The State of Bonus Depreciation
in US Short-Term Rentals — 2026
Findings from the DepreciMax STR Bonus Depreciation Market Study — the first national analysis to rank US short-term rental markets by federal IRS §168(k) bonus depreciation potential, per market and per listing.
This is the DepreciMax STR Bonus Depreciation Market Study — to our knowledge, the first national analysis to rank US short-term rental markets by federal IRS §168(k) bonus depreciation potential, per market and per listing. Every one of the 197 US STR markets in the 2026-07-18 snapshot is scored by combining assessor-grade land value ratios, active listing amenity signals, and full state §168(k) conformity treatment. The headline result is the ranking below: the Top 50 US STR markets where the federal tax math actually clears the bar that changes a purchase decision. Everything else in this Preview Edition — the national baseline, the famous markets that fail, the conformity map — flows from that same underlying dataset.
The 50 US STR markets where the tax math actually works
Ranked below are the 50 US STR markets that clear the medal thresholds — the Top 50 of the 197 markets analyzed in the 2026 dataset. Each is characterized by low land value ratios (leaving more of the purchase price as depreciable structure), amenity-heavy short-term rental stock, and — with two exceptions — full state §168(k) conformity.
| Rank | Market | Median bonus % |
Median Y1 deduction |
Total tax benefit |
Diamond density |
Conformity |
|---|---|---|---|---|---|---|
| 1 | Lake CumberlandLake · KY | 27.1% | $89,416 | $36,661 | 78% | Full |
| 2 | PoconosMountain · PA | 26.7% | $178,623 | $68,833 | 76% | Partial |
| 3 | BransonMountain · MO | 26.6% | $97,090 | $40,486 | 76% | Full |
| 4 | Angel FireSki · NM | 26.4% | $167,640 | $71,918 | 76% | Full |
| 5 | Broken BowLake · OK | 26.4% | $138,600 | $57,866 | 76% | Full |
| 6 | Winter ParkSki · CO | 26.1% | $736,673 | $304,983 | 81% | Full |
| 7 | Driggs / Teton ValleySki · ID | 26.1% | $346,869 | $148,460 | 73% | Full |
| 8 | Joshua TreeDesert · CA | 25.9% | $102,823 | $38,045 | 69% | Decoupled |
| 9 | Blue Ridge MountainsMountain · GA | 25.8% | $136,069 | $58,170 | 63% | Full |
| 10 | Orlando / KissimmeeUrban · FL | 25.7% | $76,576 | $28,333 | 67% | Full |
| 11 | Table Rock LakeLake · MO | 25.7% | $115,650 | $48,227 | 69% | Full |
| 12 | Hot SpringsMountain · AR | 25.5% | $79,050 | $33,122 | 60% | Full |
| 13 | TannersvilleSki · NY | 25.5% | $146,625 | $54,251 | 81% | Decoupled |
| 14 | EllicottvilleSki · NY | 25.5% | $117,045 | $43,307 | 69% | Decoupled |
| 15 | Hocking HillsMountain · OH | 25.5% | $153,000 | $61,965 | 69% | Full |
| 16 | Vero BeachBeach · FL | 25.3% | $177,100 | $65,527 | 42% | Full |
| 17 | New BraunfelsLake · TX | 24.9% | $130,725 | $48,368 | 62% | Full |
| 18 | Palm Coast / Flagler BeachBeach · FL | 24.9% | $174,300 | $64,491 | 49% | Full |
| 19 | Smoky MountainsMountain · TN | 24.6% | $92,225 | $34,123 | 60% | Full |
| 20 | Myrtle BeachBeach · SC | 24.6% | $100,489 | $43,713 | 44% | Full |
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| 21 | GalvestonBeach · TX | 24.6% | $91,020 | $33,677 | 55% | Full |
| 22 | RuidosoMountain · NM | 24.6% | $92,250 | $39,576 | 62% | Full |
| 23 | Sunday RiverSki · ME | 24.6% | $316,110 | $139,563 | 71% | Full |
| 24 | Lake LanierLake · GA | 24.6% | $106,887 | $45,694 | 57% | Full |
| 25 | Wisconsin DellsLake · WI | 24.5% | $120,050 | $49,011 | 60% | Partial |
| 26 | CodyMountain · WY | 24.3% | $169,857 | $62,847 | 60% | Full |
| 27 | SugarloafSki · ME | 24.3% | $147,987 | $65,336 | 67% | Full |
| 28 | MoabDesert · UT | 24.2% | $169,279 | $70,335 | 49% | Full |
| 29 | Douglas LakeLake · TN | 24.2% | $145,176 | $53,715 | 55% | Full |
| 30 | Hunter MountainSki · NY | 24.0% | $203,760 | $75,391 | 57% | Decoupled |
| 31 | Traverse CityLake · MI | 24.0% | $126,000 | $51,975 | 49% | Full |
