Manufacturing is the industry federal tax incentives were largely designed around. And in our experience it is also the industry that leaves the most on the table. Four levers do most of the work.
1. Equipment expensing and bonus depreciation
Accelerated first-year expensing of machinery and equipment, through bonus depreciation and Section 179, remains one of the most powerful cash-flow tools available to manufacturers, for used equipment as well as new. The specific percentages and limits move with legislation, which is exactly why the timing of purchases should be planned with your tax team rather than assumed.
2. The R&D credit, on the shop floor
Process improvement, tooling design, prototyping, first-article runs, scrap-reduction work. This is qualifying research activity, performed by people already on your payroll. The credit is annual and wage-driven: the bigger the technical payroll, the bigger the credit.
3. The building itself
A manufacturing facility is dense with 5- and 15-year property hiding inside a 39-year shell. Specialized electrical distribution, process piping, ventilation, and site improvements. A cost segregation study on a purchased, built, or renovated facility routinely produces six-figure first-year deductions.
4. Utilities and energy
Manufacturers are heavy utility consumers, which makes them the best candidates for utility bill recovery, refunds for years of overbilling, and for energy-efficiency incentives on lighting, HVAC, and building envelope work.
CORE has completed studies for manufacturers from Caterpillar and La-Z-Boy to specialty shops like Summit Plastic Molding and Complete Prototype Services. The playbook starts with a free savings analysis. It costs nothing to find out what your operation qualifies for.
