HB1328, titled the Supply Chain Security and Growth Act of 2025, would create a new federal income tax credit for investments in certain “critical supply chain facilities.” The credit would equal 40 percent of qualified investment in facilities placed in service after December 31, 2024, and would apply to facilities primarily manufacturing active pharmaceutical ingredients, drugs, biological products, medical countermeasures, medical diagnostic devices, semiconductors and semiconductor manufacturing equipment, aerospace equipment, and artificial nanomaterials. To qualify, the taxpayer must not be a prohibited foreign entity, and the facility must generally be located in a U.S. possession or Puerto Rico; an additional aggregation rule is included for affiliated groups investing in economically distressed zones.
The bill also makes the new credit compatible with existing tax administration rules by allowing elective payment and transferability, and by adding the credit to the list of investment credits under section 46. It further coordinates the new credit with the electricity production credit so the same facility cannot receive both benefits for the same taxable year, and it expands a separate foreign tax credit rule by increasing the deemed credit for certain taxes paid to U.S. possessions from 80 percent to 100 percent. The effective dates are generally for property placed in service or taxes paid after December 31, 2024.
The bill’s impact on state and federal law is primarily through amendments to the Internal Revenue Code, not state statutes. It would create a substantial new federal tax incentive aimed at reshoring manufacturing capacity for supply-chain-sensitive industries, especially in U.S. territories and Puerto Rico, while also restricting eligibility for entities tied to certain foreign governments or foreign entities of concern. The measure could affect manufacturers, investors, and territorial businesses by lowering the after-tax cost of building or expanding qualifying facilities.
Because there are no recorded committee transcripts or votes in the provided material, there is no documented floor or committee sentiment beyond the bill’s introduction and referral. The bipartisan list of original sponsors suggests broad interest in supply-chain resilience, domestic manufacturing, and territorial economic development. At the same time, the bill’s foreign-entity restrictions, the concentration of benefits in possessions and Puerto Rico, and the interaction with other energy tax credits could be points of policy debate if the measure advances.
HB1328 would amend the Internal Revenue Code to add a new 40 percent investment tax credit for qualifying critical supply chain facilities, make that credit transferable and eligible for elective payment, coordinate it with the electricity production credit, and increase the deemed foreign tax credit for taxes paid to U.S. possessions. The practical effect would be to incentivize investment in specified manufacturing sectors in U.S. possessions and Puerto Rico, while excluding prohibited foreign entities and limiting overlap with certain other credits.
No committee discussion or vote record was provided, so there is no direct evidence of opposition or support from debate. The bill’s introduction by a bipartisan group of House members indicates generally favorable interest in supply-chain security, domestic production, and economic development in U.S. territories. The absence of recorded votes means overall legislative sentiment cannot be measured beyond that initial bipartisan sponsorship.
The main likely points of contention are the scope and cost of the new tax credit, the decision to focus eligibility on facilities in U.S. possessions and Puerto Rico, and the exclusion of prohibited foreign entities and foreign-linked ownership structures. Some policymakers may question whether the credit should be limited to certain industries and locations, whether it duplicates or competes with other federal incentives, and whether the 40 percent rate is too generous. Others may support the bill as a targeted tool for reshoring critical manufacturing and reducing dependence on foreign supply chains.