| 32 | Las VegasDesert · NV | 23.9% | $143,279 | $53,013 | 52% | Full |
| 33 | PrescottMountain · AZ | 23.9% | $143,400 | $56,643 | 55% | Full |
| 34 | Grand LakeLake · CO | 23.7% | $208,323 | $86,246 | 55% | Full |
| 35 | TaosSki · NM | 23.7% | $142,082 | $60,953 | 55% | Full |
| 36 | Red RiverSki · NM | 23.7% | $164,715 | $70,663 | 55% | Full |
| 37 | McCallSki · ID | 23.7% | $231,075 | $98,900 | 55% | Full |
| 38 | KanabNational Park · UT | 23.7% | $141,963 | $58,985 | 53% | Full |
| 39 | Coeur d'AleneLake · ID | 23.7% | $184,860 | $79,120 | 39% | Full |
| 40 | SavannahUrban · GA | 23.6% | $96,748 | $41,360 | 50% | Full |
| 41 | AshevilleMountain · NC | 23.4% | $127,998 | $47,359 | 46% | Decoupled |
| 42 | KillingtonSki · VT | 23.4% | $217,386 | $99,454 | 52% | Full |
| 43 | Santa FeHistoric · NM | 23.4% | $135,250 | $58,023 | 47% | Full |
| 44 | Red LodgeSki · MT | 23.4% | $163,800 | $70,270 | 52% | Full |
| 45 | WindhamSki · NY | 23.4% | $137,241 | $50,779 | 49% | Decoupled |
| 46 | Williams / Grand CanyonNational Park · AZ | 23.4% | $115,128 | $45,475 | 52% | Full |
| 47 | Palm SpringsDesert · CA | 23.3% | $179,177 | $66,295 | 35% | Decoupled |
| 48 | Finger LakesLake · NY | 23.1% | $94,421 | $34,936 | 49% | Decoupled |
| 49 | SandpointSki · ID | 23.1% | $158,928 | $68,021 | 47% | Full |
| 50 | Kalispell / FlatheadMountain · MT | 23.1% | $144,375 | $61,937 | 49% | Full |
Total tax benefit = federal savings at the 37% top marginal rate + state savings at the state's top marginal rate, applied only where the state conforms to federal §168(k). Partial-conformity states apply half. Decoupled states contribute nothing on top of federal.
The median Year-1 deduction across the Top 50 varies from roughly $77,000 at the low end (Orlando / Kissimmee) to over $736,000 at the high end (Winter Park) — driven almost entirely by median property price, not by underlying tax yield. A Diamond property in Orlando is the same Diamond as a Diamond property in Winter Park; the dollar amount of the deduction just scales with what the buyer paid. The total tax benefit column layers the state effect on top: full-conformity states like Kentucky and Colorado stack a meaningful state deduction onto the federal Year 1; California decouples entirely, so Joshua Tree buyers keep the federal but lose the state add-on.
How the Top 50 breaks down by market type
The same dataset viewed by market category. Each category has a signature amenity profile that repeats across the underlying market pages — the 5-year personal property and 15-year land improvements that drive most of the bonus-eligible total on a per-listing basis. Prevalence numbers below are DepreciMax's estimates of how often each amenity shows up across active listings in the category's Top-50 markets.
Lake
Lake markets are the most consistent category in the Top 50. Rural land keeps the land-ratio component structurally low (typical 12–18%), and the 15-year outdoor amenity stack is where bonus-eligible dollars pile up fastest. Every lake market page tells a similar story: private dock or boat slip, hot tub, fire pit, wraparound decking, outdoor kitchen — all classified as land improvements under IRS §168(k), all 100% bonus-eligible in Year 1.
Common bonus-eligible amenities in lake STRs
Prevalence of 15-year land improvements typically observed across the 10 lake markets in the Top 50 — all 100% bonus-eligible in Year 1 under §168(k):
For offer analysis, the dock is usually the single-largest 15-year line item — $15k–$40k depending on the water body and permit posture — and combined with hot tub, fire pit, and decking, the outdoor stack alone typically pushes past $75k of 15-year property on a mid-tier lake home. That's what turns a good lake purchase into a Diamond property. State conformity is the second lever: Kentucky, Oklahoma, Missouri, Texas, and Georgia are all full-conformity, which is why lake markets in those states rank so high on total tax benefit.
