🎧 Listen to This Article
Federal Investment Tax Credit Raised from 25% to 35% for U.S. Semiconductor Manufacturing Projects
Micron Technology is poised to receive an additional $5 billion in federal tax credits for the first phase of its $100 billion chip manufacturing complex in Clay, New York, following the enactment of a new bill signed into law by President Donald Trump.
The legislation increases the Advanced Manufacturing Investment Tax Credit from 25% to 35% for semiconductor companies that invest in new domestic manufacturing facilities. The credit, which is fully refundable, applies to both construction and equipment costs.
Micron had previously estimated it would receive $11.3 billion in tax credits under the original 25% credit rate. With the newly enhanced 35% rate, that amount could rise to approximately $16 billion, making it the largest single public subsidy Micron has secured for its New York project.
Expanded Incentives at a Glance
In total, Micron’s first two fabrication plants in Clay (part of a $48 billion phase-one project) now stand to benefit from up to $25 billion in combined government support, including:
- $16 billion in federal tax credits (revised estimate)
- $4.6 billion in CHIPS and Science Act grants
- $2.2 billion in New York State Green CHIPS tax credits
- $1.8 billion in state and local sales tax exemptions
A Response to Soaring Construction Costs
The tax credit boost comes amid a sharp rise in U.S. construction and materials costs. Industry officials report a 10% average increase in chip plant construction costs over the past year, as over 120 U.S. semiconductor projects—valued at more than $540 billion—progress nationwide.
Micron and other chipmakers had been lobbying for stronger incentives to keep U.S.-based manufacturing competitive with Asia, where lower operating costs often provide a structural advantage.
Micron is also mid-way through a $15 billion expansion in Boise, Idaho, and recently pledged to invest an additional $30 billion in domestic projects, though none of that additional spending has yet been allocated to New York.
Legislative Path and Political Dynamics
The enhanced tax credit mirrors provisions in the Building Advanced Semiconductors Investment Credit (BASIC) Act, introduced in May by Rep. Claudia Tenney (R-NY) and backed by a bipartisan group of 10 New York House members. Though Tenney’s bill didn’t advance in the House, it formed the framework for Trump’s broader economic bill, which passed with Republican backing.
Notably, the final legislation did not extend the credit’s expiration date beyond 2026, the current cutoff for project eligibility. However, Micron officials believe all four planned fabrication facilities in Clay will qualify under current IRS guidance.
About the Advanced Manufacturing Investment Tax Credit
- Eligibility: U.S.-based semiconductor manufacturers investing in new construction and equipment
- Credit Rate: Now 35% of qualified capital expenditures (up from 25%)
- Refundability: Fully refundable, regardless of tax liability
- Expiration: Available through December 31, 2026, unless extended by future legislation
Micron CEO Sanjay Mehrotra reiterated that the company’s decision to build in New York was contingent on both federal grants and robust tax incentives, stating:
“Without this package of support, Micron would not have committed to expansion in New York—or even in the United States.”
For further details, clarification, contributions, or any concerns regarding this article, please get in touch with us at editorial@tax.news. We value your feedback and are committed to providing accurate and timely information. Please note that our privacy policy will handle all inquiries.
