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To amend the Internal Revenue Code of 1986 to establish the critical supply chains reshoring investment tax credit.
2/14/2025, 9:35 AM
Summary of Bill HR 1328
Under this legislation, companies that invest in reshoring their supply chains will be eligible for a tax credit to help offset the costs associated with relocating production back to the US. The tax credit will be based on a percentage of the eligible expenses incurred by the company in reshoring their supply chains.
The goal of this bill is to reduce the country's reliance on foreign suppliers for critical goods and services, and to strengthen domestic manufacturing capabilities. By encouraging companies to bring their supply chains back to the US, the bill aims to create more jobs, boost economic growth, and enhance national security. Overall, the Critical Supply Chains Reshoring Investment Tax Credit Act seeks to promote reshoring of critical supply chains and support American businesses in building a more resilient and self-sufficient economy.
Congressional Summary of HR 1328
Supply Chain Security and Growth Act of 2025
This 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 is
- placed into service during the tax year;
- integral to the operation of a critical supply chain facility; and
- constructed, 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.)
