BASIC ACT Proposes 35% Tax Credit for Chip Makers, Extending Investment Window to 2030

The new legislation, dubbed the Building Advanced Semiconductors Investment Credit Act (BASIC ACT), gets straight to the point: it wants to make it significantly more attractive for companies to build and upgrade advanced manufacturing facilities here in the U.S. Specifically, Section 2 of the bill focuses on supercharging the existing tax credit for these investments. Right now, companies can claim a 25 percent tax credit on certain manufacturing property; the BASIC ACT bumps that rate up by a full 10 points to 35 percent. This enhanced credit—which is essentially a discount on a company’s tax bill—applies to any eligible property placed into service after the law is enacted.

The Semiconductor Supercharger: More Credit, More Time

Think of this as pressing the accelerator on domestic chip production. The 35 percent credit is a massive financial incentive aimed squarely at companies ready to pour billions into building domestic semiconductor fabrication plants (fabs) and other advanced facilities. For a company planning a $10 billion investment, this single provision means the difference between a $2.5 billion tax break and a $3.5 billion tax break. That extra billion dollars can dramatically shift the financial calculations for where these large capital projects land, making the U.S. a much more competitive location.

Beyond the rate hike, the bill also extends the deadline for claiming this enhanced credit. The current expiration date was set for the end of 2026, which is fast approaching for projects that take years to plan and build. The BASIC ACT pushes that deadline out four years, to December 31, 2030. This extension is crucial because it gives companies the long-term certainty needed to greenlight massive, multi-year construction projects. For the average worker, this means more sustained investment in construction jobs, engineering roles, and eventually, high-tech manufacturing jobs over the next decade.

The Trade-Off: Who Pays for the Upgrade?

While the goal is to secure the U.S. supply chain and create high-value jobs—which benefits the economy broadly—it’s important to look at the mechanics. This tax credit is a direct reduction in federal revenue. When the government gives a company a $3.5 billion tax break, that’s $3.5 billion that isn't available for other federal programs or deficit reduction. The cost of this incentive is ultimately borne by taxpayers. The analysis shows this bill will create an economic burden on taxpayers due to the significant reduction in federal revenue that comes with increasing a tax credit from 25% to 35%, especially when applied to multi-billion dollar investments in new facilities. It’s a classic trade-off: use federal funds as an incentive to spur private sector investment in a critical industry, or keep those funds for other purposes. The BASIC ACT clearly chooses the incentive route to boost domestic manufacturing capacity.