Mountain
Mountain markets share a signature 15-year outdoor amenity profile plus a specific interior stack: wood-burning inserts, decorative timber ceilings, log-style FF&E, and — critically — screened porches and mountain-view decks that classify entirely as 15-year land improvements, not 39-year structural. Cabin architecture, done properly, is one of the most bonus-friendly builds an investor can buy.
Common bonus-eligible amenities in mountain STRs
Prevalence of 15-year land improvements and 5-year interior features typically observed across the 10 mountain markets in the Top 50:
Mountain properties land in the 24–27% bonus-eligible range on median across the category. State conformity is mixed: GA, NC, TN, MO, AR, OH, MT are all full-conformity; PA is partial; NY-adjacent decoupled states drag the total tax benefit of otherwise-strong markets. When comparing two mountain markets, always factor state — a Diamond in Georgia stacks more Year-1 tax benefit than a Diamond in New York, at the same property price.
Ski
Ski is the largest single category in the Top 50, and ski properties are almost universally amenity-heavy. The combination of hot tub + gas fireplace + high-end kitchen finishes shows up in virtually every active listing across the category. The specialty 15-year improvements — heated driveways, snowmelt walkways, ski-storage cubbies with boot warmers — layer additional bonus-eligible dollars on top of the base amenity stack.
Common bonus-eligible amenities in ski STRs
Prevalence across the 15 ski markets in the Top 50 — a mix of 15-year land improvements and 5-year personal property, both 100% bonus-eligible in Year 1:
Ski markets also skew toward newer construction (2015+), which improves the finish grade and shifts more dollars into 5-year personal property. That's why ski markets like Winter Park, Sunday River, and Killington show the highest median Year-1 deductions in the whole Top 50 despite mid-range bonus-eligible percentages — the property prices are simply bigger, so the Diamond percentage translates to a larger dollar figure. Winter Park's $736k median Y1 deduction leads the entire list.
Beach
Beach markets underperform in the Top 50 not because their properties lack amenities, but because coastal land ratios are structurally higher than inland lake or mountain markets. The beach markets that DO clear the Diamond threshold tend to be inland-adjacent — Vero Beach's mainland neighborhoods, Palm Coast's canal properties, Myrtle Beach's inland corridors — rather than direct oceanfront, where land can be 40–55% of purchase price and the depreciable structure share collapses.
Common bonus-eligible amenities in beach STRs
Prevalence across the 4 beach markets in the Top 50 — outdoor amenities are strong; the tax math is limited by land ratio, not by amenity density:
For beach buyers, the practical takeaway from the Study is that market selection matters more than amenity selection. A property with pool, outdoor shower, and lanai in Vero Beach (inland-adjacent, 24% land ratio) will out-yield the same property in Miami Beach (oceanfront, 55% land ratio) at the tax-math level. All four beach markets in the Top 50 are in full-conformity states (FL, SC, TX), which helps — but land ratio is the primary variable.
Desert & National Park
Desert and national-park markets combine into a single category because they share the same amenity DNA: pool + shade combos, xeriscape landscaping, casita structures, dark-sky-friendly exterior lighting, and generous outdoor lounging square footage. Land is cheap in the American desert West — Joshua Tree's median land ratio is 16%, one of the lowest in the Study — so almost the entire purchase price becomes depreciable structure.
Common bonus-eligible amenities in desert & national-park STRs
Prevalence across the 6 desert / national-park markets in the Top 50 — outdoor amenity ceiling is very high on premium builds:
The desert amenity profile has one of the highest per-property ceilings in the Top 50. The case study later in this Study — 3000 Rockwood Rd in Joshua Tree — shows over $354k of 15-year improvements on a single property, driven by pool, ramada, pickleball court, Corten steel fencing, and landscaping. For premium desert builds, the total bonus-eligible dollars can eclipse anything in the ski or lake categories. California's decoupling is the one meaningful drag — Utah, Nevada, and Arizona are all full-conformity, which is why Moab and Kanab pull cleaner state add-ons than Joshua Tree at the same bonus-eligible percentage.
