05/30/25
News
Manufacturers Should Be Following These Five Tax Provisions in the ‘One Big Beautiful Bill’
4 Min Read
Key takeaways
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The bill would currently reinstate favorable tax provisions for manufacturers, including expanded interest deductions under Section 163(j), 100% bonus depreciation, and enhanced asset expensing limits
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It offers significant R&D and income tax benefits by allowing immediate deduction of research expenses and permanently expanding the Qualified Business Income (QBI) deduction
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The bill is currently in the Senate, where changes could be made
The new budget reconciliation bill, dubbed “One Big Beautiful Bill,” has been making headlines recently as it moves to the Senate in its next step toward being signed into law. It is a domestic policy Mega Bill that covers a wide range of business and economic matters that could impact manufacturers. Our Manufacturing Practice has reviewed the 1,000-page bill and identified the following key provisions within the bill that manufacturers should be watching closely. Below is a summary of each. The bill has not been finalized, and any of these provisions could change or be eliminated as it moves through the approval process.
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Area |
Proposed changes |
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Sec. 163(j) Interest limitation |
Reinstates the EBITDA limitation under Sec. 163(j) for tax years beginning after Dec. 31, 2024, and before Jan. 1, 2030. This change would increase the amount of deductible interest and expand relief for capital-intensive businesses for tax years after 2025 through 2029. |
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Section 168(k) 100% Bonus depreciation |
Reinstates 100% bonus depreciation for property acquired after Jan. 19, 2025, and placed in service after Jan. 19, 2025, but before 2030. |
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Section 174 Deduction for research & development |
Suspends amortization of domestic research and experimental expenditures paid or incurred in tax years after 2024 and before 2030. Businesses will now be able to deduct R&D costs in the same year the money is spent OR choose to amortize them over five years. |
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Section 179(b) Asset expensing |
Increases asset expensing limitations from $1 million to $2.5 million, and $2.5 million to $4 million, for property placed in service in tax years after Dec. 21, 2024. |
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Section 199A Qualified business income deduction |
Permanently extends QBI deduction, increases it from 20% to 23%, amends QBI deduction income limits, and extends deduction to certain interest dividends of qualified business development companies. |
Elimination of various clean energy credits
The latest budget reconciliation bill also eliminates and phases out various clean energy credits for businesses and consumers. Credits like the Clean Vehicle Credit, Clean Hydrogen Production Credit, Clean Electricity Production and Investment Credits, and others will be eliminated or phased out after 2025 or later. Most importantly, the bill would phase out the Advanced Manufacturing Production Credit for tax years after 2031. It also repeals transferability for components sold after 2027, places restrictions on prohibited foreign entities, and terminates applicability for wind energy components sold after 2027.
Planning considerations for manufacturers
The manufacturing industry has been working through many challenges throughout the year and should pay close attention as this bill progresses to decide how any of these potential changes could play into their overall strategy for the near to mid-term and beyond.
Our Manufacturing Practice has been assisting clients with navigating disruption, planning and managing tariff impact through our Tariff Resources Center. Please fill out the form on this page to connect with the leaders of our Manufacturing Practice.
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