REMINDER: Tell Lawmakers To Renew, Expand Important Tax Policies

U.S. manufacturers are facing higher taxes due to the expiration of several tax policies. These include:

• Interest Deductibility. At the beginning of 2022, a stricter limitation on the deductibility of the interest payments on business loans went into effect, increasing the cost of financing critical investments in machinery and equipment. This stricter limitation effectively acts as a tax on investment by making it more expensive for capital-intensive companies to finance critical purchases, grow their businesses, and hire new workers. The American Investment in Manufacturing Act would reverse the stricter limitation and allow manufacturers to continue to invest for growth.
• Full Expensing. Since 2017, manufacturers have been able to utilize 100 percent accelerated depreciation, or “full expensing,” to immediately deduct the cost of purchased capital equipment. By reducing the cost of machinery, full expensing ensures 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 also helps the United States attract capital investments in a competitive global economy. Unless Congress acts, full expensing will be phased down each year until it is fully eliminated in 2027, making it more costly for manufacturers to invest in their teams and their communities.
• Research And Development. As of 2022, manufacturers can no longer immediately deduct their research and development expenses in the year they are incurred. Instead, manufacturers must deduct or amortize their expenses over a number of years, which makes research and development much more expensive. A bill before Congress, the American Innovation and Jobs Act, would restore the immediate deductibility of research and development expenses, a policy that was in place for nearly 70 years.

MSCI urges member company employees to make their voices heard on these important tax issues. The National Association of Manufacturers (NAM) has launched online action centers where you can learn more about individual tax policies and send letters to lawmakers asking them to reduce the tax burden on manufacturing companies.

Click here to learn more about the research and development tax credit, here for interest deductibility, and here for full expensing.