Urban & Historic
Urban and historic markets have structurally higher land ratios and smaller absolute purchase prices than the rural categories — Orlando's median STR runs $76k of Year-1 deduction, one of the lowest in the Top 50. What they lack in dollar magnitude they make up for in accessibility: entry pricing on a bonus-Diamond property is meaningfully lower here than in the ski or lake categories, and full state conformity means every federal dollar carries a state layer on top.
Common bonus-eligible amenities in urban & historic STRs
Prevalence across the 3 urban / historic markets in the Top 50 — amenity mix leans interior (5-year personal property) rather than outdoor 15-year:
For urban and historic STRs, the bonus depreciation math looks compositionally different — less 15-year land improvement, more 5-year personal property. That shifts the mix underneath the Year-1 deduction but not the total. A Diamond in Savannah is still a Diamond: 24%+ bonus-eligible, just with more of the dollars coming from cabinetry, appliances, and finish work than from decks, docks, and pools.
The average US short-term rental is not a bonus depreciation win
Across 197 US short-term rental markets, weighted by active listing volume, the national mean bonus-eligible percentage of purchase price is 19.9%. That is the average outcome: an investor buying an average property in an average US STR market can expect roughly one in five dollars of purchase price to classify as 5-year or 15-year property under IRS §168(k).
The Diamond tier — where the tax math actually starts to move an investment decision — sits at 24% bonus-eligible or higher. That threshold corresponds to the weighted 90th percentile of the national distribution. In plain English: only the top 10% of active US STR listings clear it.
147 famous short-term rental markets don't clear the bonus depreciation threshold
The DepreciMax STR Bonus Depreciation Market Study tracks 197 US short-term rental markets. 50 clear the medal thresholds and are ranked in the Top 50; 147 do not, and are tracked as reference cases. Below are eight famous STR destinations that most investors would put on a shortlist for revenue, but that fail on tax-adjusted yield.
| Market | Median bonus % |
Median land ratio |
Conformity | Primary reason it fails |
|---|---|---|---|---|
| Telluride, CO | 21.6% | 28% | Full | Land ratio elevated for a ski market; median bonus % just below Gold threshold. |
| Vail, CO | 21.5% | 35% | Full | High land component in premium ski real estate; misses Gold by half a point. |
| Napa Valley, CA | 17.9% | 41% | Decoupled | High land value plus CA decoupling — federal deduction available but state benefit blocked. |
| Key West, FL | 17.4% | 42% | Full | Land is most of the purchase price on this island market; median bonus % below Bronze threshold. |
| The Hamptons, NY | 15.9% | 49% | Decoupled | Nearly half the purchase price is non-depreciable land; NY decouples from federal §168(k). |
| Santa Barbara, CA | 14.9% | 52% | Decoupled | Land ratio above 50% and state decoupled — one of the weakest STR bonus depreciation profiles in the dataset. |
| Aspen / Snowmass, CO | 14.1% | 54% | Full | Ultra-premium land values dominate the purchase price; even full CO conformity cannot save the tax math. |
| Malibu, CA | 12.9% | 57% | Decoupled | Highest structural land ratio in the study among famous STR markets, plus CA decoupling. |
State §168(k) conformity is a hidden yield killer for STR investors
Federal §168(k) bonus depreciation is a federal deduction. Whether an investor can also take the deduction on their state return depends on whether the state conforms to federal §168(k), partially conforms, or decouples entirely. The DepreciMax Study classifies every US market by the conformity status of its state.
Two examples make the difference concrete. Florida markets (Destin, Orlando, Panama City Beach) sit in a full-conformity state — federal §168(k) flows through to the state return without penalty. California markets (Joshua Tree, Palm Springs, Napa Valley, Malibu) sit in a decoupled state — the federal deduction is intact, but the state deduction is not. For a California buyer at the top marginal state rate, decoupling can meaningfully reduce the after-all-taxes benefit of a strong federal §168(k) year. It does not eliminate the federal deduction, but it is a variable this Study codifies per market so that buyers can factor it in before making an offer.
100% bonus depreciation is on the books — for now
The federal bonus depreciation rate is the multiplier applied to the tax-eligible dollars this Study estimates. It determines how much of a Diamond property's bonus-eligible base actually reaches the Year-1 deduction. That multiplier has been on a legislative rollercoaster since 2022.
Under the 2017 Tax Cuts and Jobs Act (TCJA), §168(k) allowed 100% bonus depreciation on qualifying 5-year and 15-year property placed in service through 2022, followed by a scheduled phase-down: 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and 0% in 2027. On paper that would have made 2026 STR acquisitions eligible for only 20% of the bonus-eligible base in Year 1.
