Advanced Manufacturing Investment Credit — Section 48D (CHIPS Act)

Advanced Manufacturing Investment Credit — Section 48D — TY2025 / Filed

Supports United States semiconductor manufacturers by offsetting domestic investments in chipmaking facilities through advanced manufacturing tax credits.

The Section 48D Advanced Manufacturing Investment Credit, established by the CHIPS Act of 2022, provides semiconductor manufacturers and semiconductor manufacturing equipment makers a credit equal to 25% of the qualified investment basis for eligible property placed in service in the United States. Property must be placed in service after December 31, 2022, and construction must begin before January 1, 2027, when the statutory authorization sunset takes effect. The credit is claimed on Form 3468 (Investment Credit) and Form 3800 (General Business Credit) with the TY2025 income tax return. Final IRS regulations were issued October 24, 2024 (IR-2024-275), following earlier implementation guidance issued June 2023 (IR-2023-117).

A key feature is the elective direct-pay option under Section 6417, which converts the credit into a cash payment against tax — particularly valuable to semiconductor manufacturers with limited current-year income tax liability, tax-exempt entities, and new market entrants. Partnerships and S-corporations may also elect to receive payment rather than pass the credit through. Taxpayers choosing elective payment must obtain a registration number from the IRS IRA/CHIPS Pre-filing Registration Tool for each qualified investment before making the election. The IRS controls credit eligibility under Section 48D; separate CHIPS Act direct grants administered by the Commerce Department CHIPS Program Office are a distinct program.

Eligible taxpayers include for-profit manufacturers and, via elective direct pay, tax-exempt organizations investing in advanced semiconductor manufacturing facilities. The credit is calculated on qualifying property basis, meaning large capital projects — new fabrication lines, packaging facilities, or equipment — generate proportionally larger credits. Companies should file a pre-filing registration before beginning elective-pay planning and consult the final October 2024 regulations for detailed definitions of advanced manufacturing facility and qualified property.