The One Big, Beautiful Bill & Its Benefits for Manufacturers
Congress passed what has been referred to as the “One Big Beautiful Bill (OBBB)”, and it has been signed into law. There are far-reaching implications for manufacturers and supply chain organizations. The bottom line is that it is expected to spur growth and success with tax benefits and supporting incentives.
The high-level impacts and benefits include the following:
- Growth: The legislation is expected to entice manufacturers to invest and grow.
- Profit: The bill also provides several tax advantages and cost benefits for manufacturers and supporting organizations.
- Cash flow: It also accelerates cash flow and increases working capital.
- Powers the future: The bill supports the energy infrastructure to power future growth (artificial intelligence) and support manufacturers, distributors, and the goods movement sectors.
- Cut the red tape: The legislation aims to cut the red tape to accelerate progress.
- Family business protection: There are benefits specifically designed for family and closely held businesses.
R&D / innovation: Last but not least, the legislation also stimulates R&D and innovation which is the backbone for supply chain success.
Specific Advantages for the Supply Chain
The main beneficiaries in the supply chain are manufacturers. Not only are manufacturers vital to national security, but according to the National Association of Manufacturers, for every $1 invested into manufacturing, $2.67 is added to the economy. Thus, stimulating manufacturing will spur the economy. Distributors and supply chain organizations will gain several benefits as well. The administration also wants to invest in the middle class and drive workers’ wages up. Key advantages for the end-to-end supply chain include:
- Corporate tax cuts: The bill includes a permanent extension of the 2017 tax cuts. Prior to 2017, the corporate tax rate was 35%, the highest statutory rate among major developed economies at the time. This bill extends the 21% corporate tax rate to incentivize businesses to invest in the U.S.
- Individual tax cuts: The individual tax cuts in the 2017 bill were made permanent. These are expected to stimulate consumer demand and pump up the economy.
- Small business pass-throughs: It also makes the 20% pass-through deduction for small businesses permanent. In addition, it raises the rate to 23% in some cases, targeting family-owned manufacturers.
- Small business estate and succession tax relief: The bill provides an estate tax exemption of $15M per person ($30M per couple). This protects family-owned and multi-generation manufacturing businesses from estate tax exposure during ownership transitions
- R&D expensing: The bill extends immediately expense (write off) 100% of domestic R&D costs, thereby encouraging aggressive investment in innovation, especially for manufacturers modernizing processes or developing new products. It will also support logistics tech such as warehouse routing algorithms, optimization software and systems integration of WMS and ERP, and it supports shipbuilding with naval engineering and marine innovation.
- New facilities, machinery & software: The bill extends 100% bonus depreciation, allowing immediate write-offs for eligible business investment, and it increases the limit. This will help manufacturers modernize and upgrade. It will help transportation organizations with vehicles and fleet assets and ports logistics with mid-sized shipyards.
- Interest deductibility: It also restores full interest deductibility for manufacturers and other businesses. This is a critical advantage for capital-intensive manufacturers and supply chain-heavy operations.
- International taxation: The bill restructures and simplifies several key international tax provisions that originated in the 2017 Tax Cuts and Jobs Act (TCJA) which encourages U.S. production and improves repatriation. The 95% foreign tax credit dramatically reduces residual U.S. tax on repatriated earnings, making it more attractive to bring profits home, thereby stimulating reshoring, domestic expansion, and domestic investment.
- FDDEI deduction for exporters: It continues to offer a preferential deduction for U.S.-based manufacturers selling products or services globally, thereby incentivizing domestic production.
- Worker benefits: The OBBB contains many worker benefits such as no tax on overtime up to a limit (expanding capacity), expanded child tax credit (increasing income for families), senior worker deduction (which can be highly valuable to retain workers to train new generations of workers), auto loan interest deduction for U.S assembled cars (benefiting mainly the auto industry), and expanded SALT deduction for middle-income households mainly in high-tax states. These benefits will increase employee take-home pay, make overtime more attractive, and aid in retention and recruiting.
- Energy: The bill focuses on domestic fossil fuel production, energy independence, and cost competitiveness for industrial users like manufacturers and logistics operators. Although it repeals clean energy tax credits, it fast-tracks permits for energy projects, expands drilling on federal lands, enhances support for fossil fuel development, encourages nuclear energy investment, and prioritizes grid stability. Since energy powers manufacturers, the supply chain and artificial intelligence, it is cornerstone to success.
- Transportation: The bill provides streamlined permitting for transportation infrastructure which will also help manufacturers and distributors in growth corridors that need road access or rail upgrades.
- Modernize air traffic control systems: It allocates funds across key infrastructure and technology upgrades that will drive a strong demand for industrial equipment, digital infrastructure, and manufacturing services, while enhancing the operational efficiency and reliability of U.S. airspace—benefiting businesses across the aviation and logistics value chain.
- Port infrastructure: It accelerates the environmental review timelines for port and land-border projects and encourages public-private partnerships for intermodal freight facilities, thereby supporting faster upgrades of logistics systems for companies involved in exports, nearshoring, and cross-border trade.
- Shipbuilding: Although it doesn’t specifically address shipbuilding, in addition to several of the benefits listed above, it continues the Buy American framework which maintains preference for U.S.-assembled vehicles, port infrastructure, and defense sourcing.
The bottom-line is that there will be strong benefits for manufacturers, supply chain organizations, and supporting industries. Proactive companies will develop plans to maximize the benefit and take advantage of the opportunity.
Impacts for the Supply Chain
We expect smart manufacturers to invest heavily and ramp up operations to prepare for growth. There will be more opportunities than at any time in history to gain market share and shoot to the top of your industry. As stodgy companies do not take proactive action and struggle to serve customers, it will give proactive and innovative organizations the chance to thrive. Combine smart investments in plants, machinery, equipment, and technologies with the rollout of advanced processes such as SIOP (Sales Inventory Operations Planning) to get ahead of changing conditions and set predictive strategies for growth. You will leave the competition in the dust.
If you are interested in reading more on this topic:
Advanced Planning Strategies to Optimize Manufacturing Success