Mississippi fully conforms to federal §168(k) beginning tax year 2023 — STR investors get 100% of the federal bonus deduction on the Mississippi return with no add-back. Federal and state savings stack for property acquired and placed in service after January 19, 2025. Mississippi's 4.0% flat rate adds a modest but real extra layer of Year-1 tax relief. Visit the full state conformity hub to compare Mississippi's treatment to every other US jurisdiction.
Modeled on a $150,000 federal §168(k) deduction. Run your own numbers in the Conformity Tool →
How Mississippi adopts §168(k) — the depreciation conformity mechanic
Mississippi's depreciation conformity was updated in 2023 to align with federal §168(k). Before that update, Mississippi required non-conformity adjustments for federal bonus depreciation — a pain point for real estate investors. The 2023 change under Miss. Code Ann. §27-7-17 brought Mississippi into full conformity, and that treatment continues.
When Congress restored 100% bonus depreciation permanently under the One Big Beautiful Bill Act (OBBBA, P.L. 119-21) for property acquired and placed in service after January 19, 2025, Mississippi's conformity flowed through. STR investors claim the deduction on the federal return and the same amount on the Mississippi return — no separate depreciation schedule.
Worked example — $150,000 federal deduction plus extra Mississippi savings
Consider a Mississippi STR investor with a $150,000 Year-1 §168(k) deduction on a short-term rental acquired and placed in service after January 19, 2025. Assume the investor is in the 37% federal bracket and pays Mississippi's 4.0% flat individual income tax.
| Line | Amount | Notes |
|---|---|---|
| Federal §168(k) deduction | $150,000 | OBBBA 100% bonus |
| Federal Y1 tax savings @ 37% | $55,500 | Ordinary bracket |
| Mississippi state deduction | $150,000 | Full conformity, no add-back |
| Mississippi Y1 state tax savings @ 4.0% | $6,000 | Flat rate (2026) |
| Total Year-1 combined savings | $61,500 | Federal + Mississippi |
Because Mississippi conforms cleanly to federal treatment, there are no basis differences to track and no separate depreciation schedule to maintain across the property's holding period.
The statute explained
The controlling Mississippi authority is Miss. Code Ann. §27-7-17, the depreciation conformity statute updated in 2023 to align Mississippi with federal §168(k) treatment. The Mississippi Department of Revenue confirms full conformity in its individual income tax forms and instructions.
How Mississippi compares to decoupled states
The contrast with decoupled Southeast neighbors is significant. In Georgia, an STR investor with the same $150,000 federal deduction adds back the entire amount on the state return — giving up roughly $7,785 in Year-1 state tax savings at Georgia's 5.19% flat rate. California, New York, Pennsylvania, and about two dozen other jurisdictions impose similar 100% add-backs.
Mississippi investors face none of that. The federal deduction flows through unchanged, and the extra $6,000 in state savings stacks on top of the federal $55,500. To compare Mississippi against any decoupled state at any deduction amount, use the state conformity tool.
What this means for your STR purchase decision
Mississippi's full conformity is a real underwriting advantage. When you're evaluating a Gulf Coast, Oxford, or Jackson-area STR purchase, you can price in both federal and state Year-1 tax savings at underwriting — not just the federal deduction. On a mid-sized property with $150,000 in bonus-eligible components, that's an extra $6,000 in first-year cash flow.
The qualifier: the property must be acquired and placed in service after January 19, 2025 to qualify for OBBBA's 100% federal bonus. Pre-January 19, 2025 acquisitions fall under the earlier phaseout schedule.
Before you make an offer, run the address on your property to see the calibrated Year-1 bonus-eligible dollar amount — DepreciMax reports classify every finish as 5-year, 15-year, or 39-year and quantify the federal plus Mississippi state savings.
Analyze a specific Mississippi property
Run any Mississippi STR listing through DepreciMax's $99 property report — line-item finish classification with Mississippi-specific state impact math.
Frequently asked questions
Do I get bonus depreciation on both my federal and Mississippi return?
Yes. Mississippi conformed to federal §168(k) beginning with tax year 2023 under Miss. Code Ann. §27-7-17. STR investors claim the full federal 100% bonus deduction, and it flows through to the Mississippi return with no add-back. For property acquired and placed in service after January 19, 2025, OBBBA's permanent 100% bonus applies at both the federal and Mississippi levels.
What is Mississippi's individual income tax rate?
Mississippi has a flat 4.0% individual income tax rate for 2026 and is scheduled to phase the rate down further in coming years. On a $150,000 federal §168(k) deduction, a Mississippi STR investor picks up $6,000 in additional Year-1 state tax savings on top of the federal deduction.
Does Mississippi plan to change its §168(k) conformity in 2026?
No public legislation is pending to decouple Mississippi from federal §168(k) for 2026. The 2023 conformity move brought Mississippi into line with federal treatment, and the state has not signaled a reversal. The flat rate is scheduled to phase down further, which would slightly reduce (but not eliminate) the extra state benefit over time.
What happens on sale — does Mississippi recapture bonus depreciation?
Mississippi follows federal basis and federal §1245 / §1250 recapture rules because the state allows the full federal §168(k) deduction. There is no separate Mississippi recapture calculation for bonus depreciation; recapture flows through federal AGI to Mississippi taxable income unchanged.
Does Mississippi conformity apply to §179 as well?
Yes. Mississippi conforms to federal §179 expensing at the federal cap without a separate state limit. STR investors can layer §179 (for qualifying tangible personal property) on top of §168(k) at both the federal and Mississippi levels, subject to federal §179 income limits.
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 →