What’s Going On
The challenge: Since 2017, manufacturers have been able to utilize 100% accelerated depreciation, or “full expensing,” to immediately deduct the cost of purchased capital equipment. By reducing the cost of machinery, full expensing ensures that small and medium-sized manufacturers can scale up their operations, strengthen their teams’ productivity and create more products that improve the quality of life for everyone. This tax policy helps position the United States to attract capital investments in a competitive global economy.
However, unless Congress acts, full expensing will be phased down each year, until it is fully eliminated in 2027. This will make it more costly for manufacturers to invest in their teams and their communities.
What we’re doing about it: The NAM is calling for Congress to make permanent 100% accelerated depreciation to ensure that the tax code encourages manufacturing competitiveness.
Don’t miss the latest news and insights from the NAM newsroom and the media on manufacturers’ work to urge Congress to implement permanent full expensing and allow manufacturers to continue to invest for growth.
Click here to view all NAM tax stories. The latest on full expensing:
- NAM.ORG: NAM Leads Business Community in Urging Restoration of Pro-Growth Tax Policies
- NAM.ORG: Study: Tax Policy’s Harm Will Grow
- NAM.ORG: NAM to Congress: Reverse Course on Harmful Tax Changes
- NAM.ORG: NAM Competes to Win on Taxes
In Washington: The NAM is rallying America’s business community through our direct engagement with congressional leadership and key tax writers to advocate permanency for full expensing.
|In December 2022, the NAM led the business community with a letter to congressional leaders urging Congress to extend the 100% accelerated depreciation before it began to phase out in 2023.
|In early 2023, the NAM advised Congress and the Biden administration about how full expensing is a critical ingredient to manufacturing competitiveness.
|The NAM supported the introduction of the Accelerate Long-Term Investment Growth Now Act, also known as the ALIGN Act, which calls for the permanency of 100% accelerated depreciation.
- The Tax Cuts and Jobs Act allowed for 100% accelerated depreciation until 2023, when it began phasing down 20% each year until it is completely eliminated in 2027.
- Congress has long recognized the economic benefits of full expensing and has included it in the tax code in some form for decades.
- According to a study by the non-partisan Joint Committee on Taxation, accelerated depreciation policies lead to increased levels of manufacturing investment, especially in small businesses. The committee also found that sectors with the largest workforces, such as manufacturing, were the most able to fully utilize the policy to reinvest in their companies.
- Many of the United States’ global competitors, including China, have instituted full expensing polices to appear as a more attractive destination for investments.
Become an NAM Ambassador
Become a leading voice on this issue and let the NAM help elevate your company’s advocacy in our collective effort to urge Congress to ensure that the tax code encourages manufacturing competitiveness.