A New Era for Equipment Financing: What the OBBB Means for Manufacturing

In the wake of the recently passed "One Big Beautiful Bill Act" (OBBB), companies, especially small to mid-sized businesses, are navigating a new landscape filled with tax incentives, depreciation benefits, and financing flexibility. While some provisions of the bill have been making headlines, many businesses are still uncovering the full extent of its potential impact.

The bill's implications for industrial organizations are both immediate and long-term. It will affect how companies structure lending solutions and guide businesses through periods of expansion and investment.

Section 179 Expensing: An Immediate ROI
One of the most talked-about changes in the OBBB is the enhancement of Section 179 expensing. The deduction cap has increased from $1 million to $2.5 million, allowing businesses to immediately expense 100 percent of equipment purchases, new or used, within the year of acquisition.

In practical terms, this means that businesses no longer have to stretch depreciation over several years to see the financial benefit of their investments. They can write off the full cost now, improving both cash flow and return on investment from day one.

This has clear implications for industrial companies. With immediate deductions available, the value proposition of equipment financing becomes even stronger, especially when paired with flexible loan structures or lease options. Businesses are incentivized to act now, and lenders have a unique opportunity to support their momentum.

Qualified Production Property (QPP): Incentivizing Onshore Expansion
One of the bill’s lesser-known but highly impactful provisions is the Qualified Production Property (QPP) deduction. This allows businesses to deduct 100 percent of the cost of newly constructed manufacturing facilities the year they go into production. Previously, that expense would be amortized over 30+ years.

For businesses seeking to onshore manufacturing or expand operations in the U.S., QPP is a game-changer. Whether it’s building a robotic assembly plant or expanding a small fabrication shop, this deduction makes domestic investment dramatically more attractive, and it pairs powerfully with Section 179 and bonus depreciation for equipment placed into those new facilities.

The OBBB effectively offers a full-stack tax strategy: deduct the building, deduct the equipment, and deduct the interest all within the same fiscal year.

Bonus Depreciation Fully Restored
Beyond Section 179 and QPP, bonus depreciation has been restored to 100 percent under the OBBB. That means even if a company surpasses the Section 179 cap, it can still deduct the remaining cost of equipment via bonus depreciation all within the same year.

For example, if a manufacturer purchases $3.5 million worth of equipment, they can use Section 179 to expense the first $2.5 million, and bonus depreciation to immediately deduct the remaining $1 million. This combination delivers a powerful incentive for companies to make capital investments now rather than delaying due to longer depreciation timelines.

The restored bonus depreciation also helps level the playing field between leasing and buying. While leasing used to offer exclusive tax advantages, the current environment allows businesses to realize similar benefits through purchases, creating more choice and flexibility in financing strategies.

Boosting R&D and Innovation
The bill also includes a significant update to how businesses can expense their research and development (R&D) costs. R&D can now be fully deducted in the year incurred, and the benefit is retroactive to 2022. That’s a marked shift from the previous five-year amortization requirement.

This immediate deductibility creates new financial room for innovation whether it's prototyping new machines, improving automation systems, or investing in more innovative logistics. For industrial businesses looking to modernize their offerings, the R&D deduction makes that investment more financially viable.

Construction, Landscaping & Longstanding Businesses: Expanded Credits
Companies with longer operating histories, particularly in sectors like construction, electrical, HVAC, and landscaping, may qualify for additional credits, such as the now-permanent Qualified Business Income deduction. This 20 percent deduction applies to many pass-through entities, including S-corps and partnerships, which are common in the trades.

By reducing taxable income, these deductions give companies more flexibility to reinvest in capital expenditures and as a lender, that’s where we come in. We see strong potential for tailored financing packages that align with industry-specific use cases and credit profiles.

While many businesses are familiar with Section 179, awareness of the full suite of provisions in the OBBB remains limited. Taking advantage of the OBBB is a tax-efficient growth strategy that spans facility expansion, equipment acquisition, R&D, and interest deductions.

It’s worth noting that many of the provisions in the OBBB are time-sensitive. For example, new manufacturing facilities must be operational by January 2031 to qualify for QPP deductions. That creates a ticking clock for planning, permitting, and funding.

At the same time, economic uncertainties, tariffs, supply chain shifts, and political cycles have made long-term planning more complex. Leasing remains a smart option for companies seeking flexibility amid volatility, especially when investing in tech or equipment that may be obsolete in a few years.

For industrial businesses looking to grow, and the finance companies that serve them, the "One Big Beautiful Bill" is a growth strategy, and the time to act is now.