The 10 best states to cost seg.
Cost segregation accelerates depreciation on the building, not the land. In states where assessors allocate 60–85% of value to land (coastal California, high-density NYC/NJ), a study still helps, but you're depreciating a much smaller base. Land ratio, state bonus-depreciation conformity, and top income-tax rate together decide where a cost seg pays for itself and where it doesn't. Here's how the 50 states rank.
Why Repsie built in Utah
Utah lands in the top 10, and we buy the ground.
Utah's ~30% land share, 4.55% flat state tax (falling to 4.45% in 2026), full bonus-depreciation conformity, and landlord-friendly climate combine to make it one of a handful of states where the numbers work and we can actually execute on the ground: attorney-drafted entity, agent-led acquisition, engineered cost seg, all under one Utah roof.
Where cost seg struggles hardest
Coastal California, NYC, NJ, Hawaii.
In coastal California (SF, LA Westside, Orange County coast), assessors routinely allocate 60–85% of value to land, sometimes as high as 90% (SF). Statewide averages are lower (~40–60%), but California does not conform to federal bonus depreciation and has a 13.30% top marginal rate. New York, New Jersey, and Hawaii share a similar profile.
Composite score across 50 states.
Utah, Repsie's home market
| # | State | Land / Value | Bonus depr. | Top rate | Score | Why it ranks |
|---|---|---|---|---|---|---|
| 1 | North Dakota | 24-33% | Yes | 2.50% | 96 | Very low land ratios + full conformity + 2.50% rate — but thin transaction data. |
| 2 | West Virginia | 24-33% | Yes | 4.82% | 94 | Low land share, conforms to federal bonus, moderate rate; light-traffic market. |
| 3 | Nebraska | 25-34% | Yes | 5.20% | 91 | Low land share and conforms — no anti-STR statewide law. |
| 4 | Kansas | 25-34% | Yes | 5.58% | 90 | Low land share, full conformity, no anti-STR preemption. |
| 5 | South Dakota | 25-34% | N/A* | None | 89 | No income tax + low land share; thin data outside Sioux Falls / Rapid City. |
| 6 | Delaware | 26-34% | Yes | 6.60% | 88 | Conforms; low land ratio; small market but landlord-friendly. |
| 7 | New Mexico | 26-35% | Yes | 5.90% | 88 | Conforms; low-to-moderate land ratio; graduated rate. |
| 8 | Alaska | 24-32% | Partial | None | 88 | No state income tax + very low land ratios; limited liquidity and remoteness. |
| 9 | Colorado | 27-36% | Yes | 4.40% | 87 | Full conformity + 4.40% flat; resort-town STR caps in a handful of cities. |
| 10 | Utah | 27-36% | Yes | 4.55% | 87 | Attorney + agent on the ground, 4.55% flat (dropping to 4.45%), full conformity — Repsie's home market. |
#1 North Dakota: Very low land ratios + full conformity + 2.50% rate — but thin transaction data.
#2 West Virginia: Low land share, conforms to federal bonus, moderate rate; light-traffic market.
#3 Nebraska: Low land share and conforms — no anti-STR statewide law.
#4 Kansas: Low land share, full conformity, no anti-STR preemption.
#5 South Dakota: No income tax + low land share; thin data outside Sioux Falls / Rapid City.
#6 Delaware: Conforms; low land ratio; small market but landlord-friendly.
#7 New Mexico: Conforms; low-to-moderate land ratio; graduated rate.
#8 Alaska: No state income tax + very low land ratios; limited liquidity and remoteness.
#9 Colorado: Full conformity + 4.40% flat; resort-town STR caps in a handful of cities.
#10 Utah: Attorney + agent on the ground, 4.55% flat (dropping to 4.45%), full conformity — Repsie's home market.
Utah, Repsie's home market. *States with no state income tax show N/A conformity. Bonus depreciation is moot at the state level.
