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 Nebraska comes in.
2. Nebraska and federal bonus depreciation
Nebraska individual income tax starts with federal AGI and the state has rolling conformity to the IRC as amended, so the OBBBA's permanent 100% bonus depreciation under IRC 168(k) (property acquired and placed in service after January 19, 2025) flows through to Nebraska returns automatically with no addback. The Nebraska Department of Revenue's September 2, 2025 report to the Governor and Legislature (required by Neb. Rev. Stat. sec. 77-27,222) expressly confirmed that OBBBA full expensing reduces Nebraska taxable income for pass-through owners and corporations. Corporate income tax also begins with federal taxable income and conforms identically. The only decoupling attempt in the 2026 session, LB 853, targeted the new 168(n) qualified production property allowance (manufacturing structures), not 168(k), and was indefinitely postponed on April 17, 2026, so full conformity stands for 2025 and 2026.
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
Nebraska 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 Nebraska
Nebraska conforms in full to federal Section 179 via rolling conformity, including the OBBBA's increased limits for tax years beginning after December 31, 2024: a $2.5 million expensing cap with phase-out beginning at $4 million, inflation-adjusted after 2025. No Nebraska-specific cap or addback exists; the DOR's September 2025 OBBBA report scored the expanded 179 limits as a direct Nebraska revenue reduction, confirming automatic flow-through. (A historical addback of 100% of enhanced 179 applied only to tax years 2003-2005 and was fully recovered by 2010.)
4. Does it still help in Nebraska?
Yes, and in Nebraska it works at full strength: because the state conforms to both federal MACRS recovery periods (5/7/15/27.5/39-year) and 100% bonus depreciation with no modifications, every dollar a cost segregation study reclassifies into short-life property that is bonus-eligible federally is also deducted in year one on the Nebraska return.
- •Nebraska is one of the cleanest full-conformity states for cost segregation: no bonus addback, no state 179 cap, no separate state depreciation schedules since 2006.
- •Historical footnote: Nebraska did decouple once, requiring an addback of 85% of federal bonus depreciation for property placed in service Sept 10, 2001 - Dec 31, 2005 and 100% of enhanced Section 179 for tax years 2003-2005, recovered via 20%-per-year subtractions in 2006-2010; this is fully phased out and irrelevant to current-year studies.
- •Neb. Rev. Stat. sec. 77-27,222 forces the Department of Revenue to report to the Governor and Legislature within 60 days of any IRC change; its September 2, 2025 OBBBA report confirmed 100% bonus, expanded 179, 168(n), and 174 expensing all flow through automatically.
- •LB 853 (2026 session) would have decoupled Nebraska from IRC 168(n) qualified production property (100% write-off of certain manufacturing structures), calling it a break from the state's historical norm; it was indefinitely postponed April 17, 2026, so even 168(n) conformity survived.
- •Nebraska's individual income tax rates are falling on a legislated schedule (top rate 5.2% for 2025, stepping down to 3.99% by 2027 under LB 754 of 2023), which slightly shrinks the absolute state-tax value of accelerating deductions into earlier, higher-rate years... a timing nuance worth a sentence for investors modeling multi-year savings.
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.