The IRS and Treasury have issued interim guidance in Notice 2026-16 regarding a special depreciation allowance for qualified production property under the One Big Beautiful Bill Act.
This provision allows taxpayers to elect a depreciation deduction of up to 100% of the unadjusted depreciable basis for qualified production property placed in service between July 4, 2025, and Jan. 1, 2031.
Qualified production property is, generally, nonresidential real property used by a taxpayer as an integral part of a qualified production activity, such as manufacturing, chemical production, and agricultural production.
The notice outlines definitions, election processes and depreciation recapture rules. Taxpayers may rely on the guidance provided in Notice 2026-16 until proposed regulations are issued. Read more.