HR1328-119

1. Short title This Act may be cited as the Supply Chain Security and Growth Act of 2025.

2. Critical supply chains reshoring investment credit Subpart E of part IV of subchapter A of the Internal Revenue Code of 1986 is amended by inserting after section 48E the following new section: For purposes of section 46, in the case of a qualifying taxpayer, the critical supply chains reshoring investment credit is an amount equal to 40 percent of the qualified investment with respect to any critical supply chain facility placed in service during such taxable year. For purposes of this section— The term qualifying taxpayer means a taxpayer that is not a prohibited foreign entity. For purposes of this paragraph, the term prohibited foreign entity means— any foreign entity of concern (as defined in section 40207(a)(5) of the Infrastructure Investment and Jobs Act), any entity with respect to which the government of a covered nation has the right or power (directly or indirectly) to appoint or approve the appointment of a covered officer, or any entity 25 percent or more of the capital or profits interests of which are owned (directly or indirectly) in the aggregate by 1 or more of the following: A covered nation or an entity described in clause (i) or (ii). A citizen, national, or resident of a covered nation. An entity organized under the laws of a covered nation. For purposes of this paragraph, the term covered officer means— any member of the board of directors, board of supervisors, or an equivalent governing body, the president, senior vice president, chief executive officer, chief operating officer, chief financial officer, or general counsel, or any individual who performs duties usually associated with a title listed in clause (i) or (ii). For purposes of this paragraph, the term covered nation has the meaning given such term in section 4872(d) of title 10, United States Code. The qualified investment with respect to any critical supply chain facility for any taxable year is an amount equal to the basis of any qualified property placed in service by the taxpayer during such taxable year which is part of a such facility. The term qualifying property means property— that is integral to the operation of a critical supply chain facility, that is tangible property, with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and which is— constructed, reconstructed, or erected by the taxpayer, or acquired by the taxpayer if the original use of such property commences with the taxpayer. Property shall be treated as reconstructed for purposes of this paragraph if improvements to such property satisfy the substantial improvement test of section 1400Z–2(d)(2)(D)(ii). The term critical supply chain facility means a facility— the primary purpose of which is the manufacturing of— An active pharmaceutical ingredient (as defined in section 2017.1 of title 21, Code of Federal Regulations (or any successor regulations)), A drug (as defined in section 201(g) of the Federal Food, Drug, and Cosmetic Act), A biological product (as defined in section 351(i)(1) of the Public Health Service Act), A medical countermeasure (as defined in section 319F–3(i)(1) of the Public Health Service Act), A medical diagnostic device (as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act) intended for use in the diagnosis of disease or other conditions, Semiconductors or semiconductor manufacturing equipment, Aerospace equipment as defined under North American Industry Classification Code 3364, or Artificial nanomaterials, and located in— a specified possession within the meaning of section 937(c), or Puerto Rico. Members of a qualified affiliated group shall be treated as a single taxpayer. The term qualified affiliated group means an affiliated group (as defined in section 1504(a), determined without regard to section 1504(b)(3)) at least 1 member of which has made a qualified investment in a critical supply chain facility located in an economically distressed zone. For purposes of this subparagraph, the term economically distressed zone means a population census tract that— is a qualified opportunity zone (as defined in section 1400z–1(a)), and has a poverty rate of not less than 30 percent. The credit determined under subsection (a) shall be determined without regard to paragraphs (1) and (4) of section 50(b). Section 45(e) of such Code is amended by adding at the end the following new subsection: The term qualified facility shall not include any facility if a credit is allowed under section 48F with respect to such facility for the taxable year or any prior taxable year. Section 6417(b) of such Code is amended by adding at the end the following: The critical supply chains reshoring investment credit determined under section 48F. Section 6417(d)(1) is amended— by redesignating subparagraph (E) as subparagraph (F), and by inserting after subparagraph (D) the following new subparagraph: If a taxpayer other than an entity described in subparagraph (A) makes an election under this subparagraph with respect to any taxable year in which such taxpayer has placed in service a critical supply chain facility (as defined in section 48F(b)(4)), such taxpayer shall be treated as an applicable entity for purposes of this section for such taxable year, but only with respect to the credit described in subsection (b)(13). Section 6418(f)(1)(A) of such Code is amended by adding at the end the following: The critical supply chains reshoring investment credit determined under section 48F. Section 46 of such Code is amended by striking and at the end of paragraph (6), by striking the period at the end of paragraph (7) and inserting , and, and by adding at the end the following new paragraph: the critical supply chains reshoring investment credit. The amendments made by this section shall apply to property placed in service after December 31, 2024. 48F.Critical supply chains reshoring investment credit(a)In generalFor purposes of section 46, in the case of a qualifying taxpayer, the critical supply chains reshoring investment credit is an amount equal to 40 percent of the qualified investment with respect to any critical supply chain facility placed in service during such taxable year.(b)Definitions and special rulesFor purposes of this section—(1)Qualifying taxpayer(A)In generalThe term qualifying taxpayer means a taxpayer that is not a prohibited foreign entity.(B)Prohibited foreign entityFor purposes of this paragraph, the term prohibited foreign entity means—(i)any foreign entity of concern (as defined in section 40207(a)(5) of the Infrastructure Investment and Jobs Act),(ii)any entity with respect to which the government of a covered nation has the right or power (directly or indirectly) to appoint or approve the appointment of a covered officer, or(iii)any entity 25 percent or more of the capital or profits interests of which are owned (directly or indirectly) in the aggregate by 1 or more of the following:(I)A covered nation or an entity described in clause (i) or (ii).(II)A citizen, national, or resident of a covered nation.(III)An entity organized under the laws of a covered nation.(C)Covered officerFor purposes of this paragraph, the term covered officer means—(i)any member of the board of directors, board of supervisors, or an equivalent governing body,(ii)the president, senior vice president, chief executive officer, chief operating officer, chief financial officer, or general counsel, or(iii)any individual who performs duties usually associated with a title listed in clause (i) or (ii).(D)Covered nationFor purposes of this paragraph, the term covered nation has the meaning given such term in section 4872(d) of title 10, United States Code.(2)Qualified investmentThe qualified investment with respect to any critical supply chain facility for any taxable year is an amount equal to the basis of any qualified property placed in service by the taxpayer during such taxable year which is part of a such facility.(3)Qualifying property(A)In generalThe term qualifying property means property—(i)that is integral to the operation of a critical supply chain facility,(ii)that is tangible property,(iii)with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and(iv)which is—(I)constructed, reconstructed, or erected by the taxpayer, or(II)acquired by the taxpayer if the original use of such property commences with the taxpayer.(B)Reconstructed propertyProperty shall be treated as reconstructed for purposes of this paragraph if improvements to such property satisfy the substantial improvement test of section 1400Z–2(d)(2)(D)(ii).(4)Critical supply chain facilityThe term critical supply chain facility means a facility—(A)the primary purpose of which is the manufacturing of—(i)An active pharmaceutical ingredient (as defined in section 2017.1 of title 21, Code of Federal Regulations (or any successor regulations)),(ii)A drug (as defined in section 201(g) of the Federal Food, Drug, and Cosmetic Act),(iii)A biological product (as defined in section 351(i)(1) of the Public Health Service Act),(iv)A medical countermeasure (as defined in section 319F–3(i)(1) of the Public Health Service Act),(v)A medical diagnostic device (as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act) intended for use in the diagnosis of disease or other conditions,(vi)Semiconductors or semiconductor manufacturing equipment,(vii)Aerospace equipment as defined under North American Industry Classification Code 3364, or(viii)Artificial nanomaterials, and(B)located in—(i)a specified possession within the meaning of section 937(c),(ii)or Puerto Rico.(5)Aggregation rule(A)In generalMembers of a qualified affiliated group shall be treated as a single taxpayer.(B)Qualified affiliated group(i)In generalThe term qualified affiliated group means an affiliated group (as defined in section 1504(a), determined without regard to section 1504(b)(3)) at least 1 member of which has made a qualified investment in a critical supply chain facility located in an economically distressed zone.(ii)Economically distressed zoneFor purposes of this subparagraph, the term economically distressed zone means a population census tract that—(I)is a qualified opportunity zone (as defined in section 1400z–1(a)), and(II)has a poverty rate of not less than 30 percent.(6)Exemption from certain special rulesThe credit determined under subsection (a) shall be determined without regard to paragraphs (1) and (4) of section 50(b).. (e)Coordination with critical supply chains reshoring investment creditThe term qualified facility shall not include any facility if a credit is allowed under section 48F with respect to such facility for the taxable year or any prior taxable year.. (13)The critical supply chains reshoring investment credit determined under section 48F.. (E)Election with respect to critical supply chains reshoring creditIf a taxpayer other than an entity described in subparagraph (A) makes an election under this subparagraph with respect to any taxable year in which such taxpayer has placed in service a critical supply chain facility (as defined in section 48F(b)(4)), such taxpayer shall be treated as an applicable entity for purposes of this section for such taxable year, but only with respect to the credit described in subsection (b)(13).. (xii)The critical supply chains reshoring investment credit determined under section 48F.. (8)the critical supply chains reshoring investment credit..

