Home / Tax Credits / Production Property

Deadline aheadConstruction must begin before January 1, 2029 and the property must be placed in service before January 1, 2031. This is the only hard deadline left in the depreciation rules.

IRC Section 168(n) · Form 4562 · Deduction

Qualified Production Property

Manufacturers can now write off an entire building in year one. This has never existed before.

Construction must start before January 1, 2029. In service before January 1, 2031.

Who it is forManufacturers, refiners, agricultural producers, and chemical producers building or substantially acquiring US production facilities.

What it is worth100% of the qualifying portion of a nonresidential building's cost, deductible in the year placed in service. On a multi-million dollar facility this is the largest single deduction in the code for a Main Street manufacturer.

Where it is claimedForm 4562, under IRC Section 168(n)

Why businesses miss this one

It is brand new and almost nobody has heard of it. Buildings have never been eligible for immediate expensing. Owners and preparers both default to assuming a 39-year life on a factory.

How the money actually works

This allows 100% immediate expensing of nonresidential real property used as an integral part of a qualified production activity.
Qualified production activity means manufacturing, production, or refining of a qualified product, and only where the activity substantially transforms the property.
Production for this purpose is limited to agricultural production and chemical production. It does not extend to production generally.
A qualified product is tangible personal property. Food or beverage prepared in the same building as the retail establishment where it is sold is specifically excluded.
Construction must begin after January 19, 2025 and before January 1, 2029.
The property must be placed in service in the United States before January 1, 2031.
Original use generally must begin with you, with a narrow exception for property that nobody used in a qualified production activity between January 1, 2021 and May 12, 2025.
The election is made on the return, must specifically designate the property, and is effectively irrevocable.

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What to gather before you call anyone

Organized records are the difference between a preparer who says it is not worth the trouble and one who finds the money. Have these ready.

Construction start documentation establishing the date work physically began
A written election designating the property and the qualifying portion
Square footage or cost allocation separating qualifying production space from excluded space
Evidence of the production activity and the substantial transformation it performs
Placed-in-service documentation

Disqualifiers and traps

These are the places claims fall apart, either at filing or on examination.

Excluded space does not qualify and must be carved out: offices, administrative services, lodging, parking, sales activities, research activities, software development, engineering, and anything unrelated to production.
Landlords are out. If a lessee uses the space, the lessor cannot treat it as used in its own qualified production activity.
Food and beverage prepared in the same building where it is sold at retail is excluded. A brewpub building does not qualify. A production brewery shipping elsewhere is a different analysis.
There is a 10-year recapture window. If the property stops being used in a qualified production activity and is put to another productive use, the full deduction is recaptured as ordinary income.
The provision is unavailable if the property must use the alternative depreciation system.
Mixed-use facilities require a defensible allocation. This is where a cost segregation-style engineering analysis is still needed even though the shell itself is expensed.

One more thing worth knowing

For a qualifying new facility this largely replaces the need for a cost segregation study on the shell, though you still need engineering work to separate the excluded office, admin, parking, sales, and research space.

Sources

Every figure on this page traces to one of these. All verified August 14, 2026.

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This is educational information, not tax advice. Big Brain Funding is not a CPA firm, an enrolled agent, or a tax preparer. We do not prepare, file, or sign tax returns, and we do not determine whether any business is eligible for any tax program. Eligibility depends on facts specific to your business and on tax law that changes. Nothing here is a promise of a refund, a credit, or a deduction amount. Confirm everything with a licensed CPA or enrolled agent before you file or amend a return.

Program details on this page were verified against official IRS and government sources on August 14, 2026. Tax law changes, sometimes mid-year. Check the linked sources for the current position before acting.