Yes. Texas allows the full federal §168(k) Year-1 bonus depreciation deduction on the state return with no add-back. STR investors get 100% of the federal deduction at both federal and state levels.
Statute citation and primary source
Governing statute: Tex. Const. Art. VIII, §24 (no individual income tax); Tex. Tax Code §171.101 (franchise tax IRC conformity, updated Dec 2025)
Primary source (Texas DOR): https://comptroller.texas.gov/about/media-center/news/20251201-acting-texas-comptroller-kelly-hancock-updates-franchise-tax-depreciation-rules-to-align-with-federal-provisions-1764005132713
Last material regulatory change: 2025-12-01: Texas Comptroller updated franchise tax depreciation rules to align with OBBBA §168(k) beginning with 2026 report.
Add-back mechanics for STR investors
Texas has no individual income tax. STR investors receive the full federal §168(k) benefit ($55,500 at 37% on $150K). In December 2025, Acting Comptroller Kelly Hancock updated franchise tax depreciation rules to align with OBBBA bonus depreciation, effective with the 2026 franchise tax report — but most individual STRs are below the $2.47M no-tax-due franchise threshold anyway.
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
- Texas state tax savings: $0 (no individual income tax)
- Total Year-1 savings: $61,050 (all federal)
For individuals, the federal deduction stands alone. Texas's absence of a personal income tax means neither the deduction nor any state add-back applies to STR investors filing personally.
What this means for your STR purchase decision
If you're comparing candidate short-term rentals in Texas or considering an out-of-state purchase, the state's conformity status materially affects your Year-1 economics. Texas's full conformity is a plus for the deal.
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 Texas STR candidates before you make an offer
DepreciMax analyzes any listing address and returns a first-year bonus depreciation estimate — factoring in Texas'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 Texas'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.