In a landmark victory for American manufacturers, President Donald Trump signed the One Big Beautiful Bill (OBBB) Act into law on July 4, 2025, symbolically coinciding with Independence Day to highlight its importance for the nation’s industrial future. This sweeping new law delivers a package of long-sought tax incentives, investment opportunities, and financial relief measures to revitalize the manufacturing sector. It aligns closely with AMT – The Association For Manufacturing Technology’s Manufacturing Mandate, reflecting months of dedicated advocacy and policy work aimed at bolstering domestic production and providing manufacturers with much-needed certainty in today’s unpredictable economic environment.
The OBBB Act includes several provisions that will directly benefit manufacturers and small businesses, helping to stimulate capital investment, enhance innovation, and maintain American competitiveness in global markets:
100% Bonus Depreciation (Restored and Made Permanent): Businesses can now immediately deduct the full cost of qualified assets – including manufacturing equipment, machinery, and facilities – placed in service after Jan. 19, 2025. Importantly, this bonus depreciation benefit is extended through 2032 for qualified production property used in domestic manufacturing. This provision incentivizes companies to upgrade their production capabilities and adopt cutting-edge technologies without the burden of delayed tax benefits.
Section 179 Expensing (Doubled): The Section 179 expensing cap for small businesses has been doubled from $1.25 million to $2.5 million, enabling full first-year expensing of a much larger amount of equipment purchases. This change dramatically increases the ability of small manufacturers to invest upfront in critical assets, leveling the playing field against larger competitors.
Section 199A Deduction (Expanded and Made Permanent): The pass-through business deduction, which allows eligible businesses to deduct a portion of their income, is now permanent and increased to 23%. This enhancement offers substantial tax relief for small and midsize manufacturers operating as partnerships, S corporations, or sole proprietorships, improving their cash flow and competitiveness.
R&D Expensing (Immediate Write-Offs): Under a newly introduced Section 174A, U.S.-based research and development costs can now be fully expensed in the year they are incurred, reversing previous amortization rules that spread these expenses over several years. This change encourages manufacturers to increase investment in innovation, speeding the development of new products and technologies.
Semiconductor Investment Tax Credit (Boosted): The investment tax credit for semiconductor fabrication facilities has been increased from 25% to 35% for property placed in service in 2026 or later. This provision supports domestic chip production, helping to reduce reliance on foreign suppliers and strengthen supply chain resilience.
Estate Tax Exemption (Raised and Locked In): The estate tax exemption for small business owners has been increased and permanently locked in at $15 million for individual filers and $30 million for joint filers. This adjustment helps family-owned manufacturing businesses preserve wealth across generations without facing punitive tax burdens.
Interest Expense Deduction (Financing Relief): The bill restores EBITDA-based deduction rules through 2029, providing relief to manufacturers by allowing greater deductibility of interest expenses related to financing investments, acquisitions, and expansions.
AMT played a pivotal role in the advancement of this transformative legislation, working closely with allied organizations, industry coalitions, and lawmakers to ensure the voices of manufacturers across the country were heard throughout the legislative process. The successful passage and signing of the OBBB Act marks a significant step forward in strengthening U.S. manufacturing competitiveness, fostering innovation, and encouraging domestic investment at a time when global economic dynamics are rapidly shifting.
As the provisions of this law take effect, manufacturers can look forward to a more predictable, supportive tax environment that empowers growth, modernization, and resilience.
