• Treasury Secretary Scott Bessent outlines plans to restore 100% expensing for equipment and expand it to factory construction.
  • The proposals aim to boost domestic manufacturing, with additional tax credits for research and innovation.
  • Fiscal concerns loom as extending TCJA provisions could cost $4.5 trillion through 2034.

Trump Administration's Tax Agenda Gains Momentum

The Trump administration is doubling down on its push for sweeping business tax cuts, with Treasury Secretary Scott Bessent recently detailing plans to restore 100% expensing for equipment purchases and expand full expensing to factory structures. The proposals, which also include tax credits and deductions for research and innovation, are designed to incentivize domestic manufacturing and bring jobs back to the U.S.

In closed-door meetings with congressional leadership, Bessent and White House National Economic Council director Kevin Hassett emphasized that President Trump wants the tax portions of upcoming budget legislation to prioritize manufacturing. "We're looking at deductibility for auto loans for American-made cars, and immediate expensing—100% expensing for equipment," Bessent said, according to people familiar with the discussions. The administration also plans to extend full expensing to factory construction, a move that could significantly alter capital investment strategies.

Fiscal and Political Challenges

The proposed tax cuts come with a hefty price tag. Extending 100% bonus depreciation through 2034 alone would cost an estimated $378 billion, while broader TCJA extensions could reduce federal tax revenue by $4.5 trillion over the next decade. Republican lawmakers have expressed concerns about the fiscal impact, with Senator Tom Tillis (R-N.C.) noting the difficulty of finding "pay fors" to offset the costs.

Despite the challenges, the administration is pushing forward, with President Trump vowing in a recent address to make the expensing provisions retroactive to January 2025. The timing is critical, as key TCJA provisions are set to expire at the end of 2025, setting the stage for a high-stakes legislative battle.

Market and Industry Implications

If enacted, the tax cuts could spur a wave of investment in manufacturing and equipment. Analysts suggest that extending TCJA provisions could boost long-run GDP by 1.1%, though the immediate fiscal impact remains a sticking point. For now, businesses are watching closely as the administration and Congress negotiate the final shape of the legislation.