No. New York does not conform to federal §168(k) bonus depreciation. STR investors take the full federal Year-1 deduction but must add back the entire amount on the state return, recovering the state depreciation over the property's normal life (5, 15, or 27.5 years).
Statute citation and primary source
Governing statute: N.Y. Tax Law §612(b)(8) (PIT addition A-209); §612(c)(15) (PIT subtraction S-213); Form IT-398
Primary source (New York DOR): https://www.tax.ny.gov/forms/n-notices/n-26-1.htm
Last material regulatory change: 2026 (FY 2026-27 budget): NY decoupled from OBBBA §168(n) qualified production property; §168(k) decoupling from 2003 unchanged.
Add-back mechanics for STR investors
New York has decoupled from §168(k) since 2003 for both individual and corporate purposes, with narrow exceptions for Resurgence Zone and Liberty Zone property. Individuals report add-back on Form IT-225 using code A-209 and take state depreciation on Form IT-398. On a $150,000 federal bonus deduction, a NY STR investor at 10.9% top rate loses ~$16,350 in Year-1 state savings. NYC adds another 3.876% top rate (via NYC-1127 / IT-201 city tax) — total effective loss ~$22,164 in NYC. The 2026-2027 NY budget also decoupled from OBBBA's §168(n) qualified production property provisions.
Worked example: $750K short-term rental
Assume a $750,000 STR with a 22% bonus-eligible % — a typical median for the DepreciMax 50-market Study — producing a $165,000 federal §168(k) Year-1 deduction.
- Federal tax savings at 37% bracket: $165,000 × 37% = $61,050
- New York Year-1 state savings: $0 (100% add-back required)
- Deferred state benefit: The $165,000 is recovered on the New York return over the property's normal life (5, 15, or 27.5 years depending on the classification), not in Year 1
- Year-1 timing "cost" vs. full conformity: ~$17,985 in state tax savings deferred (10.90% × $165,000)
The federal benefit is intact — but New York's decoupling means the state timing benefit is spread over decades instead of concentrated in Year 1. Whether that changes the deal economics depends on the investor's cost of capital and hold period.
What this means for your STR purchase decision
If you're comparing candidate short-term rentals in New York or considering an out-of-state purchase, the state's conformity status materially affects your Year-1 economics. New York's decoupling means the state timing benefit is deferred over decades — factor this into your cost-of-capital analysis, especially for shorter hold periods.
DepreciMax's state conformity tool lets you plug in a federal §168(k) deduction and see the full state impact for any of the 50 states plus DC — and our property search ranks active STR listings by their estimated Year-1 bonus depreciation potential.
Screen your New York STR candidates before you make an offer
DepreciMax analyzes any listing address and returns a first-year bonus depreciation estimate — factoring in New York's conformity status and top marginal rate.
Search a Market — Free →How this page is maintained
Every field on this page — conformity status, add-back percentage, top marginal rate, statute citation, primary-source URL — is pulled from the DepreciMax state conformity dataset (CC BY 4.0 licensed), which is verified against New York's Department of Revenue on a quarterly cadence. The verified-as-of date above reflects the last time this specific state was cross-checked against a primary source. If you spot an inaccuracy, email [email protected] and we'll re-verify within 48 hours.
Not tax advice. This page is educational research. Consult a qualified CPA before making tax-driven purchase decisions. Rates and rules change; verify against the primary source linked above before filing.