48F. Critical supply chains reshoring investment credit For purposes of section 46, in the case of a qualifying taxpayer, the critical supply chains reshoring investment credit is an amount equal to 40 percent of the qualified investment with respect to any critical supply chain facility placed in service during such taxable year. For purposes of this section— The term qualifying taxpayer means a taxpayer that is not a prohibited foreign entity. For purposes of this paragraph, the term prohibited foreign entity means— any foreign entity of concern (as defined in section 40207(a)(5) of the Infrastructure Investment and Jobs Act), any entity with respect to which the government of a covered nation has the right or power (directly or indirectly) to appoint or approve the appointment of a covered officer, or any entity 25 percent or more of the capital or profits interests of which are owned (directly or indirectly) in the aggregate by 1 or more of the following: A covered nation or an entity described in clause (i) or (ii). A citizen, national, or resident of a covered nation. An entity organized under the laws of a covered nation. For purposes of this paragraph, the term covered officer means— any member of the board of directors, board of supervisors, or an equivalent governing body, the president, senior vice president, chief executive officer, chief operating officer, chief financial officer, or general counsel, or any individual who performs duties usually associated with a title listed in clause (i) or (ii). For purposes of this paragraph, the term covered nation has the meaning given such term in section 4872(d) of title 10, United States Code. The qualified investment with respect to any critical supply chain facility for any taxable year is an amount equal to the basis of any qualified property placed in service by the taxpayer during such taxable year which is part of a such facility. The term qualifying property means property— that is integral to the operation of a critical supply chain facility, that is tangible property, with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and which is— constructed, reconstructed, or erected by the taxpayer, or acquired by the taxpayer if the original use of such property commences with the taxpayer. Property shall be treated as reconstructed for purposes of this paragraph if improvements to such property satisfy the substantial improvement test of section 1400Z–2(d)(2)(D)(ii). The term critical supply chain facility means a facility— the primary purpose of which is the manufacturing of— An active pharmaceutical ingredient (as defined in section 2017.1 of title 21, Code of Federal Regulations (or any successor regulations)), A drug (as defined in section 201(g) of the Federal Food, Drug, and Cosmetic Act), A biological product (as defined in section 351(i)(1) of the Public Health Service Act), A medical countermeasure (as defined in section 319F–3(i)(1) of the Public Health Service Act), A medical diagnostic device (as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act) intended for use in the diagnosis of disease or other conditions, Semiconductors or semiconductor manufacturing equipment, Aerospace equipment as defined under North American Industry Classification Code 3364, or Artificial nanomaterials, and located in— a specified possession within the meaning of section 937(c), or Puerto Rico. Members of a qualified affiliated group shall be treated as a single taxpayer. The term qualified affiliated group means an affiliated group (as defined in section 1504(a), determined without regard to section 1504(b)(3)) at least 1 member of which has made a qualified investment in a critical supply chain facility located in an economically distressed zone. For purposes of this subparagraph, the term economically distressed zone means a population census tract that— is a qualified opportunity zone (as defined in section 1400z–1(a)), and has a poverty rate of not less than 30 percent. The credit determined under subsection (a) shall be determined without regard to paragraphs (1) and (4) of section 50(b).

3. Increase in deemed credit for taxes paid to possession of the United States Section 960(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: In the case of tested foreign income taxes paid or accrued to a possession of the United States, paragraph (1) shall be applied by substituting 100 percent for 80 percent. The amendments made by this section shall apply to taxes paid or accrued after December 31, 2024. (4)Increase for taxes paid to possession of United StatesIn the case of tested foreign income taxes paid or accrued to a possession of the United States, paragraph (1) shall be applied by substituting 100 percent for 80 percent..