# The MMEDS Act of 2021: Tax Breaks to Boost Medical Manufacturing in Struggling Areas

This bill creates a new tax incentive program designed to encourage companies to manufacture medical products in economically distressed parts of the United States and its territories. Essentially, the government is offering tax credits—money companies don't have to pay in taxes—to reward medical manufacturers who set up or expand operations in poor communities and hire workers there.

Here's how it works in practice. If a pharmaceutical or medical device company opens a manufacturing facility in a designated economically distressed zone, they can claim a tax credit worth 40 percent of the wages they pay to employees at that facility, plus 40 percent of employee benefits like health insurance and retirement contributions, plus 40 percent of the depreciation on equipment and buildings. These credits stack up, potentially saving a company millions in taxes. The bill also offers tax credits to medical manufacturers who buy products or services from suppliers located in these distressed zones—30 percent of what they spend, or higher percentages if they buy from minority-owned businesses. The goal is to create jobs and economic activity in communities that have been left behind, while also ensuring the United States has domestic capacity to produce critical medical supplies rather than relying on foreign manufacturers.

The bill includes special bonuses for two types of facilities. If a company brings manufacturing back from a foreign country that poses supply chain risks (like China), or if they manufacture products that address health problems in vulnerable populations during pandemics, the tax credits jump to 60 percent. Companies can also choose to immediately deduct the full cost of equipment instead of claiming tax credits, which can be more valuable depending on their tax situation. The bill defines "economically distressed zones" as census tracts where at least 35 percent of people live in poverty, or areas with 30 percent poverty that apply for and receive official designation. These designations last for 15 years, giving companies time to plan long-term investments.

MMEDS Act of 2021

González-Colón, Jenniffer

Medical Manufacturing, Economic Development, and Sustainability Act of 2021 or the MMEDS Act of 2021 This bill provides incentives for relocating medical manufacturing facilities in the United States and for manufacturing medical products (i.e., drugs and devices) in economically distressed zones. Specifically, the bill allows a income tax credit for 40% of the sum of wages paid in a medical manufacturing economically distressed zone, employee fringe benefit expenses, and depreciation and amortization allowances with respect to qualified medical manufacturing facility property, and a credit for economically distressed zone products and services acquired by domestic medical manufacturers. The bill increases the credit rate for minority businesses.