Sponsors (13)
The bill offers a sizable, refundable tax credit to spur reshoring and build critical domestic production in U.S. possessions — boosting local investment and supply-chain resilience — but does so at material fiscal cost, with narrower geographic/ownership eligibility and added tax compliance and international tax impacts.
Manufacturers in U.S. possessions and Puerto Rico receive a new 40% refundable/transferable tax credit for qualifying reshoring investments, lowering capital costs for building or upgrading facilities.
U.S. production of critical goods (APIs, semiconductors, medical countermeasures) is incentivized, which could strengthen supply-chain resilience and national security for Americans.
Taxpayers can elect direct payment or transfer of the credit, improving liquidity for developers and smaller firms that lack current tax liability.
A refundable and transferable 40% credit is likely to reduce federal revenue or increase deficits unless offset, imposing fiscal costs on U.S. taxpayers.
The changes add compliance and administrative burdens (for firms and the Treasury) — integrating the new credit into the investment-credit regime and adjusting systems for the new foreign-credit substitution will increase complexity and costs.
Owners of foreign subsidiaries that pay taxes to U.S. possessions will receive smaller deemed-paid foreign tax credits (80% instead of full), increasing U.S. tax liability or reducing net foreign tax relief for those firms.
Based on analysis of 3 sections of legislative text.
Creates a 40% investment tax credit for qualifying critical supply chain manufacturing investments (transferable/elective) and lowers deemed-paid credit for U.S. possession taxes to 80%.
Introduced February 13, 2025 by Nicole Malliotakis · Last progress February 13, 2025
Creates a new 40% investment tax credit for qualifying investments in U.S. critical supply chain manufacturing facilities (including U.S. possessions and Puerto Rico) and makes that credit transferable and electable for payment. Also reduces the deemed-paid foreign tax credit for taxes paid to U.S. possessions from 100% to 80%, changing how U.S. multinationals claim credits for possession taxes. The credit targets manufacturers of prioritized products (APIs, drugs, biologics, medical countermeasures, diagnostics, semiconductors and related equipment, certain aerospace equipment, and artificial nanomaterials), excludes taxpayers with significant foreign ownership or control by covered nations, and applies to property placed in service after December 31, 2024.