We have compiled key updates on recent U.S. tax law changes from PMA to help our manufacturing partners better understand shifts in the investment environment and support you in making more informed capital expenditure plans. This content is provided as an informational summary and does not represent the company’s official position.

The U.S. manufacturing industry just scored a historic win in the Big Beautiful Bill. The new tax law introduces permanent, pro-growth tax policies designed to strengthen the nation’s industrial base.

During a recent webinar hosted by the Precision Metalforming Association, tax experts outlined exactly how these changes will benefit manufacturers. From restored R&D expensing to a 100% factory write-off, this legislation delivers game-changing advantages for businesses investing in equipment, innovation, and workforce development.

“This is the first time American manufacturers really are able to go head-to-head with Europeans and Chinese manufacturers when it comes to incentives,” stated one expert in the webinar.

Key Provisions of the New Tax Law

1. 100% Bonus Depreciation

Manufacturers can now fully expense qualifying assets in the first year to improve cash flow. This provision makes capital-intensive projects far more financially feasible.

Tax year percentages:

January 1, 2025 - January 19, 2025: 40% bonus depreciation

January 20, 2025 - December 31, 2025: 100% bonus depreciation

2. R&D Expensing

After years of uncertainty, companies can once again fully deduct domestic R&D costs immediately. This aims to encouraging innovation and keeping research efforts and jobs in the U.S.

Small business under $31 million annually can elect to amend their 2022-2024 returns to retroactively expense R&D. Additionally, all other taxpayers are permitted to change the accounting method in 2025, deducting unamortized amounts over 1 or 2 tax years. This change makes it easier for manufacturers to invest in process improvements.

3. 100% Factory Write-Off

For the first time, manufacturers can expense the full cost of qualified production facilities in year one. This bold incentive makes building or retrofitting plants more attractive than ever.

There are several limitations that one must be familiar with but generally, the property must be used by the taxpayer as an integral part of a qualified production activity.

The construction of the facility must begin after January 19, 2025 and before January 1, 2029.

4. Provisions for S-Corps/Partnerships

S-Corporations and partnerships will benefit from the permanent tax rates ranging from 10% to 37%. The One Big Beautiful Bill also makes permanent the increased standard deduction, providing additional tax relief for business owners. The legislation raises the AMT exemption amounts and resets the phase-out thresholds, indexing them for inflation, which is particularly important for companies investing in R&D. Another significant benefit is the Section 199A deduction for qualified business income, which effectively lowers the top marginal rate for U.S. manufacturing income to 29.6%.

5. Energy Incentive Changes

Beginning in July 2026, the Energy Efficient Building Deduction will terminate. Manufacturers planning to install more efficient HVAC systems, new roofs, or similar upgrades should begin construction before June 30, 2026 to take advantage of the deduction. The same timeline applies to the installation of electric vehicle charging stations and solar panels on facility rooftops.

Why This Matters for U.S. Manufacturing: A Shift from Broad Tax Cuts to Targeted Incentives

Unlike previous tax reform efforts, this law directly targets manufacturing competitiveness. By incentivizing capital investment, innovation, and facility expansion, the legislation provides certainty for long-term planning.

Domestic Innovation

With immediate expensing of domestic R&D, manufacturers are encouraged to keep research efforts stateside rather than offshoring projects. This not only strengthens the U.S. economy but also accelerates technological advancements in key sectors.

Global Competitiveness

These permanent changes give U.S. manufacturers the stability needed to compete with Europe, China, and other global players, leveling the playing field for US manufacturers.

Practical Tax Planning Advice

The experts in PMA’s webinar emphasized that while the law provides significant opportunities, timing and compliance are critical:

• Act quickly on capital investments: Take advantage of 100% bonus depreciation and the new factory write-off while guidance is finalized. Helps companies shorten the payback period when evaluating equipment upgrades and new production line investments.
• Review R&D allocations: Ensure domestic research is fully leveraged under the restored expensing rules.
• Seek professional guidance: The nuanced differences between factory write-offs and bonus depreciation make expert advice essential.
• Plan for financing impacts: Adjust strategies around new interest expense limitations for highly leveraged companies.

Conclusion

The new tax law represents a landmark victory for U.S. manufacturers, offering permanent, targeted incentives that encourage investment, innovation, and long-term growth. With restored R&D expensing, enhanced capital deductions, and the groundbreaking 100% factory write-off, manufacturers now have an opportunity for lower cost investments.

Click here to view the entire webinar.

Disclaimer:

This article is provided for general industry information only and does not constitute tax, legal, or financial advice. SEYI assumes no responsibility for any actions or decisions made based on the content of this article. Before making any investments, filing taxes, or undertaking financial planning, you are advised to consult with a qualified accountant, tax advisor, or legal professional to ensure the information applies to your specific situation.