Make Full Expensing for Manufacturing Structures Permanent

Under current law, when a business invests in a building, it is not recognized as an expense on a business’s tax return in the same year. Instead, the business deducts a share of its cost each year over multiple decades: 39 years for commercial structures and 27.5 years for residential structures. Due to inflation and the time value of money, the present value of the deductions is worth less than the original investment cost.

The One Big Beautiful Bill Act of 2025 introduced a new provision allowing full expensing for structures involved in manufacturing. The provision is temporary, active for projects that begin construction between January 19, 2025, and January 1, 2029, and projects must also enter service before January 1, 2031.

This option makes expensing for manufacturing structures permanent. By eliminating the tax penalty on this particular asset class, this provision lowers the cost of capital and increases the incentive to invest.

On a conventional basis, this option would increase the primary deficit by $88.7 billion over the budget window. Long-run GDP and long-run GNP would rise by 0.2 percent. On a dynamic basis, the primary deficit would decrease by $5.9 billion from 2027 through 2036, $94.7 billion less than the conventional estimate. Incorporating changes in interest costs, the publicly held debt-to-GDP ratio would be lower than baseline, reaching 175.0 percent by 2056.

On average, in 2036, taxpayers would see increases in their after-tax incomes of 0.1 percent. The top quintile of taxpayers would experience a 0.1 percent increase, whereas the bottom quintile would experience a smaller increase. On a long-run dynamic basis, taxpayers would see a 0.2 percent increase on average.