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Full expensing—which allows manufacturers to reduce the cost of purchasing equipment and machinery—is critical for manufacturing growth and job creation. Congress must act now to make it permanent, according to the NAM, which has released a new explainer as part of its “Manufacturing Wins” campaign.

The background: Accelerated depreciation enables businesses to write off a percentage of an asset’s cost in the year it is purchased, rather than spreading the tax benefit over the course of the asset’s useful life. Congress enacted 100% accelerated depreciation—known as full expensing—via tax reform in 2017.

The phasedown: Full expensing began to phase down in 2023, when it was reduced to 80% accelerated depreciation. It’s now set at 60%, and without congressional action, it will expire completely in 2027.

The impact: The phasedown of full expensing has increased the cost of capital investments, undercutting America’s manufacturing leadership and putting the sector’s ability to invest in job-creating and job-sustaining equipment and machinery at risk. The damage will only get worse as the accelerated depreciation level continues to decrease.

The NAM says: Congress should make full expensing a permanent part of the U.S. tax code.

• “Restoring and making permanent full expensing will reduce the cost of capital equipment purchases across the manufacturing sector, supporting growth and job creation at manufacturers of all sizes,” said NAM Vice President of Domestic Policy Charles Crain. “Congress must act to reinstate this pro-growth, pro-manufacturing tax provision.”