# The FABS Act: A Tax Break for Semiconductor Manufacturing in America

This bill creates a new tax credit designed to encourage companies to build and expand semiconductor manufacturing facilities in the United States. Essentially, it's the government offering to reduce companies' taxes if they invest money in making computer chips domestically rather than overseas.

Here's how it works in practical terms: If a company builds a semiconductor factory or upgrades equipment at an existing one, they can claim a 25 percent tax credit on their investment. So if a company spends $100 million on a new chip-making facility, they could reduce their federal taxes by $25 million. The bill also offers a separate 25 percent credit for companies that spend money on semiconductor design and research—the work that goes into creating new chip technology. These credits are available through the end of 2032, giving companies more than a decade to take advantage of them.

The bill includes an interesting option called "direct payment," which allows companies to treat these tax credits as direct payments from the government rather than just reducing their tax bill. This is particularly helpful for new companies or those not currently making profits, since they might not have enough tax liability to use the full credit otherwise. However, there's a significant catch: if a company that receives these credits later transfers its semiconductor facility to a foreign company or gets taken over by foreign interests, the company has to pay back the credits it received. This safeguard is designed to prevent the credits from ultimately benefiting foreign competitors.

FABS Act

McCaul, Michael T.

Facilitating American-Built Semiconductors Act or the FABS Act This bill allows a new tax credit through 2032 for investment in any semiconductor manufacturing facility and for semiconductor design expenditures.