New Jersey has decoupled from IRS §168(k) for both CBT and Gross Income Tax since 2002 — STR investors lose Year-1 timing benefit at a top rate of 10.75%. For side-by-side context, the 50-state §168(k) conformity overview shows how New Jersey stacks up against every other US jurisdiction.
Modeled on a $150,000 federal §168(k) deduction. Run your own numbers in the Conformity Tool →
New Jersey STR investors keep the full federal IRS §168(k) deduction but must add back 100% on the state return
New Jersey has decoupled from IRS §168(k) since P.L. 2002 c.40. For Gross Income Tax (GIT) — the tax individual STR investors pay — federal bonus depreciation is disallowed and depreciation is recomputed under IRC as of the applicable statutory date. Reported on Form GIT-DEP. On a $150,000 federal bonus deduction, a NJ STR investor at the 10.75% top rate loses ~$16,125 in Year-1 state savings. NJ's high rate + full decoupling = one of the largest state timing hits nationally.
The New Jersey 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 New Jersey against any other state at any federal deduction amount.
Analyze a specific New Jersey property
Run any New Jersey STR listing through DepreciMax's $99 property report — line-item finish classification, calibrated to a formal cost seg study, includes New Jersey-specific state impact math.
Frequently asked questions
Does New Jersey conform to federal §168(k) bonus depreciation in 2026?
New Jersey is decoupled from federal §168(k) bonus depreciation. New Jersey has decoupled from IRS §168(k) for both CBT and Gross Income Tax since 2002 — STR investors lose Year-1 timing benefit at a top rate of 10.75%.
What is the New Jersey bonus depreciation add-back rule?
New Jersey requires a 100% add-back of the federal §168(k) deduction on the New Jersey state return. New Jersey has decoupled from IRS §168(k) since P.L. 2002 c.40. For Gross Income Tax (GIT) — the tax individual STR investors pay — federal bonus depreciation is disallowed and depreciation is recomputed under IRC as of the applicable statutory date. Reported on Form GIT-DEP. On a $150,000 federal bonus deduction, a NJ STR investor at the 10.75% top rate loses ~$16,125 in Year-1 state savings. NJ's high rate + full decoupling = one of the largest state timing hits nationally.
How much does New Jersey non-conformity cost a short-term rental investor?
On a $150,000 federal §168(k) deduction with New Jersey's 10.75% top marginal income tax and 100% state add-back, the Year-1 state tax miss is approximately $16,125. 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 New Jersey non-conformity kill the short-term rental loophole?
No. The STR loophole is a federal §469 mechanism. New Jersey'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 New Jersey 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 →