One Big Beautiful Bill (OB3) Special Depreciation Allowance for Qualified Production Property (new)

Effective for property placed in service after July 4, 2025, thru 2030.

There is a new asset class of Qualified Production Property created in this bill.  You can expense (deduct) 100% of the adjusted cost in the property rather than depreciate it over 39 years.

QPP is nonresidential real estate that meets the following requirements:

-Original use of the property began with the taxpayer.

-Construction of the property began after January 19, 2025, and before January 1, 2029.

-The taxpayer must elect to expense the property as QPP.

-The property must be placed in service by the end of 2030.

QPP does not include the portion of property used for office, administrative services, lodging, parking, sales activities, software, development, engineering, or other functions not related to manufacturing, production, or refining of tangible personal property.  Qualified production activity means the manufacturing, production, or refining of a qualified product.  The activities of the taxpayer do not constitute manufacturing, production, or refining of a qualified product unless the activities result in a substantial transformation of the property comprising the end product. 

Qualified product means any tangible personal property other than food or beverages prepared in the same building as a retail establishment in which the property is sold.

Depreciation recapture rules apply if the taxpayer ceases to use the property as an integral part of a qualified production activity within 10 years of placing the property in service.