President Joe Biden on August 9 signed the CHIPS and Science Act of 2022 (H.R. 4346), a semiconductor manufacturing and economic competitiveness package that includes an investment tax credit for semiconductor manufacturing facilities and equipment.

“The future is going to be made in America,” Biden said, calling the measure “a once-in-a-generation investment in America itself.”

The $280 billion legislation includes more than $52 billion for U.S. companies producing computer chips, as well as a tax credit for investment in chip manufacturing. Specifically, the legislation establishes a 25% tax credit for investments in semiconductor manufacturing, including the production of specialized equipment used in making chips. It also provides funding to spur the innovation and development of other U.S. technologies.

Taxpayers may elect to treat the credit as a payment against tax (“direct pay”). The credit is provided for property placed in service after December 31, 2022, and for which construction begins before January 1, 2027.

In late July, the House of Representatives and the Senate approved the CHIPS and Science Act following nearly two years of negotiations and political infighting.