Capital spending is spiking as U.S. companies pour money back into their businesses, taking advantage of a break under the Republican-led tax overhaul.

Beginning this year, the law allowed companies to deduct from their reported income the full cost of large equipment and other non-real estate assets. Prior to the measure, businesses could only expense a portion of those purchases each year.

That may have driven capital spending in early 2018 as much as 20 percent higher, to $162 billion, the most in four years, according to analysts at the European bank Credit Suisse. Companies had an additional incentive to move quickly: A looming shift in the definition of business income, in another portion of the law, may undermine some of the break's benefits.

General Motors, AT&T, Walmart and Verizon are among the top spenders for the first period of the year, and Royal Caribbean and Raytheon are among those posting the biggest increases, according to the report. The largest growth was in the technology industry.

In manufacturing, 86 percent of companies are investing in new equipment and facilities, according to a National Association of Manufacturers survey published last week.

“Manufacturing in America is now rising to new heights, thanks to tax reform, and as a result, manufacturers of all sizes are already investing more, growing more, hiring more and paying more," association board member David Farr, the chief executive officer of Emerson Electric Co., said in a statement. "They are already improving lives and livelihoods.”

Much of the money being spent comes from another break under the law, which lets companies bring overseas cash back to the U.S. without penalty after paying a one-time levy of 15.5 percent.

While some of the investments announced this year may have been planned in advance of the tax law, and executives may have purposely waited until it passed, the spending shows the payoff from Congress's bet that lowering government levies would buoy economic growth.

Consumer technology giant Apple, for example, is reinvesting $350 billion in the U.S. economy and building a new corporate campus. The Cupertino, Calif.-based company also said it would buy back $100 billion in stock.

Top chemical manufacturer DowDuPont announced earlier this month it would invest $45 million in a new Newark, N.J., plant. A spokesman said it was not prompted by the tax cut, but rather was "about having manufacturing facilities that support business growth."

Atlas Tool Works’ Zachary Mottl, however, linked his company's decision to buy costly new equipment directly to its lower tax bill in testimony before the House Ways and Means Committee hearing.

“The 100 percent expensing of these investments made the difference for us in buying now versus waiting longer,” said Mottl, the chief alignment officer at the Lyons, Ill.-based manufacturer.

Waiting might have proved costly. Lawmakers seeking to limit the bill's effects on the federal budget shortfall capped the interest payments that corporations can deduct at 30 percent of their taxable income, then trimmed it further over time by changing the definition of income.

Initially, taxable income is defined similarly to the corporate accounting measure known as Ebitda, or earnings before interest, taxes, depreciation and amortization. In 2022, however, depreciation and amortization will be deducted from taxable income -- making it more comparable to EBIT, or earnings before interest and taxes -- which means the allowable interest deduction will decrease.

And so would the incentive for capital spending, at least for companies that are borrowing money to fund it.

“When you limit interest deductibility based on business EBIT, then you’ve got the largest limit on business-interest deduction for the businesses that have done the most investing, which is sort of the opposite of how you’d want to design the policy,” said Scott Greenberg, a senior analyst with the Tax Foundation.

Businesses are already lobbying Congress to change that portion of the bill, but it's unlikely that lawmakers will act now, with mid-term elections less than six months away.

“This shift will have the effect of further limiting interest deductions for industries that must invest in capital equipment, such as manufacturing," Farr said. "For non-public manufacturers that may not have access to the capital markets, debt is the only source of financing for growth in U.S. manufacturing and increasing U.S. jobs.”

