H.R. 3042

119th CONGRESS 1st Session

To rescue domestic medical manufacturing activity by providing incentives in economically distressed areas of the United States and its possessions.

IN THE HOUSE OF REPRESENTATIVES · April 28, 2025 · Sponsor: Ms. Malliotakis

Subchapter AA—Medical Manufacturing in Economically Distressed Zones

H.R. 3042

Sec. 1400AA–1. Medical manufacturing in economically distressed zone credit.

(a) Allowance of credit
- There shall be allowed as a credit against the tax imposed by subtitle A for the taxable year an amount equal 40 percent of the sum of—
  - the aggregate amount of the taxpayer’s medical manufacturing economically distressed zone wages for such taxable year,
  - the allocable employee fringe benefit expenses of the taxpayer for such taxable year, and
  - the depreciation and amortization allowances of the taxpayer for the taxable year with respect to qualified medical manufacturing facility property.
(b) Denial of double benefit
- Any wages or other expenses taken into account in determining the credit under this section may not be taken into account in determining the credit under sections 41, and any other provision determined by the Secretary to be substantially similar.
(c) Definitions and special rules
- For purposes of this section—
  - The term means any facility that— qualified medical manufacturing facility
  - The term means any property used in (or consisting of) a qualified medical manufacturing facility if such property is directly connected to the research, development, or production of a medical product. qualified medical manufacturing facility property

Sec. 1400AA–2. Credit for economically distressed zone products and services acquired by domestic medical manufacturers.

(a) Allowance of credit
- In the case of an eligible medical manufacturer, there shall be allowed as a credit against the tax imposed by subtitle A for the taxable year an amount equal to the applicable percentage of the aggregate amounts paid or incurred by the taxpayer during such taxable year for qualified economically distressed zone products or services.
(b) Applicable percentage
- For purposes of this section, the term applicable percentage means—
  - 30 percent in the case of amounts paid or incurred to persons not described in paragraph (2), and
  - 5 percent in the case of amounts paid or incurred to a related person.
(c) Eligible medical manufacturer
- For purposes of this section, the term means any person in the trade or business of producing medical products in the United States. eligible medical manufacturer
(d) Qualified product or service
- For purposes of this section, the term means— qualified product or service
  - any product which is produced in an economically distressed zone and which is integrated into a medical product produced by the taxpayer, and
  - any service which is provided in an economically distressed zone and which is necessary to the production of a medical product by the taxpayer (including packaging).
(e) Related persons
- For purposes of this section, persons shall be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b).
(f) Other terms
- Terms used in this section which are also used in section 1400AA–1 shall have the same meaning as when used in such section.

Sec. 1400AA–3. Special rules to secure the national supply chain and for the production of population health products.

(a) In general
- In the case of a qualified repatriated medical manufacturing facility or a qualified population health product manufacturing facility—
  - section 1400AA–1(a) shall be applied by substituting for , and 60 percent 40 percent
  - section 1400AA–2(a) shall be applied—
    - by substituting for , and 50 percent 30 percent
    - by substituting for . 60 percent 40 percent
(b) Election To expense in lieu of tax credit for depreciation
- In the case of a taxpayer which elects (at such time and in such manner as the Secretary may provide) the application of this subsection with respect to any qualified repatriated medical manufacturing facility or qualified population health product manufacturing facility—
  - section 1400AA–1(a)(3) shall not apply with respect to any qualified medical manufacturing facility property with respect to such facility, and
  - for purposes of section 168(k)—
    - such property shall be treated as qualified property, and
    - the applicable percentage with respect to such property shall be 100 percent.
(c) Qualified repatriated medical manufacturing facility
- For purposes of this section, the term means any qualified medical manufacturing facility (as defined in section 1400AA–1) the production of which was moved to an economically distressed zone from a foreign country that the United States Trade Representative has determined could pose a risk to the national supply chain because of political or social factors. qualified repatriated medical manufacturing facility
(d) Qualified population health product manufacturing facility
- For purposes of this section, the term means any qualified medical manufacturing facility (as defined in section 1400AA–1) that produces a population health product (as defined in section 319L(a)(11) of the Public Health Service Act) which the Secretary of Health and Human Services has identified for support through a strategic initiative under section 319L(c)(4)(F)(ii) of the Public Health Service Act. qualified population health product manufacturing facility

Sec. 1400AA–4. Designation of economically distressed zones.

(a) In general
- For purposes of this subchapter, the term means any population census tract within the United States which— economically distressed zone
  - has a poverty rate of not less than 30 percent for each of the 5 most recent calendar years for which information is available, or
  - satisfies each of the following requirements:
    - has pervasive poverty, unemployment, low labor force participation, and general distress measured as a prolonged period of economic decline measured by real gross national product,
    - has a poverty rate of not less than 25 percent for each of the 5 most recent calendar years for which information is available, and
    - has been designated as such by the Secretary and the Secretary of Commerce pursuant to an application under subsection (b).
(b) Application for designation
- (1) In general
  - An application for designation as an economically distressed zone may be filed by a State or local government in which the population census tract to which the application applies is located.
- (2) Requirements
  - Such application shall include a strategic plan for accomplishing the purposes of this subchapter, which—
    - describes the coordinated economic, human, community, and physical development plan and related activities proposed for the nominated area,
    - describes the process by which the affected community is a full partner in the process of developing and implementing the plan and the extent to which local institutions and organizations have contributed to the planning process,
    - identifies the amount of State, local, and private resources that will be available in the nominated area and the private/public partnerships to be used, which may include participation by, and cooperation with, universities, medical centers, and other private and public entities,
    - identifies the funding requested under any Federal program in support of the proposed economic, human, community, and physical development and related activities,
    - identifies baselines, methods, and benchmarks for measuring the success of carrying out the strategic plan, including the extent to which poor persons and families will be empowered to become economically self-sufficient, and
    - does not include any action to assist any establishment in relocating from one area outside the nominated area to the nominated area, except that assistance for the expansion of an existing business entity through the establishment of a new branch, affiliate, or subsidiary is permitted if—
      - (i) the establishment of the new branch, affiliate, or subsidiary will not result in a decrease in employment in the area of original location or in any other area where the existing business entity conducts business operations,
      - (ii) there is no reason to believe that the new branch, affiliate, or subsidiary is being established with the intention of closing down the operations of the existing business entity in the area of its original location or in any other area where the existing business entity conducts business operation, and
      - (iii) includes such other information as may be required by the Secretary and the Secretary of Commerce.
(c) Period for which designations are in effect
- Designation as an economically distressed zone may be made at any time during the 10-year period beginning on the date of the enactment of this section, and shall remain in effect with respect to such zone during the 15-year period beginning on the date of such designation. Economically distressed zones described in subsection (a)(1) shall take effect on the date of the enactment of this Act and shall remain in effect during the 15-year period beginning on such date.
(d) Territories and possessions
- The term includes the 50 States, the District of Columbia, and the territories and possessions of the United States.
(e) Regulations
- The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including—
  - not later than 30 days after the date of the enactment of this section, a list of the population census tracts described in subsection (a)(1), and
  - not later than 60 days after the date of the enactment of this section, regulations or other guidance regarding the designation of population census tracts described in subsection (a)(2).