One Big Beautiful Bill Act (OBBBA) Tax Incentives For Manufacturers

Immediate tax savings. More cash flow. Bigger incentives to invest in U.S. operations. 

The U.S. federal government passed major tax reform in 2025, called the One Big Beautiful Bill Act (also known as OBBBA or H.R. 1).  

Among many changes, it includes significant tax incentives for manufacturing companies, both discrete (e.g., assembly, machinery) and process/batch (e.g., chemical, food/beverage, materials, pharma).  

These incentives are designed to increase cash flow, reduce taxable income in the year you invest, and make it easier to upgrade plants, buy equipment, and build new production capacity in the U.S., according to BRC.  

The certified public accounting and advisory firm also noted that if your manufacturing business is investing in equipment, machinery, or facilities, the federal tax code now lets you write-off most of that investment immediately, rather than slowly over many years. That means lower taxes this year, better cash flow right away, and stronger incentives to grow your U.S. operations.  

What are the biggest benefits of the One Big Beautiful Bill that manufacturers should know? 

Immediate tax write-offs for equipment and machinery 

• What it is: 
  Under current law, businesses can deduct 100% of the cost of qualifying production equipment and machinery in the year it’s placed in service. That means instead of spreading out depreciation over five, seven7, or more years, manufacturers get the full deduction right away, improving cash flow and reducing tax bills this year, according to BRC.
• Why it matters: 
  This accelerates tax deductions and turns a construction or equipment purchase into an immediate cash tax benefit. That can be a game-changer for manufacturers investing in automation, robotics, production lines, or fleet upgrades.
• Example: Buy a new $1 million piece of equipment, and instead of deducting it over time, you can write-off the entire $1 million this year. That lowers taxable income sooner, freeing up cash for growth. 

Qualified Production Property (QPP): Massive new bonus for facilities 

• What it is: 
  A brand new incentive allows certain parts of factory buildings and production facilities, such as production lines, manufacturing zones, and direct production support areas, to qualify for 100% immediate expensing, even if they used to have to be depreciated over decades, according to PwC.
• Why it matters: 
  If you are building a new plant or upgrading a facility, you can potentially deduct major portions of the building costs up front, rather than waiting years. This really accelerates return on investment and boosts cash flow for growth.
• Note: According to Maurer, Graf & Rivera, LLP, here is how to qualify:
• Property must be used for manufacturing/production/refining.
• Construction must begin by deadlines set in law (e.g., Jan 2029).
• You must make an election on your tax return to treat it as QPP.  

Expanded Section 179 immediate deductions 

• What it is: 
  Section 179 is another tax rule that lets businesses immediately expense the cost of certain property rather than depreciate it. The new law raises the maximum amount you can deduct to $2.5 million with a $4 million phase-out threshold. This means more equipment qualifies each year, according to Frazier & Deeter.
• Why it matters: 
  This especially helps smaller or medium-sized manufacturers. Rather than depreciating equipment over many years, Section 179 lets you expense it right away, again boosting cash flow in the year you invest.
• Tip: You can combine Section 179 with 100% bonus depreciation smartly for maximum tax savings, according to Ourtaxpartner.com.

Why are these benefits important? 

Even if you’re not a tax expert, PwC notes that these changes matter because they: 

• Improve cash flow so cash stays in your business longer.
• Lower taxable income in the year you invest.
• Incentivize investment in U.S. manufacturing so that building new facilities or upgrading existing ones can be much more tax-efficient.
• Make long-term planning easier by removing uncertainty around depreciation rules.  

What are some actions you can take? 

Review your capital budget 

Look at planned equipment and facility investments for this year and next year. Estimate how much you could write-off immediately under current laws (bonus depreciation + Section 179 + QPP). 

Talk to your tax advisor early 

Your tax team can help determine which assets qualify, how to elect QPP, and whether Section 179 or bonus depreciation gives you the best outcome for each purchase. 

Time your purchases strategically 

Since bonus depreciation applies only if assets are acquired and placed in service after certain dates, planning the timing of installations and deliveries can make a big difference in your deductions. 

Do a cost segregation study (for facilities) 

If you’re building or renovating, a cost segregation study tells you which parts of the property can qualify for faster write-offs like QPP or other accelerated depreciation categories. 

Where can you find more information? 

If you want deep dives with specific tax code references, here are resources you can share with your finance/accounting team: 

• PwC – Bonus Depreciation and QPP details — permanent extension of 100% bonus depreciation and new production property bonus.
• Frazier & Deeter – Business tax changes under H.R.1 – high-level breakdown of bonus depreciation and Section 179 limits.
• GBQ – OBBBA tax depreciation changes – specifics on timing, bonus depreciation, and Section 179.
• Maurer, Graf & Rivera, LLP – Manufacturing-focused incentives with QPP: eligibility conditions and use cases.
• RSM Consulting – Business Tax Planning Guide
• Deloitte - 2025 Tax Credits Incentives Clean Energy   

This article is purely promotional and is not intended to, nor does it contain any tax advice. All examples are hypothetical and cannot be construed as an offer or binding agreement of any kind. Your actual tax deduction, if any, may vary based on a number of factors, including the timing of purchase and first use of equipment, your choice of depreciation schedule, and your tax bracket. Consult a professional tax advisor before buying. To the maximum extent allowed by law, ECI disclaims any and all responsibility and liability for any buying decisions made by a third party in reliance upon this promotional advertisement or any of the statements contained herein.