How the Big Beautiful Bill Helps Manufacturing Companies in 2025
In July 2025, the One Big Beautiful Bill Act was signed into law. This legislation includes a wide range of updates to the U.S. tax code and investment incentives—many of which are designed to directly support manufacturers.
For companies considering equipment upgrades, expansion, or innovation in 2025 and beyond, this bill includes several provisions that significantly reduce the cost of investment.
Here are the most important updates manufacturers should know about:
1. Full Equipment Write-Offs Are Back
The bill restores 100% bonus depreciation through 2026. This allows businesses to fully deduct the cost of qualifying equipment (new or used) the year it's placed in service.
Additionally, Section 179 expensing remains in effect, allowing businesses to deduct up to $1.2 million in equipment purchases immediately, with phase-outs starting above $2.5 million.
Combined, these provisions make it possible for manufacturing companies to deduct large capital investments up front—improving cash flow and shortening ROI timelines.
2. Advanced Manufacturing Investment Credit (AMIC)
Originally introduced through the CHIPS Act and now expanded, the AMIC provides a tax credit of up to 35% for investments in certain manufacturing facilities—particularly those involved in producing semiconductors or equipment used in semiconductor manufacturing.
For manufacturers in or serving advanced sectors like aerospace, defense, clean energy, or electronics, this credit can significantly reduce the after-tax cost of qualifying machinery.
3. R&D Expensing Restored
The bill reverses the previous requirement to amortize domestic research and development (R&D) expenses over five years.
Now, businesses can fully expense R&D costs in the year they’re incurred. This benefits manufacturers who invest in:
- Product development
- Prototyping
- Custom tooling
- Process innovation
4. Interest Deductibility Improved
Manufacturers often rely on financing to acquire capital equipment. The bill improves the interest deductibility cap, switching the formula from EBIT (earnings before interest and taxes) to EBITDA (earnings before interest, taxes, depreciation, and amortization). This restores a more favorable calculation for capital-intensive industries.
5. Tax Code Stability for Business Planning
Several structural provisions provide long-term tax stability for manufacturing businesses:
- The 21% corporate tax rate is retained for C-corporations
- The 20% pass-through deduction is made permanent for S-corporations, LLCs, and other pass-through entities
- Qualified Small Business Stock (QSBS) exclusions remain in effect, allowing certain shareholders to exclude gains on qualified stock held for five years or more
What This Means for Manufacturing Companies
For manufacturers planning to buy equipment, expand operations, or innovate in 2025, this bill offers clear benefits:
- Significant tax savings on machinery purchases
- Reduced financing costs through interest deductibility
- Support for advanced manufacturing investment
- Easier cash management for R&D-heavy operations
Companies that plan ahead and place qualifying assets in service within the current window will benefit the most.
If you'd like help reviewing your equipment plans, budgeting for tax-advantaged investments, or understanding lead times on capital machinery, contact our team. We're here to support manufacturers navigating this new opportunity landscape.