Does California Allow Bonus Depreciation? (2026 Rules)
Short answer: no. California has never conformed to federal bonus depreciation, and it caps Section 179 at just $25,000 — a fraction of the federal $2,560,000 limit. If you buy a work truck or heavy SUV in California, your state deduction will look very different from your federal one, and you will owe California an addback for the difference.
The $25,000 Section 179 cap
California Revenue and Taxation Code Section 17255 limits the Section 179 election to $25,000 per year, reduced dollar-for-dollar once the total cost of Section 179 property you place in service exceeds $200,000. Unlike the federal limit, California's cap is set by statute and is not inflation-adjusted — it has been $25,000 for years and did not move for 2026.
California also ignores the federal phase-out structure entirely: there is no $2,560,000 federal-style limit or $4,090,000 threshold on a California return. It is simply $25,000, phasing out above $200,000 of placed-in-service property.
Bonus depreciation: California says no
California has never conformed to bonus depreciation under IRC Section 168(k) (R&TC Sections 17250 and 24349). That was true under the old phase-down schedule, and it remains true now that the One Big Beautiful Bill Act restored permanent 100% bonus depreciation federally for property acquired and placed in service after January 19, 2025. California does not conform to the OBBBA's bonus provisions.
Practical effect: whatever bonus depreciation you claim on your federal return must be added back on your California return. You then depreciate the property under California's regular rules — generally MACRS-style recovery periods without the bonus kicker.
California's conformity date just moved (SB 711)
One thing that did change recently: SB 711, signed October 1, 2025, moved California's Internal Revenue Code conformity date from January 1, 2015 to January 1, 2025, effective for tax years beginning on or after January 1, 2025. Many older articles still say California conforms to the 2015 IRC — that is now outdated.
The update did not change the depreciation picture: California still decouples from bonus depreciation and from the increased federal Section 179 amounts. The new conformity date just means California now follows more of the 2015–2025 federal code in other areas.
How the addback works on your return
The mechanics run through FTB Form 3885A, Depreciation and Amortization Adjustments:
- Compute California depreciation (regular MACRS, no bonus, $25,000 Section 179 cap) on Form 3885A.
- The excess of your federal depreciation over California depreciation goes on Form 3885A, line 8b.
- That amount flows to Schedule CA (540), Part I, line 12, column B as an addition to income for a Schedule C business.
In later years the pattern reverses: as California depreciation catches up, you get subtraction adjustments. You are not losing the deduction forever — you are just spreading it over more years for state purposes.
Worked example: $80,000 heavy SUV in California
Buy an $80,000 heavy SUV (6,001–14,000 lbs GVWR), 100% business use, placed in service in 2026:
| Federal | California | |
|---|---|---|
| Section 179 | $32,000 (SUV cap) | $25,000 (CA cap) |
| Bonus depreciation | $48,000 (100%) | $0 — not allowed |
| Regular depreciation, year 1 | $0 | $11,000 (5-yr, 200% DB, half-year on $55,000) |
| Total year-1 deduction | $80,000 | $36,000 |
The $44,000 difference ($80,000 federal minus $36,000 California) is added back on your California return via Form 3885A. Same truck, same year — less than half the first-year deduction for state purposes.
Federal vs. California at a glance
| Rule | Federal (2026) | California (2026) |
|---|---|---|
| Section 179 limit | $2,560,000 | $25,000 |
| Phase-out threshold | $4,090,000 | $200,000 |
| Bonus depreciation | 100% (permanent under OBBBA) | None — addback required |
| Heavy SUV sub-cap | $32,000 | Moot — $25,000 general cap is lower |
| IRC conformity date | N/A | January 1, 2025 (SB 711) |
What this means for your planning
- Time purchases with both returns in mind. A December equipment buy that wipes out federal income may barely dent your California liability.
- Track two depreciation schedules. Federal and California basis diverge the moment you claim bonus depreciation — your books need both.
- The Section 179 election is separate for California. It is made on FTB Form 3885A, Part II — it does not automatically follow your federal election.
- See the national picture. California is the strictest state, but it is not alone — see our 2026 50-state conformity table.
For the federal side of the math, see our 2026 Section 179 limits guide, heavy SUV rules, and bonus depreciation vs. Section 179.
Run the federal numbers on your vehicle.
The vehicle calculator applies the SUV cap, luxury limits, and bonus depreciation automatically. (California filers: remember to compute the state addback separately.)
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