New Opportunities to Upgrade Equipment and Stretch Your CAPEX Budget
The recently passed One Big Beautiful Bill Act (OBBBA) is making waves across the manufacturing and automation industries — and for good reason. With sweeping updates to federal tax policy, the bill aims to strengthen domestic production, drive investment, and support companies that need to modernize their operations.
For manufacturers, the OBBBA introduces new opportunities to move forward with critical equipment upgrades and line improvements thanks to expanded options for immediately expensing capital equipment.
We reviewed insights from recent industry commentary about how this bill affects manufacturers and plant operations teams. Several provisions stood out as especially relevant to EDC’s audience — particularly those trying to justify much-needed automation upgrades with limited CAPEX.
If you’ve been pushing a project forward but keep hearing “there’s no money this year,” this may help change that conversation.
A Big Win for CAPEX: Immediate Write-Offs for New Equipment
Until now, many manufacturers had to spread the cost of automation and equipment upgrades over several years through depreciation. This made planning difficult, especially for maintenance managers who knew that replacing an obsolete drive or PLC was essential but couldn’t get the timing or budget to line up.
Those conversations are all too familiar: “Not this year,” “CAPEX is frozen,” or “Let’s try again next cycle,” even when equipment is causing downtime or safety concerns.
With the OBBBA, that reality may shift. For qualifying equipment placed into service after January 19, 2025, manufacturers can fully expense many types of capital equipment in the year they’re installed. This immediate write-off creates a clearer financial pathway to justify upgrades and, in some cases, accelerate projects that were previously postponed.
A Quick Note on R&D: Some Process Improvements May Also Qualify
While the OBBBA’s biggest benefit for manufacturers is the ability to immediately expense capital equipment, it also restores immediate expensing for domestic R&D work, and many companies underestimate what “R&D” actually covers.
In reviewing insights from a recent Rivergate Marketing conversation with Tim Finerty, partner at Wipfli, one point stood out:
“Engineers often say, ‘I’m not inventing something new, I’m just solving problems,’” he said. “But the R&D credit is about innovation and uncertainty — not invention.”
For manufacturers, this can apply to engineering work tied to improving or refining production processes, testing new control strategies, integrating new automation technology, or addressing challenges with materials, tension, speed, or reliability. In practice, we’ve come to find that many projects meet the IRS’s four-part test for R&D eligibility.
We see this type of work often in EDC projects. When our team developed a custom low-torque winding system for an aerospace composites manufacturer, the project required designing and testing a torque-limiting control approach, integrating redundant sensors, and validating operator-safe performance across multiple lines — exactly the kind of experimentation and uncertainty that tax advisors often evaluate when determining R&D eligibility.
Always consult your tax advisor for specifics, but it’s worth considering how these rules may apply to upcoming engineering or process-improvement work.
Why Manufacturers Should Act Now
Although most OBBBA provisions apply to tax years beginning after December 31, 2024, planning should begin now. For many manufacturers, this is a rare chance to move long-delayed projects forward. Maintenance managers and plant engineering teams who’ve repeatedly heard “not this year” may find that the math finally works in their favor. With the ability to immediately expense many types of capital equipment — and potentially deduct certain engineering or process-improvement work — projects that once stalled may now be far easier to justify.
This is the time to take a fresh look at upgrades you’ve postponed, gather quotes, and plan installations for early next year so you’re positioned to take full advantage of the new rules. The One Big Beautiful Bill gives manufacturers real tools to modernize equipment, improve reliability, and stretch their CAPEX budgets further. Whether you’re replacing obsolete drives, updating unsupported PLCs, improving motion control, or enhancing operator safety, this may be the ideal moment to move ahead.
If you’d like help planning an upgrade — or need supporting information for a budget or CAPEX request — EDC is here to support you.