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ARTICLE · 01 APRIL 2024

Treasury Department, IRS Release Final Regulations On Direct Pay Under CHIPS Act Section 48D

Holland & Knight
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The Chips and Science Act of 2022 (CHIPS Act) added Section 48D to the Internal Revenue Code to incentivize the production of semiconductors and semiconductor manufacturing equipment in the United States.

United StatesTax
Nicole Elliott
Nicole Elliott
Joshua David Odintz
Joshua David Odintz
Nicholas Leibham
Nicholas Leibham
Greg M. Louer
Greg M. Louer
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Highlights

  • The Chips and Science Act of 2022 (CHIPS Act) added Section 48D to the Internal Revenue Code to incentivize the production of semiconductors and semiconductor manufacturing equipment. The Section 48D credit is generally 25 percent of the basis of any qualified property that is part of an eligible taxpayer's advanced manufacturing facility.
  • Similar to many of the tax credits included in the Inflation Reduction Act (IRA), the Section 48D credit enables taxpayers to receive direct payment (sometimes referred to as elective payment).
  • Unlike some of the IRA credits, direct payment of Section 48D credits is not limited to tax-exempt entities. Rather, any taxpayer undertaking activities provided for in Section 48D can request direct pay.

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