For decades, your production building paid you back in pennies.
The old way: 39 years of slivers
About 2.6% a year.
The new way: 100% in year one
Year 1
Illustration: on a $4M production building, that's the difference between roughly $102K of depreciation in year one and the full qualifying amount.
What changed
The One Big Beautiful Bill Act created Section 168(n). In February 2026, the IRS released Notice 2026-16 with the rules for using it.
The short version: if you make, process, or refine a physical product, the space where that happens can now be expensed instead of slowly depreciated. Manufacturers, fabricators, machine shops, food processors, chemical plants, and refineries are exactly who this was written for.
Is your building in?
You built or expanded
Construction started after January 19, 2025 and before 2029, and the space is open for production by the end of 2030.
You bought a building and turned it into a plant
Acquired after January 19, 2025, and nobody used it for production from 2021 through May 12, 2025.
Your factory is older
The original building doesn't qualify. A new expansion or a structural upgrade for a new production line can, on its own.
Your CPA files the election. Someone still has to engineer it.
Only the production portion qualifies, so your building has to be split correctly: production floor on one side, offices, break rooms, and storage on the other. Get the split wrong and you either leave money behind or face recapture if the space stops being used for production within 10 years.
We pair the election with a cost segregation study. Equipment, electrical, and site improvements move to 100% bonus depreciation, which doesn't carry the same production-use recapture rule. One study. Both write-offs. We handle the heavy lifting.
https://gmg.me/news/cost-seg-landing/143862