The Infant Formula Made in America Act of 2025 creates two tax-credit mechanisms to boost domestic infant formula production. It establishes a 48F investment credit worth 30% of qualified investment for eligible infant formula manufacturing projects, with strict eligibility, certification, and cap rules.
It also creates a 45BB production credit worth $2 per pound of eligible infant formula manufactured and sold in the United States, subject to annual and aggregate limits. The bill sets a certification process, safeguards against misuse, and a framework for transferring credits and coordinating with existing incentives.
Together, these credits are intended to expand U.S. manufacturing capacity while tracking domestic sales and construction timelines.
At a Glance
What It Does
The package creates a 48F investment credit worth 30% of qualified investment for qualifying infant formula projects and a 45BB production credit worth $2 per pound for domestic-delivered formula, with defined caps and an eligibility framework.
Who It Affects
Taxpayers with up to $750 million in global revenue, manufacturers building or expanding U.S. infant formula facilities, and the Treasury/IRS administering the program.
Why It Matters
The credits aim to diversify and strengthen domestic supply, encourage modernization of facilities, and provide a measurable path to increased U.S. production while imposing caps and oversight to limit exposure and ensure domestic sales.
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What This Bill Actually Does
The bill creates two main incentives to promote domestic infant formula production in the United States. First, the 48F investment credit allows eligible taxpayers to offset 30% of the basis of eligible property invested in qualifying infant formula manufacturing projects.
The property must be part of a project that re-equips, expands, or establishes a facility in the United States and must be eligible for depreciation. The program includes a certification process managed by the Secretary of the Treasury, a cap on credits per project ($150 million) and in total ($750 million), and a sunset for credits on projects that begin construction more than ten years after enactment.
It also includes rules for how the credit can be transferred and how it interacts with other tax provisions, including recapture if performance conditions aren’t met. Second, the 45BB production credit offers a per-pound credit for eligible infant formula manufactured and sold domestically, with a cap of 18 million pounds per taxpayer per year and a five-year limit on claiming the credit.
Both credits are designed to work together—no double counting of credits for formula produced at a site that has already claimed the 48F credit. The bill also provides for interaction with rehabilitation credits and requires disclosure of allocations once credits are issued.
The Five Things You Need to Know
The 48F investment credit equals 30% of qualified investment for eligible infant formula manufacturing projects.
Per-project credit cap is $150,000,000; total credits cannot exceed $750,000,000; credits sunset after 10 years for projects that begin after enactment.
Certification program: the Secretary must establish a qualifying project program, with 50% of eligible formula sales domestically within the first year, and a 3-year window to place the project in service.
The 45BB production credit pays $2 per pound of eligible infant formula sold in the U.S.
with an 18,000,000-pound annual cap per taxpayer and a 5-year usage limit.
Credits can be transferred, and the 45BB credit is integrated into the general business credit (with related regulatory and coordination rules).
Section-by-Section Breakdown
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Domestic infant formula manufacturing investment credit—overview
Section 48F creates a new investment credit for eligible taxpayers that re-equip, expand, or establish US infant formula manufacturing facilities. The credit equals 30% of the taxpayer’s qualified investment in eligible property, decreasing the after-tax cost of capital for projects that meet the criteria. The rule ties depreciation-allowable property to the credit and specifies that only property directly used in the manufacturing process qualifies. The mechanism is designed to accelerate capital-intensive plant modernization and expansion in the domestic infant formula sector.
Definitions: eligible taxpayer, project, and property
The bill defines an eligible taxpayer as one with total global revenue not exceeding $750 million in the preceding calendar year. It defines a qualifying infant formula manufacturing project as a project that re-equips, expands, or establishes a facility for producing eligible infant formula in the United States. Eligible property includes tangible personal property or other tangible property used as an integral part of such a facility, as long as depreciation or amortization is allowed. Eligible infant formula is formula that can be lawfully sold in the U.S. and is manufactured domestically.
Certification program and eligibility criteria
A secretary-established program will certify qualifying infant formula manufacturing projects. Applications must show evidence that at least 50% of eligible formula produced with the project will be sold for U.S. use in the first year after placement in service. Applicants have one year to demonstrate that criteria are met, and certified projects must be placed in service within three years of certification. The secretary may revoke certification for noncompliance, with provisions for reporting and data disclosure.
Caps, sunset, and administration
Credit allocations under 48F are capped at $150 million per project and $750 million in total. The government may not allocate credits to projects begun more than ten years after enactment. The section also provides for review and possible redistribution of credits if applications are underutilized or if projects are delayed by third-party opposition. In addition, it requires public disclosure of allocations and describes how credits interact with other tax provisions.
Transfers, recapture, and regulatory framework
The act allows credits to be transferred in specified ways and requires regulations to govern the conversion of quantities of liquid concentrate to pounds for purposes of the credit. Recapture provisions apply if a project fails to meet certification requirements or ceases to be eligible property. The section also clarifies how credits interact with the rehabilitation credit and sets forth general regulatory guidance and effective date provisions.
Infant Formula Production Credit—basic rule
Section 45BB provides a production credit for eligible infant formula manufactured and sold domestically. The credit equals $2 per pound of eligible formula, multiplied by the amount sold in the United States during the taxable year. A taxpayer’s qualified production is limited by annual and aggregation rules, and the credit is designed to complement the investment credit by rewarding successful domestic production.
Limitations and coordination with investment credit
Eligibility for the production credit is limited to taxpayers within the revenue threshold or those receiving the credit in a prior year. The section coordinates with the investment credit by disallowing double counting for formula produced at facilities that have the 48F credit. It also provides for aggregation rules where related taxpayers are treated as a single taxpayer for purposes of the credit. The production credit becomes part of the general business credit when claimed by the taxpayer.
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Explore Economy in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Domestic infant formula manufacturers expanding or establishing U.S. facilities, which lowers production risk and improves supply security.
- Construction, engineering, and equipment suppliers that serve large plant modernization or new facility projects.
- Local workers and communities that gain jobs and potential economic activity around new or expanded manufacturing sites.
- Taxpayers engaging in eligible investments may realize a more favorable after-tax cost of capital due to the investment tax credit.
- Consumers benefit indirectly through a more reliable domestic supply of infant formula.
Who Bears the Cost
- Taxpayers who fund the credits through reduced federal revenue or increased deficit exposure.
- Small and mid-sized manufacturers who may not qualify due to revenue thresholds but face competitive pressure to modernize.
- Fiscal and regulatory agencies that must administer the certification program, monitor compliance, and manage recapture rules.
Key Issues
The Core Tension
The central dilemma is whether these credits will reliably boost domestic infant formula production and supply without creating perverse incentives or excessive budgetary exposure. On one side, you have a strong case for reforming incentives to build U.S. manufacturing capacity; on the other, you face complexity, potential gaming, and the risk that credits subsidize projects with limited long-term domestic benefit.
The bill’s design attempts to front-load capital investment to accelerate domestic production, but it creates a complex web of eligibility, certification, caps, and sunset rules that require robust administration. The combination of transferable credits, production-based rewards, and a domestic-sales requirement introduces incentives that could be exploited if not tightly monitored.
The 50% domestic sales trigger in the first year creates a market-composition risk—projects may favor pre-sold domestic products to meet the test rather than maximizing domestic production efficiency. While recapture and the prohibition on double counting with the rehab credit guard against misuse, the interplay between the investment and production credits could complicate tax planning and require precise measurement of qualified investments and pounds produced.
Regulators will need to publish clear guidance on how to measure eligible property, depreciation, and conversion of liquid concentrate to pounds to ensure consistent application across taxpayers.
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