Section 179 & OBBBA Manufacturing Equipment Tax Advantages
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The U.S. tax code, enhanced by the One Big Beautiful Bill Act (OBBBA) (effective July 4, 2025), offers significant incentives for manufacturers to invest in equipment via Section 179 expensing and bonus depreciation.
Section 179 Overview
Section 179 allows businesses to deduct the full purchase price of qualifying equipment in the year it is placed in service, immediately reducing taxable income. Eligible property includes machinery and production equipment. There are limits on the maximum deduction and there is a phase-out threshold based on the total cost of property placed in service during the year.
OBBBA Enhancements
The OBBBA permanently increased Section 179 limits for tax years beginning after December 31, 2024:
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Maximum Deduction: Increased from $1.25 million to $2.5 million.
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Phase-Out Threshold: Increased from $3.13 million to $4 million.
Bonus Depreciation
After applying Section 179, bonus depreciation covers remaining costs. The OBBBA permanently reinstated 100% bonus depreciation for qualifying equipment placed in service after January 19, 2025. Unlike Section 179, it has no spending cap and can create a net operating loss.
Combined Benefit
Businesses can potentially combine these provisions to write off a significant portion of the cost of most equipment in the first year, which can improve cash flow and encourage investment. Section 179 and bonus depreciation are U.S. tax provisions that offer significant incentives for businesses to invest in equipment.
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Consult a tax advisor to understand how these provisions apply to your specific situation and to maximize potential benefits.
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If you are exploring automation solutions this year, we’re always happy to serve as a technical resource—answering questions about equipment capabilities, implementation timelines, and long-term operational value.