, but §63-3004 excludes §168(k). Add-back required via Form DBDA at 5.3%.
- South Carolina — rolling IRC via §12-6-40, but §12-6-50 lists §168(k) as an unadopted section. Add-back required at 6.0% top rate.
- Arizona — rolling IRC, but A.R.S. §43-1021/§43-1022 requires the taxpayer to elect out of §168(k). Effective 100% add-back at 2.5% flat.
- Georgia — recently-advanced IRC conformity (HB 1162), but O.C.G.A. §48-7-21(b)(9) retains the §168(k) exclusion. See the Georgia conformity guide.
Full-conformity is only "full" if there's no statutory carve-out. Idaho is the canonical example of a rolling-conformity state where the §168(k) exception matters — and where the Form DBDA compliance burden lands on the investor every year the property is held.
What OBBBA did NOT do for Idaho
OBBBA (P.L. 119-21, July 2025) restored 100% federal §168(k) permanently for property placed in service on or after January 19, 2025. That flowed automatically through pure rolling-conformity states without §168(k) carve-outs (Colorado, Utah, Kansas). Idaho's §63-3004 §168(k) exception operates independently of the conformity date, so OBBBA does not reach Idaho returns.
The precedent for a state affirmatively excluding OBBBA is California's SB 711 (October 2025) — see the California conformity guide. Idaho didn't need a similar bill because §63-3004 already does the work. The 2001 carve-out has been stable through 25 years of federal §168(k) changes.
Practical mechanics — filing Idaho Form 40 with bonus depreciation
The Idaho depreciation workflow for a §168(k)-claiming STR investor:
- Claim federal §168(k) on federal Form 4562 as normal. This drives the federal Schedule E loss that offsets W-2 income under the STR loophole.
- Recompute depreciation for Idaho purposes as if §168(k) did not exist. Depreciable life remains the same as federal.
- Report the difference (federal depreciation minus Idaho depreciation) as an addition modification on Idaho Form DBDA in Year 1.
- Carry Form DBDA forward every year the property is held. In subsequent years when Idaho depreciation exceeds federal, report the excess as a Form DBDA subtraction.
- Track state-federal basis differences for disposition. Idaho capital gain/loss on sale must be recalculated using the Idaho basis.
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.
Related state conformity guides
- Kentucky conformity guide
- California conformity guide
- Georgia conformity guide
- 50-state conformity hub
Model Idaho at any deduction size
Free interactive tool — pick Idaho, adjust the federal deduction amount, see the Form DBDA state miss.
Open the Conformity Tool →Analyze a Driggs or Coeur d'Alene listing
DepreciMax's $99 property report — line-item finish classification with Idaho-specific state impact math.
Analyze a property →Frequently asked questions
Does Idaho conform to federal §168(k) bonus depreciation in 2026?
No. Idaho generally has rolling IRC conformity but has statutorily excluded §168(k) since 2001 via Idaho Code §63-3004. STR investors must compute Idaho depreciation as if §168(k) did not exist and report the difference on Form DBDA.
Did OBBBA change Idaho's bonus depreciation treatment?
No. Idaho's §168(k) exclusion is a standing statutory carve-out that operates independently of the conformity date. OBBBA does not flow through to Idaho returns.
How much does Idaho non-conformity cost a Driggs or McCall STR investor?
On a $150,000 federal §168(k) deduction, an Idaho STR investor at the 5.3% flat rate misses ~$7,950 in Year-1 state tax savings. Federal savings of ~$55,500 at the 37% bracket are unaffected.
Which Idaho STR markets are in the DepreciMax Top 50?
Driggs (#7), McCall (#37), Coeur d'Alene (#39), and Sandpoint (#49). All four face Idaho's 100% §168(k) add-back at 5.3%.
What is Idaho Form DBDA?
Idaho's Deferred Bonus Depreciation Addition schedule. Taxpayers claiming federal §168(k) compute Idaho depreciation as if §168(k) did not exist and report the difference on Form DBDA — with subsequent-year subtractions on the same form when Idaho depreciation exceeds federal.
What is the Idaho statute for §168(k) non-conformity?
Idaho Code §63-3004, which defines Idaho's IRC conformity with an explicit §168(k) exception in place since 2001.
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 →