What Does Trump's "One Big Beautiful Bill" Mean for Manufacturing?

On May 22, 2025, the House of Representatives passed President Trump’s “One Big Beautiful Bill,” a sweeping tax reform package. The Tax-Cut Act brings far-reaching consequences for the U.S. economy, social safety net, and clean energy sector.

Overview of the Legislation: Key Business Tax Changes

On May 18, 2025, the House Budget Committee approved comprehensive tax legislation known as "The One, Big, Beautiful Bill" (the “House Bill”). This bill extends several provisions from the 2017 Tax Cuts and Jobs Act (TCJA) while introducing new tax measures across business, individual, and tax-exempt sectors.

Bigger Tax Deductions for Businesses

• Small businesses and manufacturers can now deduct 23% of their qualified income instead of 20%, which lowers their taxes.

• Companies can calculate their interest deductions using a method (EBITDA) that usually lets them deduct more, at least until 2028.

• Businesses can immediately deduct the full cost of new equipment, factory upgrades, or production property for manufacturing, farming, or refining.

International Tax Rules

• The tax rates for certain types of foreign income (GILTI and BEAT) are set at 10.5% and won’t go up as previously planned.

• If other countries impose unfair taxes on U.S. companies, the U.S. can raise taxes (up to 20%) on people and businesses from those countries in retaliation.

Investment Incentives

• A new round of “Opportunity Zones” will start in 2027 and run through 2033, encouraging investment in certain areas, especially rural communities.

• The maximum amount businesses can deduct for equipment purchases is increased to $2.5 million, with higher limits before deductions start to phase out.

Energy and Environmental Changes

• Tax credits for clean energy (like wind, solar, and hydrogen) from the Inflation Reduction Act (IRA) will be gradually reduced and mostly end by 2031.

• The tax credit for building new hydrogen production facilities will end after 2025.

This comprehensive tax reform represents a significant shift in U.S. tax policy.

Impact of Trump's "One Big Beautiful Bill" on U.S. Manufacturing

The passage of President Trump’s "One Big Beautiful Bill" is projected to spark $284 billion in new economic growth for the U.S. manufacturing sector and boost manufacturing wages by $126 billion. Over the next four years, this legislation promises manufacturers a big chance to grow.

Source: The White House

Industry Applause: A Defining Win for Manufacturing

The National Association of Manufacturers (NAM) and other industry leaders have celebrated the bill as a transformative victory. NAM President and CEO Jay Timmons described it as “a manufacturers’ bill,” emphasizing that it will empower companies to create jobs, invest in communities, and compete globally.

For 96% of manufacturers that operate as pass-through businesses, the bill permanently raises the Section 199A small business deduction to 23%. This change is expected to create over 1 million new jobs each year.

This bill brings us closer to the vision of a 15% effective tax rate for manufacturers that President Trump and I discussed in 2016

– Timmons stated, highlighting the bill’s role in enabling manufacturers to buy equipment, hire workers, increase pay, and expand operations with greater certainty.

Economic Projections Paint Rosy Picture

The Council of Economic Advisers estimates the legislation will boost America's real gross domestic product by 5.2% in the short term and 3.5% in the long run. The bill is expected to create or save between 6.6 and 7.4 million full-time jobs over the next four years. During this time, investments are projected to increase by 9.8 to 14.5%.

Ways and Means Committee Chairman Jason Smith emphasized the bill's comprehensive approach, stating it

locks in the successful 2017 Trump tax cuts and builds on that foundation with bold, pro-growth reforms that will strengthen families, workers, farmers, and small businesses.

Key Manufacturing Provisions Drive Industry Support

The legislation includes several provisions specifically designed to boost American manufacturing:

• 100% Immediate Expensing: The bill renews full expensing for equipment and machinery, research and development conducted in the U.S., and extends this benefit to new factories, improvements to existing facilities, and other production operations.

• Enhanced R&D Incentives: Immediate expensing for domestic research and development is restored, which alone is projected to accelerate over $20 billion in investment.

• Interest Expense Deductions: The legislation increases deductions for interest expenses, supporting business expansion and modernization efforts.

  
  

  
  

  
  

Temporary Provisions Raise Long-Term Concerns

Tax policy analysts point to significant concerns about the bill's structure. Several key business provisions that manufacturers rely on are set to expire, potentially undermining the legislation's long-term effectiveness.

The most critical temporary provisions include:

• 100% bonus depreciation for machinery and equipment,

• immediate expensing for domestic R&D,

• and enhanced business interest deductions

—all scheduled to expire after 2029. Additionally, the 100% bonus depreciation for manufacturing structures must be constructed before January 1, 2029, and placed in service by January 1, 2033.

Source: Tax Foundation

Tax experts warn that

because the expensing provisions are temporary, they should not be expected to permanently increase investment or growth in the economy,

noting that businesses make investment decisions over long horizons. They argue that temporary incentives may not yield lasting investment, as businesses need long-term certainty.

The Sweeping Tax-Cut Bill: Repercussions and Political Outlook

The bill passed the House by a razor-thin margin (215-214), reflecting deep partisan divisions and some Republican dissent.

• Deep Cuts to Social Programs

The bill proposes historic reductions in Medicaid and Supplemental Nutrition Assistance Program (SNAP), slashing about $700 billion and $300 billion, respectively, over the next decade. Experts warn these cuts could result in millions losing health coverage and food assistance, disproportionately affecting low-income Americans. The Congressional Budget Office estimates that nearly 9 million people could lose Medicaid or ACA coverage, and 13.7 million could become uninsured overall if the bill’s provisions are enacted.

• Rollback of Clean Energy Incentives

A major shift in energy policy is also at stake. The bill would abruptly end key clean energy tax credits—such as the Investment Tax Credit and Production Tax Credit—for projects not operational by the end of 2028, rather than phasing them out gradually as previously planned. This hard deadline could severely disrupt investment in solar, wind, and energy storage, undermining the momentum of the clean energy transition and threatening jobs and growth in this sector.

• Debt and Deficit Implications

Despite deep spending cuts, the legislation is projected to add between $3 trillion and $4 trillion to the national debt over the next decade, mainly due to the extension and expansion of tax cuts, particularly for higher-income households and businesses. Analysts from the Wharton Budget Model and Yale’s Budget Lab warn that, if made permanent, these provisions could push the U.S. debt-to-GDP ratio to unprecedented levels, rivaling only countries like Japan and Sudan.

• Economic and Distributional Effects

While the bill is expected to provide a modest boost to GDP (up to 0.7% over 30 years), these gains are largely driven by increased labor supply and savings in response to a weaker social safety net.

Next Steps: "The Big, Beautiful Bill" Heading to Senate

President Trump’s “One Big Beautiful Bill” has passed the House of Representatives by a narrow margin (with a 215-214 vote) and is now being considered by the Senate.

While the House approval marks a major step forward, Senate leaders have signaled that they intend to leave their own mark on the bill and are preparing to negotiate changes before any final vote. Further changes are likely as lawmakers grapple with concerns about deficits, social program cuts, and the abrupt end to clean energy incentives. All Democrats are opposed, and some Senate Republicans have voiced reservations, particularly about the scale of social spending reductions and the long-term fiscal impact.