How a 100% First-Year Deduction Could Change the Math on Your Next Plant
If you are planning a new U.S. manufacturing facility or expansion, it may be worth learning about a provision inside the “One Big Beautiful Bill” that relates to Qualified Production Property.
Some manufacturers may be able to deduct 100% of the cost of qualifying production space in the first year it is placed in service rather than depreciating it over 39 years. Whether a facility qualifies depends on how the space is used, construction timing, and other factors reviewed by a tax professional.
This concept is called Qualified Production Property (QPP). For those who qualify, it can make a meaningful difference in how a project is evaluated.
Every manufacturer planning a facility should understand the general framework and then speak with their tax professional to determine how it applies to their situation.
Who Should Be Looking at This?
This potential first-year deduction may be especially relevant for:
- Manufacturers planning a new U.S. plant
- Companies reshoring or moving production closer to customers
- Firms consolidating older facilities into one modern operation
- CFOs and finance teams running capital planning models
- Boards weighing “now vs later” on expansion timing
If your next facility will be production-heavy, your CPA can help determine whether QPP is applicable.
Why CFOs and Owners Care
If a project qualifies and a company elects the 100 percent deduction, it may allow manufacturers to:
- Recover eligible production facility costs in year one instead of over decades
- Improve cash flow during start-up and ramp-up
- Strengthen project NPV, IRR, and payback
- Make expansion, reshoring, or consolidation more financially attractive
For capital-intensive operations, the timing of cost recovery can play a significant role in planning.
What Is “Qualified Production Property” in Plain English?
Qualified Production Property refers to the portion of a non-residential building used directly in qualified production activities. It does not apply to the entire facility.
Under the current language, QPP is the portion of a building that:
- Is used as an integral part of a qualified production activity, such as:
- Manufacturing, production, or refining of tangible personal property
- Processes that substantially transform inputs into finished goods
- Is located in the United States
- Is original use with the company, with limited exceptions for certain acquisitions
- Has construction beginning within the applicable federal window
- Is placed in service by the required deadline
There is also a ten-year use period. If the space stops being used for qualified production within that timeframe, a portion of the benefit may be subject to recapture. A tax professional should review these rules closely.
Timing: Why the Calendar Suddenly Matters
The QPP provision is highly time-sensitive. Under the current structure:
- Construction must begin within a defined window
- The building must be placed in service by the stated deadline
- Qualified production use may need to be maintained for multiple years
If you are thinking about expanding or reshoring in the next few years, your construction schedule and site selection may influence eligibility.
How We Fit In
While we do not provide tax, legal, or accounting advice, we do provide modern, production-ready industrial buildings designed for manufacturing and logistics operations.
That means:
- Large, efficient production footprints
- High clear heights and flexible layouts
- Strong power infrastructure
- Locations that support workforce and logistics needs
For manufacturers exploring QPP with their tax advisors, the right type of space can be part of the overall planning conversation.
Want Our Full QPP Information Package?
We prepared a deeper information package that:
- Summarizes the QPP rules and timing requirements
- Outlines how manufacturers may integrate QPP into planning
- Highlights considerations related to facility design and market selection
Request it here https://hollingsworthcos.com/qpp or scan the QR code below.
We will share the full write-up and can help you explore how our buildings align with your operational plans.
Important Disclaimer
This material is for informational purposes only. It is not tax, legal, or accounting advice.
You should consult with your tax professional, attorney, or accountant to evaluate whether your company, project, or facility design may qualify under the Qualified Production Property provisions of the “One Big Beautiful Bill.”
