Pennsylvania decouples from IRS §168(k) for both PIT and CNIT — Act 72 (2018) fixed CNIT recovery mechanics, but PIT still has no bonus depreciation. Compare Pennsylvania's treatment to every other US jurisdiction in the complete state-by-state conformity map.
Modeled on a $150,000 federal §168(k) deduction. Run your own numbers in the Conformity Tool →
Pennsylvania STR investors keep the full federal IRS §168(k) deduction but must add back 100% on the state return
Pennsylvania Personal Income Tax (PIT) is the tax individual STR investors pay. PA PIT computes net profits from federal Schedule C/E without IRS §168(k) bonus depreciation — depreciation is recalculated under §§167 and 168 without bonus. Act 72 (2018) fixed CNIT depreciation timing for corporate taxpayers but PIT treatment is unchanged. On a $150,000 federal bonus deduction, a PA STR investor at the 3.07% flat rate loses ~$4,605 in Year-1 state savings. Philadelphia BIRT also decouples separately (following state approach).
The Pennsylvania 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 Pennsylvania against any other state at any federal deduction amount.
Analyze a specific Pennsylvania property
Run any Pennsylvania STR listing through DepreciMax's $99 property report — line-item finish classification, calibrated to a formal cost seg study, includes Pennsylvania-specific state impact math.
Frequently asked questions
Does Pennsylvania conform to federal §168(k) bonus depreciation in 2026?
Pennsylvania is decoupled from federal §168(k) bonus depreciation. Pennsylvania decouples from IRS §168(k) for both PIT and CNIT — Act 72 (2018) fixed CNIT recovery mechanics, but PIT still has no bonus depreciation.
What is the Pennsylvania bonus depreciation add-back rule?
Pennsylvania requires a 100% add-back of the federal §168(k) deduction on the Pennsylvania state return. Pennsylvania Personal Income Tax (PIT) is the tax individual STR investors pay. PA PIT computes net profits from federal Schedule C/E without IRS §168(k) bonus depreciation — depreciation is recalculated under §§167 and 168 without bonus. Act 72 (2018) fixed CNIT depreciation timing for corporate taxpayers but PIT treatment is unchanged. On a $150,000 federal bonus deduction, a PA STR investor at the 3.07% flat rate loses ~$4,605 in Year-1 state savings. Philadelphia BIRT also decouples separately (following state approach).
How much does Pennsylvania non-conformity cost a short-term rental investor?
On a $150,000 federal §168(k) deduction with Pennsylvania's 3.07% flat income tax and 100% state add-back, the Year-1 state tax miss is approximately $4,605. 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 Pennsylvania non-conformity kill the short-term rental loophole?
No. The STR loophole is a federal §469 mechanism. Pennsylvania'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 Pennsylvania 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 →