Trump raises tax credits for US chipmakers from 25% to 35%

Tax breaks for chipmakers building in the US just got a major upgrade after the Senate passed Donald Trump’s latest bill on Tuesday.

The legislation bumps tax credits for semiconductor manufacturing from 25% to 35%, giving companies like Intel, Micron, and Taiwan Semiconductor Manufacturing Company a bigger reason to set up new plants across American soil.

The goal, according to CNBC, is to pull more of the world’s advanced chip production away from Asia and get it done at home before a 2026 deadline kicks in.

This is Trump’s attempt to pile more weight behind domestic chipmaking after earlier efforts like the 2022 CHIPS and Science Act, which had offered $39 billion in grants and $75 billion in loans. His latest bill offers a more aggressive incentive: bigger long-term tax breaks instead of temporary handouts. 

A draft version of the bill had included a 30% credit, but the final version passed Tuesday pushes it to 35%, giving semiconductor companies even more breathing room for costly US projects.

House Republicans threaten to block Senate bill

Despite getting through the Senate, the fight isn’t over. Trump’s bill now faces a new round in the House of Representatives, which passed its own version of the bill last month. Trump wants final approval by July 4, but that deadline might not hold up. Speaker Mike Johnson is facing resistance from his own party, and with the vote margins razor-thin, he can’t afford to lose more than three Republicans if every member shows up.

Andy Ogles, a Republican from Tennessee, said Tuesday on X, “I don’t work for the Senate parliamentarian. I work for the PEOPLE.” He called the Senate bill a “dud” and has already submitted an amendment to swap it with the House’s version.

Ralph Norman, another Republican from South Carolina, is also opposing the Senate’s text. Thomas Massie of Kentucky and Warren Davidson of Ohio, who both voted against the earlier House version in May, are expected to vote no again.

Andy Harris, a Republican from Maryland who chairs the House Freedom Caucus, didn’t vote for or against the bill last time. He just voted “present,” which gives no clear signal where he stands now. But if Johnson loses more than three Republican votes, the bill doesn’t pass, and the 35% credit never becomes law.

Trump rejects Biden’s chip policy and pushes tariffs instead

While Trump is trying to boost US fabs with tax incentives, he’s also gunning for Biden’s CHIPS Act, which focused more on giving out grants. Earlier this year, Trump called for that entire law to be repealed.

Republican lawmakers haven’t moved on that demand, but Commerce Secretary Howard Lutnick confirmed last month that the administration is in the middle of renegotiating some of the grant terms from Biden’s version.

Trump’s approach skips the handouts and leans hard on tariffs. His administration has launched an investigation into semiconductor imports, which could lead to new duties on foreign chip technology. That adds more pressure on companies that don’t want to deal with unpredictable trade costs. Instead, they’re now speeding up construction in the US to avoid that whole mess.

Major names like TSMC, Nvidia, Micron, and GlobalFoundries have already ramped up US projects in recent months. They want to make sure they’re in position to claim the credits before the 2026 deadline passes. Companies that miss that window don’t get the deal.

The Senate passed the bill with Vice President JD Vance breaking a 50-50 tie. But Johnson’s real challenge now is keeping his party together in the House. No Democrats are expected to support the bill, and with Republican objections growing, the odds are getting tighter by the hour. Trump is demanding the House push the bill through before Independence Day, but the numbers don’t lie—if even four Republicans vote no, the bill dies.

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