Sec. 2. Semiconductor investment tax credit

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Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 48C the following: For purposes of section 46, the qualifying semiconductor equipment credit for any taxable year is the applicable percentage of— the basis of any qualified semiconductor equipment placed in service during such taxable year, any qualified semiconductor manufacturing facility investment expenditures incurred during such taxable year, and any expenses incurred by the taxpayer during such taxable year with respect to entering into a lease (including renewal or extension of a lease) for qualified semiconductor equipment.

For purposes of subsection (a), the applicable percentage is— 40 percent in the case of any qualified semiconductor equipment which is placed in service before January 1, 2025, or any qualified semiconductor manufacturing facility investment expenditures or expenses described in subsection (a)(3) which are incurred before such date, 30 percent in the case of any such equipment which is placed in service, or any such expenditures or expenses which are incurred, after December 31, 2024, and before January 1, 2026, 20 percent in the case of any such equipment which is placed in service, or any such expenditures or expenses which are incurred, after December 31, 2025, and before January 1, 2027, and 0 percent in the case of any such equipment which is placed in service, or any such expenditures or expenses which are incurred, after December 31, 2026.

For purposes of this section, the term qualified semiconductor equipment means any property— which has been identified by the Secretary, in consultation with the Secretary of Commerce, as machinery or equipment that is designed and used to— manufacture or process semiconductors, or perform research with respect to semiconductors, which is placed in service in the United States by the taxpayer, and with respect to which depreciation (or amortization in lieu of depreciation) is allowable.

For purposes of this section, the term qualified semiconductor manufacturing facility investment expenditure means any amount properly chargeable to capital account— for property for which depreciation is allowable under section 168, and in connection with the construction or upgrading of any facility located in the United States which substantially operates qualified semiconductor equipment, including— costs relating to— acquiring or upgrading an existing building, or construction of a new building, and property such as— integrated systems, fixtures, piping, movable partitions, and lighting, and any property which has been identified by the Secretary, in consultation with the Secretary of Commerce, as necessary or adapted to— reduce contamination, or control air flow, temperature, humidity, chemical purity, or other environmental conditions or manufacturing tolerances.

Rules similar to the rules of subsections (c)(4) and

(d)of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of subsection (a). The amount of the credit determined under this section with respect to any qualified semiconductor equipment placed in service before January 1, 2027, or any qualified semiconductor manufacturing facility investment expenditures incurred before such date, shall be treated as a credit allowable under subpart C (and not allowable under section 38). If a credit is determined under this section with respect to any property, the basis of such property shall be reduced by the amount of the credit so determined. No credit shall be allowed under any provision of this chapter with respect to any amount taken in account in determining the credit allowed to a taxpayer under this section. For purposes of subsection (a)(3), rules similar to the rules under section 48(d) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply. No credit shall be allowed under this section with respect to any qualified semiconductor equipment which is used predominantly outside the United States. In the case of a credit under subsection

(a)which is determined at the partnership level, with respect to any partner which is exempt from taxation under section 501(a), such partner may elect to transfer their distributive share of such credit to any other partner in the partnership. The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this section, including any such measures as are deemed appropriate to avoid abuse or fraud with respect to the credit allowed under this section. . Section 59A(b)(1)(B)(ii) of the Internal Revenue Code of 1986 is amended— in subclause (II), by striking the period at the end and inserting , plus , and by adding at the end the following: the credit determined under section 48D for the taxable year. . Section 46 of the Internal Revenue Code of 1986 is amended by striking and at the end of paragraph (5), by striking the period at the end of paragraph

(6)and inserting , and , and by adding at the end the following new paragraph: the qualifying semiconductor equipment credit. . The table of sections for subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 48C the following new item: Sec. 48D. Qualifying semiconductor equipment credit. . The amendments made by this section shall apply to any qualified semiconductor equipment (as defined in subsection

(c)of section 48D) placed in service after the date of enactment of this Act, or any qualified semiconductor manufacturing facility investment expenditure (as defined in subsection

(d)of such section) incurred after such date.