1. What a cost segregation study does
A building normally depreciates over 27.5 years (residential) or 39 years (commercial). A cost segregation study breaks the purchase price apart and reclassifies components like flooring, cabinetry, dedicated electrical, and land improvements into 5, 7, and 15-year property, so a large slice of the basis depreciates on much shorter schedules.
On the federal return, that reclassified property also qualifies for bonus depreciation, which restores a 100% first-year write-off for qualifying property acquired and placed in service after January 19, 2025. States set their own rules, which is where Alaska comes in.
2. Alaska and federal bonus depreciation
Alaska has no individual income tax at all (repealed 1980), so there is no state-level bonus depreciation question for individuals, pass-through owners, or rental-property investors filing personally. Alaska's corporate net income tax (Form 6000) adopts IRC sections 1-1399 by rolling reference under AS 43.20.021, with no carve-out for IRC 168(k), so C corporations doing business in Alaska automatically get the OBBBA's permanent 100% bonus depreciation for property acquired after January 19, 2025. No 2025-2026 Alaska legislation decoupled from the OBBBA. The one major exception: oil and gas corporations must compute depreciation under the IRC as it existed on June 30, 1981, so petroleum taxpayers get no bonus depreciation.
Worked example
A $1,000,000 building, with and without a study
Illustrative only. A residential rental purchased for $1,000,000 of building basis (land excluded), acquired and placed in service after January 19, 2025.
Building basis
$1,000,000
Reclassified to 5, 7, and 15-year property (25%)
$250,000
Federal first-year deduction at 100% bonus
$250,000
Year 1 on that $250,000 without a study (27.5-year straight line)
about $9,100
Alaska conforms to federal bonus depreciation, so the state return mirrors the $250,000 first-year deduction.
Model your own numbers with the tax strategy projector.
3. Section 179 in Alaska
For corporate taxpayers, Alaska's rolling IRC adoption picks up Section 179 at full federal limits, including the OBBBA's increased $2.5M expensing cap and $4M phase-out threshold. No individual income tax means no 179 question for individuals.
4. Does it still help in Alaska?
For the only taxpayers Alaska actually taxes (C corporations), cost segregation flows through fully: shorter MACRS lives and 100% bonus both carry straight into the Alaska return because federal taxable income is the starting point with no depreciation modification (outside the oil-and-gas exception).
- •Alaska is the only state ever to repeal an individual income tax (1980, after Prudhoe Bay oil revenue); individuals and pass-through owners file no Alaska income tax return on rental or K-1 income.
- •Alaska's corporate tax is bracketed from 0% to 9.4% (top bracket above $222,000 of Alaska taxable income), so a real estate investor holding property in a C corporation doing business in Alaska does face a meaningful state tax, and gets full 100% bonus there.
- •Alaska conforms to federal S corporation and partnership flow-through treatment, so S corps and LLCs taxed as partnerships generally owe no Alaska income tax (S corps may still have a filing obligation).
- •Oil and gas corporations are decoupled from modern depreciation entirely: they must use the IRC as of June 30, 1981 (pre-ACRS/MACRS section 167), so no bonus depreciation on petroleum property.
- •Rolling conformity means the OBBBA's permanent 100% bonus, higher 179 caps, and new 168(n) qualified production property expensing all flowed into Alaska corporate tax automatically with no legislative action; the 2025 session's SB 92 corporate-tax proposals did not change depreciation conformity.
- •No state sales tax either (local option only), which is why Alaska routinely ranks as one of the lowest-tax states for real estate investors.
5. The exit: recapture and timing
The accelerated deductions come back into view when you sell. Gain attributable to the 5, 7, and 15-year property is Section 1245 recapture, taxed at ordinary rates, and the straight-line depreciation on the building itself is unrecaptured Section 1250 gain, taxed at up to 25%. A study does not create that bill, it moves deductions forward, but the timing of the sale decides how much of the benefit you keep.
Two levers manage the exit. A 1031 exchange defers both flavors of recapture along with the rest of the gain, and simply holding the property lets the time value of the early deductions do its work; most owners want a 3 to 5 year horizon before a taxable sale for the math to stay comfortably positive. Model the exit before you commission the study, not after.