See all 50 states, ranked
| # | State | Land / Value | Bonus depr. | Top rate | Score |
|---|---|---|---|---|---|
| 1 | North Dakota | 24-33% | Yes | 2.50% | 96 |
| 2 | West Virginia | 24-33% | Yes | 4.82% | 94 |
| 3 | Nebraska | 25-34% | Yes | 5.20% | 91 |
| 4 | Kansas | 25-34% | Yes | 5.58% | 90 |
| 5 | South Dakota | 25-34% | N/A* | None | 89 |
| 6 | Delaware | 26-34% | Yes | 6.60% | 88 |
| 7 | New Mexico | 26-35% | Yes | 5.90% | 88 |
| 8 | Alaska | 24-32% | Partial | None | 88 |
| 9 | Colorado | 27-36% | Yes | 4.40% | 87 |
| 10 | Utah | 27-36% | Yes | 4.55% | 87 |
| 11 | Wyoming | 26-35% | N/A* | None | 87 |
| 12 | Montana | 27-36% | Yes | 5.90% | 86 |
| 13 | Louisiana | 28-38% | Yes | 3.00% | 86 |
| 14 | Washington | 27-36% | N/A* | None | 85 |
| 15 | Iowa | 25-34% | Partial | 3.80% | 80 |
| 16 | Mississippi | 25-34% | Partial | 4.40% | 79 |
| 17 | Alabama | 25-34% | Partial | 5.00% | 79 |
| 18 | Missouri | 26-35% | Partial | 4.70% | 77 |
| 19 | Tennessee | 29-38% | Partial | None | 75 |
| 20 | Illinois | 26-36% | Partial | 4.95% | 75 |
| 21 | Nevada | 32-42% | N/A* | None | 73 |
| 22 | New Hampshire | 26-35% | No | None | 69 |
| 23 | Oregon | 27-36% | Partial | 9.90% | 69 |
| 24 | Arkansas | 25-34% | No | 3.90% | 67 |
| 25 | Oklahoma | 25-34% | No | 4.75% | 66 |
| 26 | Indiana | 26-35% | No | 3.00% | 66 |
| 27 | Pennsylvania | 26-35% | No | 3.07% | 66 |
| 28 | Ohio | 26-35% | No | 3.50% | 66 |
| 29 | Kentucky | 26-35% | No | 4.00% | 65 |
| 30 | Texas | 28-38% | No | None | 64 |
| 31 | Rhode Island | 26-35% | No | 5.99% | 63 |
| 32 | Michigan | 27-36% | No | 4.25% | 62 |
| 33 | North Carolina | 27-36% | No | 4.25% | 62 |
| 34 | Arizona | 28-37% | No | 2.50% | 62 |
| 35 | Maryland | 26-35% | No | 6.50% | 62 |
| 36 | Connecticut | 26-35% | No | 6.99% | 62 |
| 37 | Maine | 26-35% | No | 7.15% | 61 |
| 38 | Wisconsin | 26-35% | No | 7.65% | 61 |
| 39 | Idaho | 27-36% | No | 5.70% | 61 |
| 40 | Virginia | 27-36% | No | 5.75% | 61 |
| 41 | Vermont | 26-35% | No | 8.75% | 60 |
| 42 | Florida | 30-40% | No | None | 59 |
| 43 | Massachusetts | 26-35% | No | 9.00% | 59 |
| 44 | Minnesota | 26-35% | No | 9.85% | 58 |
| 45 | New York | 25-35% | No | 10.90% | 58 |
| 46 | South Carolina | 28-37% | No | 6.20% | 58 |
| 47 | Georgia | 28-38% | No | 5.39% | 58 |
| 48 | New Jersey | 26-35% | No | 10.75% | 57 |
| 49 | Hawaii | 28-38% | No | 11.00% | 52 |
| 50 | California | 40-70% | No | 13.30% | 0 |
How the ranking works.
We blend three inputs into a 0–100 composite score:
- Land-to-value ratio (60% weight, inverse) A lower land share means more of the purchase basis is depreciable through a cost seg study. In coastal CA, land allocations of 60–85% are common; in Utah, ~30%.
- State conformity to federal bonus depreciation (25%) States that decouple from IRC §168(k) limit how much of the accelerated deduction you can use against state income.
- Top marginal state income tax rate (15%, inverse) Determines how much state tax the deduction can offset.
Land-ratio data is cost-seg practitioner aggregates (Modern CFO / freecostseg.com), cross-checked against Lutz Sales & Investments, EisnerAmper, and Overline. Ranges are estimates, not measured averages, and vary heavily by submarket. Conformity per Bloomberg Tax's state conformity chart. Top marginal rates per Tax Foundation 2025.
Sources: Modern CFO cost seg by state · Lutz Sales & Investments · EisnerAmper · Overline (Utah) · Bloomberg Tax conformity chart · Tax Foundation 2025 state rates · FHFA / Davis-Larson land price data.
This page is a general educational reference, not tax advice. Your specific outcome depends on your income, entity, purchase price, land allocation on the study, and material participation. Talk to your Repsie team before running a study.
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