In 2025, federal legislation restored the 100% bonus depreciation rate for qualifying property acquired and placed in service after the effective date of that legislation, with permanent status (no scheduled sunset in the restored regime). For qualifying STR property placed in service in 2025 and 2026, the practical result is that the Year-1 bonus-eligible dollars shown throughout this Study can be deducted at 100% in the year the property is placed in service — subject to the buyer clearing the IRC §469 usability bar (see the case-study assumption footnote below).
What this means for the numbers in this Study. A property with $200,000 of tax-eligible 5-year and 15-year property under this Study's estimates translates to a $200,000 Year-1 federal deduction, not the $40,000 that would have applied under the TCJA phase-down. The Study itself is legislation-agnostic — it reports depreciation potential at the property and market level, and the federal bonus rate is a multiplier layered on top. But under the current restored 100% regime, the Diamond and Gold markets in the Top 50 deliver materially more Year-1 benefit than they would have at 40% or 20%.
Anatomy of a Diamond property — 3000 Rockwood Rd, Joshua Tree, CA
Rankings and thresholds only mean something once you see the dollar breakdown behind an actual property. Below is a real DepreciMax report on a premium-tier Joshua Tree build — a Diamond property in a Diamond market, in a state that decouples from federal §168(k). It illustrates both what drives a strong bonus-eligible outcome at the line-item level and how state conformity changes the after-all-taxes number.
Breakdown by IRS class
- Land value (16%)$479,200
- 5-year personal property$449,279
- 15-year land improvements$354,317
- 39-year structural$1,712,204
Top bonus-eligible line items
- In-ground pool + spa (15-yr)$110,000
- FF&E — fully furnished (5-yr)$85,000
- Porcelain tile flooring throughout (5-yr)$74,310
- Corten steel perimeter fence (15-yr)$50,000
- Covered pavilion / ramada (15-yr)$35,000
- Lighting, AV & specialty electrical (5-yr)$30,000
- Landscaping, irrigation & desert plantings (15-yr)$25,000
- Pickleball court (15-yr)$18,000
The Study reports tax-eligible depreciation potential. Realized Year-1 savings depend on the buyer's marginal rate and whether the loss is usable that year under IRC §469 — for many STR buyers this requires material participation (the STR “7-day” rule) or offsetting passive income; without it, the deduction typically suspends and carries forward. Buyers should model their individual situation with a qualified CPA before making an offer.
Market selection is upstream of property selection
The core practical implication of the DepreciMax STR Bonus Depreciation Market Study is that STR investors optimizing for tax-adjusted return should screen at the market level first, then verify at the property level second. A Diamond property in a Diamond-dense market is a strong tax outcome. A Diamond property in a low-density market is a rare exception. And a formal cost segregation study after closing is what turns any prospecting estimate into a filed number.
The workflow this Study is designed to enable:
- Screen markets using this Study's Top 50 rankings and medal density. Rule out markets in the "did not make the cut" set unless there is a non-tax reason to be there.
- Confirm state §168(k) conformity for the buyer's tax situation — federal deduction is intact everywhere; state benefit depends on state.
- Verify property-level bonus depreciation potential on a specific listing before the offer using DepreciMax's $99 property report — the same estimation approach applied to a specific address. See pricing for the annual Pro tier if evaluating multiple properties.
- Commission a formal cost segregation study post-closing to establish the IRS-defensible number that goes on the filed return.
Common questions about STR bonus depreciation
https://deprecimax.com/str-bonus-depreciation-study
[email protected]. Full technical documentation is published in the Study Methodology.
Read the underlying research
Every finding in this Preview Edition is drawn from the DepreciMax STR Bonus Depreciation Market Study. The technical work behind each finding is published in the DepreciMax Research Library.
Study Methodology — Data Sources, Estimation Approach, and Calibration
The full technical documentation behind the Study — market selection, data inputs, per-listing estimation, and calibration against benchmark cost segregation studies.
DepreciMax Research Library
The full catalog of research publications, upcoming publications, and citation formats.
The National STR Bonus Depreciation Curve
The full weighted national distribution across 197 markets and 1,717 individually estimated listings, the state §168(k) conformity map, and the empirical basis for the Diamond / Gold / Silver / Bronze thresholds.
Famous STR Markets Where the Tax Math Doesn't Pencil
Full technical notes on all 147 famous STR markets that failed to clear the Bronze bonus depreciation threshold — with the specific failure mode for each market.