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Tax Credits and Incentives

Senate Passes Bill to Boost US Chip Production

Jeff Carlson  

· 5 minute read

Jeff Carlson  

· 5 minute read

Senators on July 27 approved legislation on semiconductor production and economic competitiveness, including an investment tax credit for manufacturing facilities and equipment.

The legislation, Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act (S.A. 5135), includes more than $52 billion for U.S. companies that make computer chips as well as a tax credit for investment in chip manufacturing. It also provides funding to spur innovation and development of other U.S. technologies.

The bipartisan measure was approved by a vote of 64 to 33 and is now headed to the House of Representatives, which is expected to hold a vote and pass the bill by the end of this week.

The bill provides a new advanced manufacturing investment credit for any tax year in an amount equal to 25% of the qualified investment for that tax year with respect to any advanced manufacturing facility of an eligible taxpayer. Effectively, the credit is for investments in chip production and includes incentives for the manufacturing of semiconductors, as well as for producing the specialized tooling equipment required in the chipmaking process.

Taxpayers may elect to treat the credit as a payment against tax, or “direct pay.” The credit is provided for property placed in service after December 31, 2022, and for which construction begins before January 1, 2027.

“By approving one of the largest investments in science, technology, and manufacturing in decades… we say that America’s best years are yet to come,” Senate Majority Leader Charles Schumer, Democrat of New York, said on the Senate floor before the vote.


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