American manufacturers that build factories in U.S. territories or Puerto Rico to produce critical goods — including pharmaceutical ingredients, drugs, semiconductors, aerospace equipment, and medical devices — would get a new 40% federal tax credit on their investment under this bill. The credit specifically excludes companies with significant ownership or governance ties to China, Russia, or other countries designated as foreign threats. Eligible companies could claim the credit directly, transfer it to another taxpayer, or get it paid out as cash through a one-time election. The bill also raises the credit U.S. companies get for taxes paid in U.S. possessions from 80% to 100%, making investment in those regions more financially attractive.
Corporate Benefits
- Critical-supply-chain investment credit — New 40% federal credit for U.S.-territory factories making drugs, chips, or medical devices
- U.S. possessions tax credit — Raised from 80% to 100% for taxes paid by domestic companies in U.S. territories
Congressional Summary
Supply Chain Security and Growth Act of 2025This bill establishes a tax credit for qualified investments made in certain facilities that are located in a U.S. possession and manufacture drugs, pharmaceuticals, semiconductors, or certain other items, subject to limitations. The bill also increases the deemed-paid foreign tax credit for taxes paid to a U.S. possession.Specifically, under the bill, a taxpayer (other than a prohibited foreign entity) is allowed a tax credit for 40% of an investment in certain property that isplaced into service during the tax year;integral to the operation of a critical supply chain facility; andconstructed, reconstructed, or erected by the taxpayer, or property acquired for original used by the taxpayer.The bill defines critical supply chain facility as a facility that (1) manufactures active pharmaceutical ingredients, drugs, biologic products, medical countermeasures, medical diagnostic devices, semiconductors, semiconductor manufacturing equipment, aerospace equipment, or artificial nanomaterials; and (2) is located in Puerto Rico, Guam, American Samoa, the Northern Mariana Islands, or the Virgin Islands.Under the bill, the tax credit is transferable and may be claimed as a direct cash payment (i.e., elective payment). (Limitations apply.)Finally, the bill increases to 100% (from 80%) the deemed-paid foreign tax credit for income taxes paid or accrued by a controlled foreign corporation (CFC) to a U.S. possession. (Under current law, a U.S. shareholder of a CFC is allowed a tax credit for income taxes paid by a CFC on certain income attributable to the U.S. shareholder.)
Details
- Congress
- 119th
- Chamber
- House
- Status
- summarized
- Action
- Introduced in House
- Action Date
- 2025-02-13
- Date Added
- 2026-05-02
- Source
- Congress.gov →
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