One Big Beautiful Bill Act - Manufacturing Benefits

Insight courtesy of LB Carlson

On July 4th, 2025, the president signed the largest piece of new tax legislation since The Tax Cuts and Jobs Act and the Inflation Reduction Act. Below are just a few of the sweeping changes that will have a significant impact for manufacturers. Unless noted, all changes are effective beginning after December 31, 2025.

• Section 179 Expensing Election
  • The accelerated expense election has been increased for tax year 2025 from $1,250,000 to $2,500,000 and will be indexed for inflation every year thereafter. The investment limitation was increased from $3,130,000 to $4,000,000 in 2025 and indexed for inflation thereafter.
• Bonus Depreciation
  • For property acquired and placed in service after January 19, 2025, 100% (up from 40%) expensing option is available. The property needs to be acquired and placed in service after January 19, 2025. If there is a written binding contract for the acquisition of property before January 20, 2025, the 40% expensing option will apply.
• Bonus Depreciation for Qualified Production Property
  • Qualified Production Property is real property used by the taxpayer as part of a qualified production activity. 100% bonus depreciation is available if the property is constructed after January 19, 2025, and before January 1, 2029, and placed in service before 2031.
• Section 174 - Research and Experimental Expenses
  • Beginning with tax years after December 31, 2024, taxpayers can immediately deduct domestic research and experimental expenses paid or incurred.
  • Taxpayers may accelerate deductions over a one-year period or ratably over a two-year period, if they made domestic research or experimental expenditures after December 31, 2021, and before January 1, 2025.
  • For small business taxpayers (average annual gross receipts of $31 million or less) they may retroactively apply the change to tax years beginning after December 31, 2021. The taxpayer must elect by July 4, 2026, and amend the returns affected.
  • Foreign research and experimental expenses still need to be capitalized and amortized over 15 years.
• Qualified Business Income Deduction
  • The deduction is made permanent for tax years after December 31, 2025 

Many of changes will require additional guidance to be issued from the IRS, Treasury and Congress, so please contact us if you have any questions regarding how Visit this link to our website to read more on tax changes for businesses and individuals.

***Thank you to MPMA Member LB Carlson's Joleen Pierce, Principle for this article. Questions? Reach out to jpierce@lbcarlson.com or 763-531-5323.