On August 9, 2022, President Biden signed the Creating Helpful Incentives to Produce Semiconductors Act (CHIPS and Science Act of 2022) into law. It provides more than $52 billion for American semiconductor research, development, and production. The CHIPS Act will provide funding over five years to build, expand or modernize domestic facilities and equipment for semiconductor fabrication, assembly, testing, advanced packing or research and development.
The Advanced Manufacturing Investment Credit
The CHIPS Act also included the new Section 48D, The Advanced Manufacturing Investment Credit (AMTC). This provides manufacturers with a credit equal to 25% of the tax basis of qualified property placed in service by the taxpayer during the year. The credit is available for qualifying property placed in service after December 31, 2022 for which construction begins before January 1, 2027. Qualified property includes any tangible depreciable property that is an integral part of the manufacturing facility. It also includes buildings and structural components related to manufacturing. If eligible, taxpayers may choose to treat the credit as a payment against tax (“direct pay”). The additional payment of tax may be refundable, creating additional cash flow to taxpayers.
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