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 Wyoming comes in.
2. Wyoming and federal bonus depreciation
Not applicable in the usual sense: Wyoming levies no individual income tax and no corporate income tax, so there is no state return on which IRC 168(k) bonus depreciation could be allowed, limited, or added back. The federal treatment, including OBBBA's permanent 100% bonus for property acquired after January 19, 2025, is the entire story for Wyoming residents and Wyoming rental property owners. Nothing in Wyoming's 2025-2026 legislative sessions created an income tax or any depreciation-related provision; Wyoming Constitution Art. 15, Sec. 18 requires a full credit for sales, use, and property taxes against any income tax, which makes one effectively unworkable, and the state ranks 1st on the Tax Foundation's 2026 State Tax Competitiveness Index partly for that reason.
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
Wyoming levies no individual income tax, so the federal deduction above is the whole story for individual owners and pass-through investors.
Model your own numbers with the tax strategy projector.
3. Section 179 in Wyoming
No state income tax means no state-level Section 179 limitation, cap, or addback. The full federal 179 expensing election (OBBBA-raised $2.5M limit / $4M phase-out for 2025) applies with zero state friction for Wyoming filers.
4. Does it still help in Wyoming?
There is no state return to protect, so a cost segregation study delivers its full federal benefit with no state clawback: 5/7/15-year reclassified property gets 100% federal bonus and nothing is added back at the state level. Note the small Wyoming annual report license tax ($60 minimum or $0.0002 per dollar of in-state assets) is based on asset value, not income, so depreciation deductions do not interact with it.
- •Wyoming has never had an individual or corporate income tax; Wyoming Constitution Article 15, Section 18 requires a full credit for sales, use, and ad valorem (property) taxes against any income tax liability, making an income tax effectively impractical without a constitutional amendment.
- •The only recurring state-level entity charge is the Secretary of State annual report license tax: $60 minimum or $0.0002 per dollar of assets located and employed in Wyoming (break-even at $300,000 of in-state assets). It is computed on asset value, not net income, so bonus depreciation, Section 179, and MACRS lives are irrelevant to it.
- •A corporate income tax proposal (the 'National Retail Fairness Act,' targeting large retailers) failed in the 2019-2020 sessions, and no income tax measure advanced in the 2025 or 2026 sessions.
- •Wyoming ranks 1st overall on the Tax Foundation's 2026 State Tax Competitiveness Index; state revenue leans on property tax (~35.5%), severance/excise taxes, and a 4% state sales tax (~5.36% average combined).
- •Out-of-state investors holding Wyoming rentals through a Wyoming LLC still owe income tax to their home state of residence; Wyoming's zero-tax advantage applies to the property's situs, not to nonresident owners' home-state returns.
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.