taxnews.ey.comPrint

20 February 2026

IRS provides guidance on special depreciation deduction for qualified production property under IRC Section 168(n)

The IRS issued interim guidance (Notice 2026-16 or the Notice, released February 20, 2026) on the special depreciation deduction for qualified production property (QPP) under IRC Section 168(n), which was created by the "One Big Beautiful Bill Act." In addition to defining qualified production activity, the Notice provides rules for electing to designate property as QPP, as well as special depreciation recapture rules for property that no longer qualifies as QPP because of a change in use. Taxpayers may rely on the guidance in the Notice for property that is acquired or for which construction began after January 19, 2025. A Tax Alert is forthcoming.

* * * * * * * * * *
Published by NTD’s Tax Technical Knowledge Services group; Chris DeZinno, legal editor

Document ID: 2026-0483

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 1996 – 2026, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement