Immediate Expensing, Higher Limits, and Increased Cash Flow — How OBBBA Benefits Your Manufacturing Business
Precision manufacturing thrives on efficiency, smart financial planning, and timely investments. The One Big Beautiful Bill Act (OBBBA), effective from January 19, 2025, significantly enhances tax incentives, empowering manufacturers by reinstating full bonus depreciation, raising Section 179 expensing limits, and simplifying R&D deductions.
Here’s how your business can leverage these changes:
What is Bonus Depreciation?
Bonus depreciation allows businesses to immediately deduct a significant portion (in this case, 100%) of the cost of new or used qualifying equipment.
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Immediately expense 100% of qualifying equipment placed in service after January 19, 2025.
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Example: A $750,000 equipment purchase could result in up to $165,000 in immediate tax savings (assuming a 22% tax rate).
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Accelerate your ROI and reinvest in critical areas like automation, workforce training, or expansion.
How Section 179 Helps Manufacturers Save on Taxes
Section 179 lets businesses immediately expense the cost of qualifying property rather than depreciating over several years.
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New Section 179 limit increased significantly to $2.5 million (up from $1.22 million in 2024).
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Phase-out threshold now starts at $4 million, providing ample headroom for growing manufacturers.
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Example: Deduct costs for an entire equipment cell, including machinery, software, and facility upgrades.
Immediate R&D Expensing: Encouraging Manufacturing Innovation
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No longer amortize R&D expenses over multiple years.
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Instantly deduct prototyping, tooling, and process innovation costs.
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Lower financial barriers and encourage competitive innovation.
Ending IRA Clean Energy Programs: Trade-offs for Manufacturers
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Certain Inflation Reduction Act clean energy incentives have ended.
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While clean energy credits may decrease, reduced administrative and compliance burdens provide flexibility and potential operational savings.
Permanent Individual Tax Cuts: Benefits for Manufacturing Owners
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Individual tax cuts permanently extended, increasing cash flow for pass-through business owners.
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Use these savings to reinvest in business expansion, workforce development, or equipment upgrades.
How Precision Manufacturers Can Leverage OBBBA
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Maximize tax incentives by timing equipment purchases strategically in 2025.
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Combine Section 179 and bonus depreciation to fully capitalize on available deductions.
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Leverage immediate R&D expensing to drive product innovation and competitive advantage.
Common Questions About OBBBA for Manufacturers
Can Section 179 and Bonus Depreciation be combined?
Yes, apply Section 179 first and then bonus depreciation to maximize deductions.
Does used equipment qualify?
Yes, as long as it's "new to your business."
Are these changes permanent?
The current provisions are permanent, but always verify with your tax advisor.
Next Steps: Calculate Your Potential Savings
Quickly estimate your 2025 tax savings using our straightforward one-page worksheet.
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Contact Our Finance Experts:
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Phone: (888) 808-0834
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Our experienced team can assist you in financing up to $750,000 with minimal upfront capital, helping you fully leverage OBBBA tax incentives.
Disclaimer: This information is provided for educational purposes only and does not constitute tax, legal, or financial advice. Always consult your professional advisors.