Tax Incentives for Cobots and Automation in Manufacturing
How manufacturing leaders can save now with smarter automation
If your manufacturing team is evaluating robotic process upgrades or collaborative robots (“cobots”), you should know that tax incentives are making those investments more financially compelling. But what are the incentives, how do they work, and how do you go about implementing COBOTS to make the most impact?
What tax incentives apply to cobots and automation
First, what are the specific tax incentives being offered under the new 2025 tax reform? Listed below are the key items you need to be aware of.
1. Section 179 Deduction for Qualifying Equipment
Under Internal Revenue Code Section 179, your business can immediately deduct the full cost of eligible equipment placed into service during the tax year. For example, automation equipment used more than 50% of the time for business purposes qualifies. Universal Robots+3Midwest Engineered Systems+3Midwest Engineered Systems+3
With this in mind, manufacturers purchasing cobots can reduce their taxable income significantly in the same year they install the technology.
2. Bonus Depreciation & Expanded Deduction Limits under 2025 Tax Reform
In 2025, the tax regime shifted in favor of faster expensing. For property placed in service after January 19, 2025, manufacturers can take 100% bonus depreciation for eligible capital investments. CBH+2Automation Alley+2
Additionally, the threshold for Section 179 increased: for tax years beginning after December 31, 2024, your deduction limit rose to $2.5 million with a phase-out at $4 million. gma-cpa.com+1
3. Qualified Research & Development (R&D) Tax Credit
If you’re upgrading your processes, say by designing or deploying automation systems, writing machine-vision software, or improving manufacturing workflow, your work may qualify as “qualified research activities” and thereby earn a credit. This offsets tax liability dollar-for-dollar rather than just reducing taxable income. Kaufman Rossin Multisite Website+2hrlogics.com+2
Manufacturers who believed they couldn’t qualify often discover they already have eligible work underway.
4. Investment Tax Credit for Advanced Manufacturing
For certain advanced manufacturing investments (e.g., semiconductor-related), the federal program offers up to 25% credit of the qualified investment. manufacturing.gov
While this is more narrowly targeted than cobots, it demonstrates the expanding scope of automation-friendly incentives.
Why process integration matters and how Better Process helps
Buying a cobot alone isn’t enough. You must embed it into your workflow, align it with strategy, and quantify the impact. That’s where Better Process steps in.
Benefit-first focus: We lead with the outcome (higher output, less waste, faster throughput), then select the automation solution.
Tax-savvy project planning: We help you identify which equipment qualifies, when it must be placed in service, and how to document for deductions and credits.
Execution support: From selecting cobot hardware, designing cell layout, programming, to training your team, we cover it.
ROI and financing clarity: We model the tax incentives, estimate payback periods, and integrate the capex into your financial plan.
By combining process redesign with automation implementation, you maximize the tax incentives and make sure the cobot is productively integrated. The tax write-off is valuable; the real value is in improved operations.
Timing and action steps you can take now
Inventory your automation-capable tasks: Identify repetitive tasks (machine tending, inspection, packaging) where cobots can drive measurable improvement.
Engage tax and automation advisors: Confirm eligibility under Section 179, bonus depreciation, and R&D credit. For example, automation equipment must be in service by year-end to claim the deduction for that year. Food Industry Executive+1
Implementation plan: Schedule purchase, delivery, installation, and commissioning so that the asset is in service within the tax year.
Document everything: Costs, dates, nature of integration, software development — all help support deductions and credits.
Leverage Better Process: If you engage our team early, we can make sure your automation path aligns with tax strategy and operational outcome.
Final thought
If you’re a U.S. manufacturing company ready to improve throughput, reduce cost, and modernize your workforce, the tax incentives for cobots and automation make now a strong time to act. By combining smart process design with deliberate investment in cobot systems — and by documenting everything — you can take full advantage of Section 179 deductions, 100% bonus depreciation, and R&D credits.
Better Process is ready to help you connect tax strategy and automation implementation into one streamlined, effective initiative.
Ready to explore how automation and tax strategy work together for your facility? Contact Better Process today
Visit www.betterprocess.com to learn how we support companies like yours.
