Minnesota is a partial conformer — 80% of federal §168(k) must be added back in Year 1, then 1/5 of the addback recovered each year over the next 5 years. For side-by-side context, the 50-state §168(k) conformity overview shows how Minnesota stacks up against every other US jurisdiction.
Modeled on a $150,000 federal §168(k) deduction. Run your own numbers in the Conformity Tool →
Minnesota STR investors keep the full federal IRS §168(k) deduction but must add back 80% on the state return, recovered over 5 years
Minnesota requires an 80% add-back of federal §168(k) bonus depreciation in the year claimed, allowing 20% state deduction in Year 1. The 80% addback is recovered by subtracting 20% (i.e., 16% of original bonus) in each of the 5 succeeding years. On a $150,000 federal bonus deduction, a Minnesota STR investor gets $30,000 state deduction in Year 1 (worth ~$2,955 at 9.85%) and defers ~$11,820 in state savings over years 2-6. The 2026 Omnibus Tax Bill preserves this treatment; qualified production property is excluded from the addback.
The Minnesota 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 Minnesota against any other state at any federal deduction amount.
Analyze a specific Minnesota property
Run any Minnesota STR listing through DepreciMax's $99 property report — line-item finish classification, calibrated to a formal cost seg study, includes Minnesota-specific state impact math.
Frequently asked questions
Does Minnesota conform to federal §168(k) bonus depreciation in 2026?
Minnesota partially conforms to federal §168(k) bonus depreciation. Minnesota is a partial conformer — 80% of federal §168(k) must be added back in Year 1, then 1/5 of the addback recovered each year over the next 5 years.
What is the Minnesota bonus depreciation add-back rule?
Minnesota requires a 80% add-back of the federal §168(k) deduction on the Minnesota state return. Minnesota requires an 80% add-back of federal §168(k) bonus depreciation in the year claimed, allowing 20% state deduction in Year 1. The 80% addback is recovered by subtracting 20% (i.e., 16% of original bonus) in each of the 5 succeeding years. On a $150,000 federal bonus deduction, a Minnesota STR investor gets $30,000 state deduction in Year 1 (worth ~$2,955 at 9.85%) and defers ~$11,820 in state savings over years 2-6. The 2026 Omnibus Tax Bill preserves this treatment; qualified production property is excluded from the addback.
How much does Minnesota non-conformity cost a short-term rental investor?
On a $150,000 federal §168(k) deduction with Minnesota's 9.85% top marginal income tax and 80% state add-back, the Year-1 state tax miss is approximately $11,820. 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 Minnesota non-conformity kill the short-term rental loophole?
No. The STR loophole is a federal §469 mechanism. Minnesota'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 Minnesota 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 →