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Tax Incentives for the Manufacturing & Distribution Industry

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Reviewed and updated September 2026

KBKG is a national tax specialty firm that helps manufacturing and distribution companies identify, document, and support federal, state, and local tax incentives related to Research and Development (R&D) Tax Credits, Repair vs. Capitalization Reviews, 179D Tax Deductions, Cost Segregation, IC-DISC, Predominant Use Studies, Transfer Pricing, and other federal, state, and local tax incentives. The opportunities available depend on the company’s manufacturing or distribution activities, facilities and equipment, research and development projects, energy usage, capital investments, and specific business circumstances.

KBKG helps manufacturing and distribution businesses identify and maximize tax incentives related to Research and Development (R&D) Tax Credits, Repair vs. Capitalization Review, 179D Tax Deduction, Cost Segregation / Fixed Assets, Negotiated Incentives, IC-DISC, Predominant Use Study, and Transfer Pricing.

KBKG’s tax specialists have experience helping manufacturing and distribution companies evaluate qualifying activities, projects, facilities, equipment, and expenditures to identify available tax incentives. Our team helps businesses document and support eligible tax positions while pursuing applicable federal, state, and local tax benefits.

Manufacturing & Distribution Industry Tax Saving Opportunities

Cost Segregation for Buildings & Improvements

Building acquisitions, new construction, and major improvements should be reviewed for proper classification of the individual components for tax depreciation.

Repair vs. Capitalization Review §263(a)

Taxpayers often capitalize major building expenditures that could be claimed as current year deductions for repairs and maintenance such as HVAC units, roofs, parking lots and more.

Fixed Asset Review

Evaluating a company's entire fixed asset schedule to identify assets that can be optimized for federal and state tax purposes. Taxpayers utilizing the book method of accounting for tax are not maximizing their available deductions.

Research and Development (R&D) Tax Credit

Federal credit worth approximately 7% to 10% of qualified research expenditures related to designing, developing and improving processes, formulae, and software. State R&D tax credits may also be available, allowing eligible companies to maximize their tax benefits.

179D Incentive for Energy Efficient Buildings

Federal deduction worth up to $5.94/per square foot of energy efficient buildings. Available to architects, engineers, design/build contractors and building owners.

Transfer Pricing

Cross-border transfer prices drive how much income tax a multinational company pays by country. Transfer pricing regulations apply to the intercompany prices of goods, services, royalties, and loans across all industries. Many companies can realize significant tax savings through transfer pricing strategies.

IC-DISC

The IC-DISC is a federal tax incentive that provides significant, permanent tax savings for U.S. companies that export.

Negotiated Incentives

KBKG helps businesses secure and maximize state and local incentive programs that reduce project costs and improve long-term return on investment.

Predominant Use Study

These studies determine the percentage of utilities used in qualifying processes, enabling businesses to claim important sales tax exemptions and reduce operating costs.

Manufacturing & Distribution Industry Tax Insights

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