After many months of negotiations, H.R. 1, the One Big Beautiful Bill Act was signed into law on July 4, 2025.
H.R. 1 extends critical provisions of the 2017 Tax Cuts and Jobs Act and adds several new provisions that were stated as a high priority for Congressional Republicans this Congress.
“Among these are the so-called ‘business tax trifecta’,” Jack Isselmann, Railway Supply Institute (RSI) Government & Public Affairs Committee (GPAC) Chair, said. “This refers to three key corporate tax incentives temporarily reinstated to spur business investment from 2025 to 2029.”
With the nearly 900-page tax reform and spending bill impacting virtually every sector of the economy, Isselmann found three opportunities for RSI members: equipment and factory structures, research and development spending and business interest deductions.
Immediate Expensing of Equipment and Factory Structures
Immediate expensing allows companies to fully deduct the cost of new equipment — like railcars — and factory structures in the year they are purchased and placed in service rather than depreciating them over time. This provision boosts cash flow and incentivizes rapid investment in U.S.-based manufacturing and infrastructure. This will benefit domestic manufacturers making products more competitive in the global market.
“This will incentivize our members to expand their production capabilities,” Ashley Shelton, RSI Vice President for Government & Public Affairs, said. “It will also offer freight rail more opportunities to serve U.S.-based manufacturers across the nation.”
Full Expensing of Research and Development (R&D) Spending
This incentive provides an immediate deduction on the entire cost of research and development in the year it’s incurred, rather than amortizing these costs over five years. This change restores a powerful incentive for innovation by improving cash flow and reducing the after-tax cost of R&D. This will be beneficial for supporting new rail technology that prioritizes safety and efficiency.
“This aspect of the law benefits the initiatives discussed during Innovation in Rail week which began on July 14,” Shelton said. “As an industry, railway safety is a priority, and we appreciate the legislative support for the necessary research activities to advance safety.”
Higher Limits on Business Interest Deductions
This initiative expands the amount of interest companies can deduct from their taxable income, replacing stricter rules that previously capped these deductions based on a percentage of earnings. This change lowers the cost of borrowing — especially for capital-intensive industries like railway leasing — and encourages investment by making debt financing more attractive. It’s particularly beneficial for small, growing firms that rely on loans to scale up operations.
“Our railcar leasing members will benefit from this provision,” Shelton said. “Capital growth in the railway equipment industry can help contribute to railroad modal share.”
These three measures of the One Big Beautiful Bill Act offer opportunities for our members to expand their businesses and move the industry forward.
“Together, these three measures — the trifecta — aim to lower the effective cost of capital, reinforce R&D investment, and provide relief for capital-intensive businesses, like manufacturers,” Isselmann said about the new law’s impact on the rail supply industry.
Interested in the legislative impact on the railway supply industry? RSI members are invited to participate in our Government & Public Affairs Committee by reaching out to Ashley Shelton, ashelton@rsiweb.org.
About the Railway Supply Institute (RSI)
The Railway Supply Institute (RSI) is dedicated to advancing safety, innovation, technology, and sustainability within the freight and passenger railway supplier industry, both in North America and global markets. As the voice of the industry, RSI strategically engages in critical and urgent industry matters by leveraging the technical expertise of our members to advocate in the legislative and regulatory arenas, foster education, host impactful events, and facilitate networking opportunities. For more information visit www.rsiweb.org, follow RSI on Twitter and LinkedIn.