2026 State Guide

Real Estate Professional Status Requirements by State

The IRS's core REP requirements — 750 hours and the more-than-half test — are federal law and apply equally in every state. What varies dramatically is the state-level tax benefit. Select your state below to see the specific tax treatment, licensing body, deduction rules, and market overview.

No State Income Tax States

In these 9 states, REP status delivers federal-only savings — but federal savings at up to 37% can still be enormous.

AK FL NV NH SD TN TX WA WY

Highest Combined Tax Benefit States

These states have top income tax rates above 8%, making REP status especially valuable for unlocking state + federal savings.

California 13.3% top rate Hawaii 11% top rate New York 10.9% top rate New Jersey 10.75% top rate Oregon 9.9% top rate Minnesota 9.85% top rate

All 50 States

Each page includes state tax treatment, licensing body, deduction rules, average property prices, and top metro markets.

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Frequently Asked Questions

Do REP status requirements differ by state?
The core federal REP requirements (750 hours, more than half of personal services) are the same in every state — set by the IRS under IRC Section 469. What differs by state is how the tax benefit is realized: high-income-tax states like California (13.3%) and New York (10.9%) provide much larger state-level tax savings on top of federal savings. States with no income tax still provide full federal REP benefits.
Which states provide the most benefit from REP status?
States with the highest income tax rates provide the greatest combined federal + state tax savings. California's 13.3% top rate, Hawaii's 11%, New York's 10.9% (plus NYC surcharges), Minnesota's 9.85%, and Oregon's 9.9% create the largest state-level incentives to qualify. Even in zero-income-tax states, REP status is valuable for federal savings alone.
Do all states follow the federal passive activity loss rules?
Most states conform to federal passive activity loss rules, meaning REP status recognized federally reduces state taxable income. Notable exceptions: New Jersey and Pennsylvania have their own income categorization systems where rental losses generally cannot offset wages at the state level. In those states, REP status provides full federal savings but limited state relief.
What is the 750-hour requirement?
The IRS requires more than 750 hours per year in real property trades or businesses where you materially participate (IRC Section 469(c)(7)). Additionally, those hours must exceed more than half of all your personal services during the year. Both tests apply in every state. Contemporaneous time logs are essential documentation.
Does REP status affect state taxes in no-income-tax states?
In Texas, Florida, Nevada, Washington, Wyoming, South Dakota, Tennessee, New Hampshire, and Alaska, REP status provides no state income tax benefit because there is no state income tax. However, the full federal income tax savings still apply — which can be tens of thousands of dollars annually for investors with significant rental losses.

Track Your REP Hours — Automatically

Knowing your state's REP requirements is step one. Step two is building the audit-ready documentation the IRS and your state's Department of Revenue require. REPSShield syncs with your calendar and email to log every qualifying hour automatically.

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