Tax breaks and growth incentives for small and mid-sized manufacturers are on the table. Here’s what to know—and how to act.
Washington’s newest tax package, the “One Big Beautiful Bill Act”, isn’t just political theater. For manufacturers across Southwestern Pennsylvania, it could translate into serious savings and investment opportunities.
The House has already passed. The Senate is reviewing it. And if it becomes law in its current form, here’s how it could directly benefit your business.
- Immediate Equipment and Facility Write-Offs
The bill brings back 100% bonus depreciation for qualified equipment purchases and facility upgrades through 2030. That means you could fully expense new machinery, shop expansions, or tech investments in the same year they’re made, rather than stretching deductions across five or more years.
Why it matters:
If you’ve been holding off on capital acquisitions related to automation, tooling upgrades, or floor expansion, this creates a clear tax incentive to move now. - More Savings for Pass-Through Businesses
For LLCs, S-Corps, and sole proprietorships—the business types most common among small and mid-sized manufacturers, the bill increases the Qualified Business Income (QBI) deduction from 20% to 23%.
What that means:
You’ll retain more profit at the ownership level. More flexibility. More cash to reinvest. More breathing room during tight cycles. - R&D Expensing Returns
Another important shift: businesses would once again be allowed to immediately expense domestic R&D costs. This reverses the 2022 change that required amortizing those expenses over five years.
If your company does any in-house engineering, process innovation, or prototyping, those costs just got more valuable. - Retention Boost: Tax Relief for Your Workforce
While not business-specific, there’s also a provision that excludes overtime pay, tips, and auto loan interest from federal income tax. For workers on your floor clocking long shifts or managing commutes, that’s extra take-home pay for them without added cost to you.
What You Should Do Next
Catalyst Connection recommends manufacturers take a proactive approach. Here’s how:
• Reassess your capital investment plans with full expensing in mind
• Connect with your accounting and tax teams to explore depreciation, QBI and R&D impacts
• Review labor strategies with a focus on maximizing workforce retention
• Contact Whit Little at Catalyst Connection if you need help in finding the right resources with any of these issues (wlittle@catalystconnection.org)