CHIPS Act Section 48D in 2026: How US Manufacturers Lock In the 35% Credit Before It’s Gone

The federal Advanced Manufacturing Investment Credit (Section 48D) just got bigger — and shorter. The credit rate increased from 25% to 35% for qualified property placed in service after December 31, 2025. But there’s a hard cliff: the credit does not apply to property whose construction begins after December 31, 2026. For US manufacturers weighing a semiconductor or semiconductor-equipment facility, 2026 is the year to act — or miss the most generous version of this incentive.

What changed: 25% to 35%

Section 48D originated in the CHIPS and Science Act as a 25% investment tax credit for facilities whose primary purpose is manufacturing semiconductors or semiconductor manufacturing equipment. Subsequent tax legislation raised the rate to 35% for property placed in service after December 31, 2025. The credit has already helped catalyze more than $540 billion in announced US semiconductor-supply-chain investment across 100+ projects in 28 states — part of a broader wave of roughly $1.76 trillion in announced US manufacturing investment tracked since 2025.

The deadline that matters

The enhanced credit is not open-ended. Section 48D does not apply to property the construction of which begins after December 31, 2026. In practice that means the clock is on the start of construction, not completion — so projects need to be scoped, sited and underway this year to qualify. Note also that taxpayers electing the credit on qualified progress expenditures may be limited to the 25% rate, so timing and election strategy materially affect what you capture.

What qualifies

Eligibility centers on facilities whose primary purpose is manufacturing semiconductors or semiconductor manufacturing equipment. The credit applies to qualified investment in the facility’s tangible property integral to that purpose. Because the rules interact with recapture provisions under Section 50 and with state-level CHIPS/IRA incentives, most eligible taxpayers pair the federal credit with state programs — stacking that can meaningfully change project economics. Always confirm specifics with your tax counsel.

Why operational readiness decides the ROI

A 35% credit lowers your capital cost — but it doesn’t run the plant. New US fabs and supplier facilities are coming online through 2026, yet full staffing across announced sites isn’t expected until 2029 and beyond. That gap between built and productive is where returns are won or lost. Plants that instrument production from day one — capturing real-time OEE and production data — ramp faster and prove capacity sooner. The incentive funds the building; measurement funds the payback.

By the numbers: the investment wave

The scale of activity is what makes the deadline consequential. Federal incentives have helped catalyze more than $540 billion in announced US semiconductor-supply-chain investment across over 100 projects in 28 states, sitting inside a broader $1.76 trillion of announced US manufacturing investment tracked since 2025 across roughly 160 companies and 37 states. The largest single commitments run into the tens and hundreds of billions of dollars. For suppliers and equipment makers in the semiconductor value chain, that demand signal is durable — but the most favorable tax treatment for the facilities that serve it is time-boxed. The practical consequence is that capacity decisions you might otherwise phase over several years are worth pulling forward into 2026 if they can credibly begin construction in time.

Common §48D mistakes to avoid

Three errors repeatedly cost manufacturers credit value. First, misreading the trigger: the cliff is keyed to when construction begins, not when the facility is finished, so teams that plan around a completion date can miss the window entirely. Second, mishandling the progress-expenditure election — claiming on qualified progress expenditures can cap the rate at 25% even when the property is ultimately placed in service after 2025, so the election needs to be modeled, not defaulted. Third, ignoring stackable state incentives; many states layer their own CHIPS/IRA-aligned programs on top of the federal credit, and leaving those on the table can mean forgoing a material share of the total benefit. None of this is tax advice — it’s a prompt to get your counsel and your operations leads in the same room early.

Your 2026 action plan

Move in parallel on three tracks: (1) Tax — confirm §48D eligibility and the progress-expenditure election with counsel; (2) Project — get construction formally underway before the December 31, 2026 cliff; (3) Operations — design the monitoring and ramp plan now so the new line proves its capacity early. The discipline that ties them together is sequencing: the tax election shapes the financing, the financing gates the construction start, and the construction start sets when you need measurement live. Our free toolkit gives you the eligibility checklist, the timeline, and an operational-readiness checklist to run all three in sync. See how fast teams stand up measurement with a free POC, or review outcomes in our case studies.

Frequently asked questions

Is the CHIPS Act 48D credit 25% or 35%?

The Section 48D advanced manufacturing investment credit increased from 25% to 35% for qualified property placed in service after December 31, 2025. Taxpayers electing the credit on qualified progress expenditures may still be limited to the 25% rate, so the timing of your election matters.

What is the deadline for the 48D credit?

Section 48D does not apply to property the construction of which begins after December 31, 2026. The trigger is the start of construction, so projects must be underway in 2026 to qualify for the enhanced credit.

What facilities qualify for Section 48D?

Facilities whose primary purpose is manufacturing semiconductors or semiconductor manufacturing equipment. The credit covers qualified investment in tangible property integral to that purpose, and can often be stacked with state CHIPS/IRA incentives. Confirm details with tax counsel.