The IRS’ recent guidance on the One Big Beautiful Bill Act’s (OBBB) depreciation deduction for qualified production property provides “at least some version of an answer” to most key questions, according to Plante Moran partner Stephen Eckert. However, he highlighted one area where clients might be missing an opportunity to take advantage of the new deduction.

Qualified Production Property Deduction Basics

New IRC § 168(n) allows taxpayers to take a special 100% first‑year depreciation deduction for the qualifying portion of certain new or substantially improved nonresidential real property. To claim the deduction, taxpayers must begin construction after January 19, 2025, and before January 1, 2029, and place the property in service, generally, after July 4, 2025, and before January 1, 2031.

In addition, the property must be used as an integral part of a qualified domestic manufacturing, production, or refining activity. Portions of property that are used for non-production functions, such as administration, parking, sales, and research, must be excluded when claiming the deduction.

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