Qualified Production Property (QPP) Tax Benefits

 

New Tax Incentive Alert for Manufacturers (QPP)

The One Big Beautiful Bill Act generated considerable attention for extending 100% bonus depreciation for new assets, but manufacturing executives should focus on a quieter provision that could prove far more transformative: Qualified Production Property (QPP).

What’s the Opportunity?

QPP allows 100% immediate expensing of qualifying manufacturing buildings—not just equipment. This could double your first-year tax deductions, unlocking major cash flow advantages.

Key Requirements

• Owner-occupied facilities only (leases don’t qualify)
• Construction must begin after Jan 19, 2025 and be placed in service before Jan 1, 2031
• Only areas used for manufacturing, production, or refining qualify

Why It Matters

This is a game-changer for companies considering:

• Greenfield development
• Reshoring strategies
• Long-term facility ownership

• Acquiring an existing  property that has not been used as a manufacturing facility since 2021

Gray Areas

• The legislation defines qualifying activities as “manufacturing, production, or refining of a “qualified product,” but includes specific limitations on production activities, restricting them to agricultural and chemical production.  It also specifically excludes “food or beverage prepared in the same building as a retail establishment” from being considered a qualified product.
• The construction timing requirements add another layer of complexity. QPP requires construction to begin after January 19, 2025, and facilities must be placed in service before January 1, 2031. However, the legislation provides no safe harbor for determining when construction “begins”—a critical threshold that could determine QPP eligibility for projects already in development.
• Mixed-Use facility challenges – QPP’s scope extends beyond simple manufacturing equipment to encompass entire manufacturing buildings, but specifically excludes office, administrative, lodging, parking, sales, research, software development, and engineering activities areas (basically any areas of the building that are unrelated to the manufacturing, production, or refining of tangible personal property). QPP appears to encompass entire building structures where manufacturing occurs. This broader scope could include structural elements, building shells, and major building systems—but only for the portion of facilities dedicated to qualifying activities.

Let’s Turn Policy into Profit

The Qualified Production Property (QPP) provision is more than a tax incentive—it’s a strategic opportunity to reshape your manufacturing footprint, accelerate ROI, and unlock substantial cash flow advantages. But navigating its complexities—from owner-occupancy rules to construction timing thresholds—requires more than awareness. It demands expertise.

That’s where we come in.

As site selection advisors specializing in state and local tax credits and business incentives, we help companies:

• Identify optimal locations aligned with workforce, infrastructure, and incentive potential
• Navigate QPP eligibility and regulatory gray areas with confidence
• Negotiate incentive packages that meet or exceed financial goals for both project launch and long-term operations

Whether you’re planning a greenfield development, reshoring operations, or expanding your domestic capacity, the time to act is now. The QPP window is limited—and early movers stand to gain the most.

Let’s talk.

We’ll help you turn policy into profit and strategy into success.