BEACH Act Offers Tax Breaks for Bringing Manufacturing Back to the US, Makes Full Expensing Permanent

The "Bring Entrepreneurial Advancements To Consumers Here In North America Act," or BEACH Act, rolls out specific tax incentives designed to encourage manufacturers to move their operations from foreign countries back to the United States. It sweetens the deal by allowing faster write-offs on new U.S. property and potentially eliminating taxes on gains from selling off old foreign assets tied to the move. The bill also locks in a popular business tax break permanently.

The Relocation Toolkit: Faster Write-Offs & Tax-Free Sales

So, how does this work? If a company qualifies as a "qualified manufacturer" (basically, anyone making tangible goods) undertakes a "qualified relocation of manufacturing" (moving production of essentially the same items from overseas to the U.S., ensuring U.S. production increases match or exceed foreign decreases), they get a couple of key benefits under Section 2:

1. Faster Depreciation: When they build or buy property in the U.S. for this relocated manufacturing (defined as "qualified nonresidential real property"), they can depreciate it over 20 years instead of the standard longer period. Think of depreciation as how businesses deduct the cost of large assets over time. A shorter timeline means bigger deductions sooner, freeing up cash.
2. Tax-Free Sales (Potentially): If the company sells property previously used in their foreign manufacturing operations as part of this qualified move, the profit (gain) from that sale might be excluded from their gross income under the newly proposed Section 139J. This could make selling off old overseas factories or equipment less costly from a tax perspective.

These relocation incentives apply to property placed in service or sales occurring after the bill's enactment.

Locking In Full Expensing: A Permanent Perk for Business Investment

Section 3 tackles a broader business tax provision: 100% bonus depreciation, often called "full expensing." This allows businesses to immediately deduct the full cost of certain new or used assets ("qualified property," like machinery or equipment) in the year they are placed in service, rather than depreciating them over many years. This popular provision, originally expanded in 2017, has been phasing down.

This bill amends Section 168(k) of the tax code to make the 100% rate permanent for qualified property placed in service after September 27, 2017. This isn't just for relocating manufacturers; it applies widely to businesses making capital investments, potentially encouraging more spending on equipment and facilities across the board.

The Bottom Line: What This Means on the Ground

In simple terms, this bill uses the tax code to make relocating manufacturing to the U.S. more financially attractive. The accelerated depreciation and gain exclusion directly target the costs associated with moving production. Making full expensing permanent provides a stable incentive for all types of businesses to invest in new equipment and assets within the U.S.

The goal appears to be boosting domestic manufacturing and investment. Companies that meet the specific relocation criteria stand to benefit directly from the targeted incentives. Other businesses benefit from the certainty of permanent full expensing. While the aim is domestic growth, a potential side effect could be reduced manufacturing activity in the foreign countries companies relocate from. Companies not undertaking qualified relocations won't benefit from the specific relocation perks, though they still gain from permanent full expensing.