Bill Proposes 30% Tax Credit and Per-Pound Incentives to Boost U.S. Infant Formula Manufacturing

The Infant Formula Made in America Act of 2025 aims to strengthen domestic production by creating two new tax credits for manufacturers. The core idea is to incentivize companies to invest in building or expanding formula-making facilities within the U.S. and reward them for the formula they produce here, specifically targeting companies with under $750 million in global revenue.

Gearing Up: The Investment Credit

First up is a significant tax break for getting production lines running. Section 2 outlines a 30% investment tax credit for the costs of eligible property – think machinery and equipment – used in a qualifying infant formula manufacturing project. This could involve re-tooling an existing plant, expanding one, or building something entirely new. To qualify for this credit, a company's global revenue can't top $750 million in the prior year. They also need to get certified by the Treasury Secretary, promising that at least 50% of the formula made will be sold for use in the U.S. There are caps: no single project can get more than $150 million in credits, and the total pot for all projects is limited to $750 million. Companies have a tight timeline: one year after acceptance to meet certification requirements and three years after certification to get the project up and running. If they don't meet these terms, or if the property stops being used for formula production within a year, the government can claw back the tax credit plus interest – a provision known as 'recapture'. This investment credit applies to projects starting construction after the bill's enactment.

The Payoff: The Production Credit

Beyond building facilities, the bill also rewards actual production. Section 3 introduces an infant formula production credit. Eligible manufacturers (again, generally those under the $750 million revenue cap or those who received the credit previously) can claim $2 for every pound of qualifying infant formula they produce and sell for use in the United States. This isn't unlimited, though; the credit applies only up to 18 million pounds of formula per taxpayer per year. Another key point: this production credit is temporary, lasting only for a 5-year period starting from the first year a company claims it. The bill notes this credit can be transferred or taken as a direct payment, potentially making it more accessible for companies that might not have large tax liabilities. This credit applies to formula manufactured after the bill becomes law.

What It Means on the Ground

Taken together, these credits represent a targeted push to onshore more infant formula production. By offering financial incentives for both capital investment and ongoing production, the bill tries to make manufacturing formula in the U.S. more economically attractive. The focus on companies below the $750 million revenue threshold suggests an effort to support smaller or mid-sized players, potentially diversifying the market. However, the overall $750 million cap on investment credits and the 5-year limit on the production credit might restrict the long-term scale of the impact. The certification and recapture rules show an intent to ensure the credits genuinely support domestic supply, rather than just subsidizing production for export.