Sponsors (26)
The bill incentivizes U.S. semiconductor design with a generous 25% credit that can lower costs, help startups, and strengthen domestic innovation, but it reduces federal revenue and creates risks of windfalls and added tax‑compliance complexity.
Semiconductor designers and firms (including startups) receive a 25% tax credit for in‑house and contract design spending, lowering development costs and encouraging investment, hiring, and commercialization of new chips.
The U.S. semiconductor ecosystem (design sector and related domestic supply chain) benefits because extending the credit to design activity — not just facilities — can boost domestic innovation, resilience, and longer‑term manufacturing activity.
All taxpayers face larger federal budget shortfalls or reduced funding for other priorities because the new credit reduces federal tax revenue unless offsets are provided.
Firms could treat contract design payments as fully qualifying and restructure deals to maximize the credit, producing potential windfalls and outcomes that divert benefits away from the intended domestic design activity.
The coordination rule preventing double‑dipping with the existing R&D credit adds tax compliance and planning complexity, raising administrative costs for companies and the IRS.
Based on analysis of 2 sections of legislative text.
Introduced January 28, 2025 by Blake D. Moore · Last progress January 28, 2025
Creates a new 25% tax credit for qualified semiconductor design expenditures under the advanced manufacturing investment credit (IRC §48D), in addition to the existing 25% credit for investment in advanced manufacturing facilities. The design credit covers both in-house design wages, supplies, and computer use, and contract design payments made to non-employees, with special rules for prepaid amounts and certain startups. Defines qualified semiconductor design by tying it to experimental development activities (new or improved function, performance, reliability, or quality) and excludes routine, style/taste, or post-production design except in limited cases. The change and the existing facility credit both terminate on December 31, 2036, and the provision applies to amounts paid or incurred after enactment.