How the 2026 Tax Bill Could Pay for Your Steel Building (OBBBA Guide for Oregon Owners)

The steel building tax deduction under the One Big Beautiful Bill Act (OBBBA, signed July 4, 2025) can let a business write off much of a new steel building on its federal return in the first year, but only if the building is used in the business, and Oregon now handles bonus depreciation differently. Personal-use buildings and hobby shops do not qualify.

This is a plain-language overview, not tax advice. Confirm everything with your CPA before you decide to buy.

The provisions that matter most

• 100 percent bonus depreciation is permanent for qualifying property acquired after January 19, 2025.
• Section 179 expensing is $2.56 million for tax years beginning in 2026, with a phase-out starting at $4.09 million of purchases.
• A new category, Qualified Production Property under Section 168(n), allows the building portion used in qualifying production to be deducted in year one.
• Single-purpose agricultural structures, on a 10-year depreciation schedule, qualify for 100 percent bonus depreciation.

Sources: IRS Notice 2026-16 for Section 168(n), and Revenue Procedure 2025-32 for the 2026 Section 179 figures.

Manufacturers and producers

Section 168(n) is the biggest change. Nonresidential buildings are normally depreciated over 39 years. Under Section 168(n), the part of a new building used as an integral part of a qualified production activity can be deducted in the first year.

Offices, administrative space, and other areas unrelated to production do not qualify. The IRS guidance also includes a 95 percent test: if at least 95 percent of the building's space is used for qualified production, the whole building can be treated as qualifying.

Whether your activity counts depends on the IRS definition of a qualified production activity (manufacturing, agricultural or chemical production, or refining that substantially transforms a product) and its list of qualifying business codes. A cabinet shop or fabrication shop is a typical manufacturing example. Food, drink, and agricultural processing need a CPA's review against the IRS list.

The deadlines:

• Construction must begin after January 19, 2025 and before January 1, 2029.
• The building must be placed in service after July 4, 2025 and before January 1, 2031.

If the building stops being used for qualified production within 10 years of being placed in service, the deduction can be recaptured. Plan for that.

Farmers and ranchers

Single-purpose agricultural structures, such as dairy parlors, poultry houses, hog barns, and greenhouses, are 10-year property. General-purpose farm buildings, such as a typical farm shop or equipment storage building, are 20-year property. Both recovery periods are short enough to qualify for bonus depreciation. Land improvements such as paving, fencing, and drainage are generally 15-year property and also qualify.

Federal bonus depreciation does not set a first-year dollar cap, but it depends on your tax situation. Your CPA should confirm what applies to your farm.

Commercial shops and contractor yards

If your building does not qualify under Section 168(n), parts of it may still qualify for faster write-offs. A cost segregation study separates building components, such as certain electrical, plumbing, and land improvements, from the 39-year shell. Section 179 can also cover some improvements to nonresidential buildings, including roofs, HVAC, fire protection, alarm systems, and security systems.

Oregon is different

Oregon passed SB 1507 in April 2026. It decouples the state from federal bonus depreciation (Section 168(k)) for property placed in service in tax years beginning on or after January 1, 2026. Oregon taxpayers add the federal bonus back and depreciate the property over its normal life on the state return. Per reports on the bill, Oregon did not decouple from Section 168(n) or Section 179. Source: RSM summary of SB 1507.

The federal benefit is unchanged. The state benefit for bonus depreciation is not. Your CPA should model both returns.

What does not qualify

Personal-use buildings, hobby shops, and residences do not qualify. If a building has a separate, dedicated business space, that portion may qualify, but the allocation needs a CPA.

Timing

For manufacturers, the 168(n) construction-start deadline is January 1, 2029. The IRS refers to its existing bonus depreciation rules for when construction begins, so ask your CPA how your project will be documented. Foundation and steel lead times, permitting, and engineering all come before that date, so start planning well ahead.

Bottom line

OBBBA lowered the federal after-tax cost of a working steel building. For qualifying manufacturers, much of the building can be written off in year one if construction begins before 2029. For farmers and other businesses, bonus depreciation is permanent. Oregon's separate rules change the state side of the math.

The QPP tax savings calculator gives a ballpark based on your business type and project size. It is a planning number, not a tax filing. For buildings, see commercial steel buildings.