The Department of the Treasury and the Internal Revenue Service issued Notice 2026-16, providing interim guidance on the new special depreciation allowance for Qualified Production Property (QPP) enacted under the One, Big, Beautiful Bill Act and added to IRC §168(n). Treasury and the IRS indicate they intend to issue proposed regulations that are expected to be consistent with this interim guidance. Notice 2026-16 explains that taxpayers may elect a depreciation deduction equal to 100% of the adjusted basis of QPP in the taxable year the property is placed in service
What is Qualified Production Property (QPP)?
Under the notice, QPP is generally nonresidential real property (or a portion of it) used by the taxpayer as an integral part of a qualified production activity (QPA). A QPA is the manufacturing, production, or refining of a qualified product that results in a substantial transformation of the property comprising that qualified product (with “production” limited to agricultural and chemical production). In addition to other requirements, QPP must be placed in service after July 4, 2025, and before January 1, 2031. The notice also provides interim rules addressing definitions, how the special depreciation allowance operates, how and when the election/designation is made, and how depreciation recapture can apply if property later ceases to qualify due to a change in use
Practical PeopleSoft Asset Management approach
Most organizations will have only a small population of assets that may qualify. So rather than making broad, immediate configuration changes, a best-practice approach is to take lightweight “readiness” steps in PeopleSoft Asset Management that can be activated only when a customer/taxpayer confirms they are making the §168(n) election.
Readiness Step:
- Set up a new Bonus Depreciation Code for the 07/05/2025-12/31/2030 100% bonus depreciation. See the following blog for instructions.
- Update QPP Asset Profiles. See the following blog for instructions.
Adoption:
Once the configuration is completed, new assets with the QPP Asset Profile will automatically take the 100% bonus. If necessary, you may retroactively apply the bonus to existing assets by following the instructions in this blog.
With Notice 2026-16 in place, the best next step for most organizations is a lightweight PeopleSoft AM “readiness” setup that’s only activated when a taxpayer confirms they will make the §168(n) election. By creating a dedicated 100% bonus depreciation code (07/05/2025–12/31/2030) and updating QPP asset profiles, you’ll be positioned to apply the treatment quickly to qualifying assets—without broad configuration changes. As always, align with your tax team on eligibility, election documentation, and recapture considerations before applying QPP treatment.