In July 2025, Congress raised the Advanced Manufacturing Investment Credit (AMIC) in the tax code’s §48D from 25% to 35%—for qualified property placed in service after December 31, 2025. This is a meaningful boost to America’s semiconductor build-out, tightening the economics of fab construction and equipment purchases inside the United States. Congress.govLegal Information Institute

1) Birth in the CHIPS Act (2022)

Congress created §48D in the CHIPS and Science Act of 2022, offering a 25% investment tax credit for qualified semiconductor manufacturing facilities and semiconductor equipment manufacturing. The law also allowed “elective pay” (direct pay) so companies could monetize the credit even without current tax liability—key for capital-intensive projects. IRS

2) Treasury/IRS implementation (2024)

Final regulations issued in October 2024 defined core eligibility terms (e.g., “advanced manufacturing facility,” what counts as “qualified property”), clarified location/contiguity rules for co-located assets (like water treatment or gas separation units), and established a 10-year recapture framework tied to significant expansions in a “foreign country of concern.” The regs confirmed the original timing rules: AMIC applies to property placed in service after 12/31/2022 and does not apply to property whose construction begins after 12/31/2026. Federal Register

3) The 2025 upgrade: Section 70308

In 2025, Congress enacted Section 70308 (“Enhancement of Advanced Manufacturing Investment Credit”) within H.R. 1 (the One Big Beautiful Bill Act). Section 70308 amends §48D(a) by replacing “25 percent” with “35 percent,” and applies this higher rate to property placed in service after December 31, 2025. The codified U.S. Code for §48D now reflects the 35% rate, with a statutory note confirming that effective date. Congress.govLegal Information Institute

What stays the same?
The statute’s construction-window limit remains: the credit “shall not apply to property the construction of which begins after December 31, 2026.” Companies must still navigate the foreign-entity-of-concern rules and recapture guardrails. Federal RegisterLegal Information Institute

How the credit actually works (in practice)

Who qualifies? U.S. taxpayers that are not foreign entities of concern and that have not undertaken disqualifying “applicable transactions” abroad. Federal Register

What qualifies? Tangible, depreciable property that is integral to operating a semiconductor or semiconductor-equipment manufacturing facility; certain buildings/structural components qualify (office space does not). Federal Register

When does the new 35% rate apply? To qualified property placed in service after 12/31/2025; property placed in service earlier remains under the 25% regime. Congress.govLegal Information Institute

How do firms realize the benefit? Taxpayers can claim the credit on Form 3468 and may elect direct pay (elective payment) after completing required registration. IRS

Why Congress’s 2025 action is a positive step for the U.S. semiconductor industry

1) It narrows the cost gap that drove fabs overseas

Even with the CHIPS Act, building and running a leading-edge fab in the U.S. has been materially more expensive than in East Asia. Independent analysis highlights that incentives account for a large share of this gap; the original 25% credit helped close it, and moving to 35% strengthens the U.S. value proposition further. ITIF

2) It amplifies a surge of private investment already underway

Since CHIPS passed, companies have announced hundreds of billions in U.S. semiconductor and supply-chain investments, spanning 100+ projects in 28 states and including dozens of fabs. Analysts project U.S. manufacturing capacity could triple by 2032, with notable gains in advanced logic. Boosting the AMIC to 35% keeps momentum onshore, helping these commitments reach the finish line. ITIFCSIS

3) It complements, rather than replaces, grants and loans

Grants can be uncertain in timing and size; by contrast, the AMIC is predictable at the time of investment (especially with elective pay). Increasing the rate to 35% deepens that predictability and lowers the weighted average cost of capital for multi-billion-dollar fabs and equipment clusters. IRS

4) It strengthens supply-chain resilience and national security

A larger domestic base for wafers, advanced packaging, and tool manufacturing reduces exposure to geopolitical risk. The 2024 final rules also include a 10-year recapture if a recipient materially expands capacity in a foreign country of concern—guardrails that align the higher incentive with strategic objectives. Federal Register

Why Congress’s 2025 action is a positive step for the U.S. semiconductor industry

Placed in service 1/1/2023–12/31/2025: 25% AMIC. IRS

Placed in service on/after 1/1/2026: 35% AMIC (assuming all other §48D requirements are met). Congress.govLegal Information Institute

Construction start after 12/31/2026:No AMIC under current law. Firms should ensure projects begin construction on or before 12/31/2026 to stay eligible. Federal Register

The bigger picture: a policy that’s working—now working better

The original §48D credit has been a cornerstone of America’s semiconductor revival: it’s simple, bankable, and designed for the sector’s capital intensity. The 2025 enhancement to 35% is therefore more than a marginal tweak—it materially improves after-tax project economics and keeps the U.S. competitive against jurisdictions that pair industrial policy with deep subsidies. In a market where a single leading-edge fab can cost tens of billions of dollars, that extra ten percentage points can be the difference between a groundbreaking in Ohio or Oregon versus one in Hsinchu or Pyeongtaek. ITIF

A constructive note on next steps

To maximize the impact of the 35% rate, policymakers could consider: (1) re-examining the 12/31/2026 construction-start deadline so late-stage projects don’t slip out of eligibility due to permitting or supply-chain delays, and (2) ensuring complementary investments—in workforce, infrastructure, and R&D—keep pace with the capital influx. But even without further changes, Section 70308 is a clear and welcome escalation of America’s commitment to on-shore semiconductor manufacturing. Federal Register

Sources & statutory anchors

H.R. 1 (119th Congress)—Section 70308 text increasing §48D from 25% to 35% and setting the effective date (property placed in service after 12/31/2025). Congress.gov

26 U.S.C. §48D (current text and editor’s notes)—shows 35% and cites Pub. L. 119–21, §70308 with effective-date note. Legal Information Institute

IRS AMIC page—program overview, 25% baseline, elective pay/registration, forms. (Page last reviewed May 29, 2025; statutory change is effective for post-2025 placed-in-service property.) IRS

Federal Register final regulations (Oct. 23, 2024)—definitions, eligibility, co-located property rules, and 10-year recapture. Federal Register

ITIF / CSIS—industry impact: $540B+ announced investments, 100+ projects, capacity projections, cost differentials, and why credits matter. ITIFCSIS

Bottom line

Congress’s 2025 enhancement of §48D from 25% to 35% is a timely, targeted, and effective policy move. It accelerates private investment, shores up supply-chain resilience, and strengthens America’s long-term technological leadership—exactly the kind of pragmatic industrial strategy the United States of America needs in a strategically vital sector.

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