Maximize Your Tax Savings in Manufacturing with Section 179 Expensing: What the One Big Beautiful Bill Act Means for 2025

If you operate in the manufacturing industry, understanding tax-saving opportunities is crucial to improving your bottom line. One powerful yet often overlooked tool is Section 179 expensing, which allows manufacturers to immediately deduct the full cost of qualifying business equipment and property instead of depreciating it over several years.

What Is Section 179 Expensing?

Section 179 of the IRS tax code permits businesses to write off the entire purchase price of qualifying equipment and software in the year they are placed in service. This is especially beneficial for manufacturers investing heavily in machinery, tools, or technology upgrades.

Current Section 179 Limits for 2025

Under the existing tax laws for 2025, the Section 179 expensing limit stands at $1.25 million. This means manufacturers can deduct up to $1.25 million of equipment costs immediately. However, this deduction begins to phase out dollar-for-dollar once total equipment purchases exceed $3.13 million in a tax year. This phase-out is designed to limit the deduction for very large businesses.

Changes Under the One Big Beautiful Bill Act

The recently passed One Big Beautiful Bill Act introduces significant changes to Section 179 expensing limits that will benefit manufacturers:

• The deduction limit increases to $2.5 million, effectively doubling the immediate expensing amount.
• The phase-out threshold rises to $4 million, allowing businesses to invest more in equipment before deductions start to reduce.

These expanded limits mean manufacturers can write off substantially more of their equipment investments upfront, improving cash flow and freeing up capital for growth.

Combining Section 179 with Bonus Depreciation

An added advantage is that Section 179 expensing can be used alongside bonus depreciation. While Section 179 allows for immediate write-offs up to certain limits, bonus depreciation enables businesses to deduct a percentage of the cost of qualifying assets beyond those limits. Together, these tax incentives create a powerful strategy to reduce taxable income.

Why Manufacturers Should Care

Manufacturers regularly invest in expensive machinery, vehicles, and technology upgrades to stay competitive. The increased limits under the One Big Beautiful Bill Act provide an unprecedented opportunity to maximize tax savings in 2025 and beyond.

Many businesses miss out on these deductions simply because they are unaware or unsure of how to apply Section 179 benefits. Consulting with a qualified tax professional or CPA is crucial to ensure your manufacturing business fully leverages these tax tools.

Key Takeaways for Manufacturers

• Section 179 expensing allows immediate write-off of qualifying equipment costs.
• For 2025, current limits are $1.25 million with a $3.13 million phase-out.
• The One Big Beautiful Bill Act raises the limit to $2.5 million and phase-out to $4 million.
• Section 179 can be combined with bonus depreciation for maximum tax efficiency.
• Consult your tax advisor to take full advantage of these powerful deductions.

Are you using Section 179 for your manufacturing equipment purchases? Don’t miss this chance to boost your tax savings in 2025!