No. Pennsylvania 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: 72 P.S. §7401(3)1(r) (CNIT §168(k) decoupling; Act 72 of 2018); 72 P.S. §7303 (PIT net profits computed without §168(k))
Primary source (Pennsylvania DOR): https://www.revenue.pa.gov/FormsandPublications/PAPersonalIncomeTaxGuide/Pages/Income-Loss-Business-Profession-Farm.aspx
Add-back mechanics for STR investors
Pennsylvania Personal Income Tax (PIT) is the tax individual STR investors pay. PA PIT computes net profits from federal Schedule C/E without §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).
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
- Pennsylvania Year-1 state savings: $0 (100% add-back required)
- Deferred state benefit: The $165,000 is recovered on the Pennsylvania 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: ~$5,066 in state tax savings deferred (3.07% × $165,000)
The federal benefit is intact — but Pennsylvania'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 Pennsylvania or considering an out-of-state purchase, the state's conformity status materially affects your Year-1 economics. Pennsylvania'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 Pennsylvania STR candidates before you make an offer
DepreciMax analyzes any listing address and returns a first-year bonus depreciation estimate — factoring in Pennsylvania'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 Pennsylvania'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.