Treasury Issues Proposed Semiconductor Chips Tax Credit Rules (2)

The IRS issued proposed rules Tuesday carving out who will be eligible for the tax credit for research and manufacturing of semiconductor chips.

The rules (RIN 1545-BQ54), which implement the CHIPS Act enacted last year, provide a 25% tax credit and $52 billion to help boost US competitiveness against China. The credit, under Section 48D, can be applied starting Jan. 1 and will sunset in 2026.

The rules clarify who is and isn’t eligible for the tax credit, saying that research and packaging facilities may qualify for the tax credit but facilities that manufacture materials or chemicals ...