Feds Issue Advanced Manufacturing Investment Credit Rules

The Internal Revenue Service and U.S. Treasury Department issued final regulations Oct. 22 governing implementation of the advanced manufacturing investment credit.

The regulations clarify eligibility requirements and the amended recapture provisions for the credit, a feature of the 2022 CHIPS and Science Act.

Designed to promote domestic production of semiconductors and semiconductor manufacturing equipment, the credit is generally equal to 25% of an eligible taxpayer’s qualified investment.

An eligible taxpayer’s qualified investment equals its basis in any qualified property placed in service during the taxable year.

The qualified property must be integral to the operation of the advanced manufacturing facility. The credit is generally available for qualified property placed in service after Dec. 31, 2022.

Taxpayers, including a partnership or S corporation, can make an elective payment election instead of claiming the credit.

U.S. Secretary of Commerce Gina Raimondo said the regulations represent “an important milestone” in the implementation of the CHIPS and Science Act.

“The advanced manufacturing investment tax credit, when paired with CHIPS direct funding and loans, provides a comprehensive set of federal incentives to drive the significant investment in semiconductor manufacturing capacity occurring in the U.S.,” she said.