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- The Onshoring Act of 2024, signed into law on July 12, 2024, provides a series of tax incentives and grants designed to encourage companies to relocate manufacturing operations...
- The Act establishes several key programs to facilitate onshoring.
- Designated "Onshoring Zones" are strategically located areas identified as having the potential for significant manufacturing growth.
the Onshoring Act of 2024: Incentivizing Domestic Manufacturing
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The Onshoring Act of 2024, signed into law on July 12, 2024, provides a series of tax incentives and grants designed to encourage companies to relocate manufacturing operations back to the United States.This legislation aims to strengthen domestic supply chains, create jobs, and reduce reliance on foreign production, particularly in critical sectors.
Key Provisions of the onshoring Act
The Act establishes several key programs to facilitate onshoring. These include a tax credit for companies that incur costs associated with relocating manufacturing to the U.S., grants for infrastructure improvements in areas designated as “Onshoring Zones,” and a loan guarantee program for small and medium-sized enterprises (SMEs) seeking to re-establish domestic production. The Congressional Budget Office estimates the Act will cost $85 billion over ten years.
Onshoring Zones and Regional Impact
Designated “Onshoring Zones” are strategically located areas identified as having the potential for significant manufacturing growth. These zones, selected by the Department of Commerce in consultation with state governors, receive priority for infrastructure funding and expedited permitting processes. As of January 24, 2026, 32 Onshoring zones have been established across 18 states, with the largest concentration in the Southeast and Midwest. Department of Commerce Announcement
Tax Incentives for Relocating manufacturers
The Act offers a substantial tax credit to companies that move manufacturing operations to the U.S.The credit covers 30% of eligible expenses, including the cost of equipment, facility upgrades, and employee training, up to a maximum of $50 million per company. According to the Joint Committee on Taxation, this credit is projected to incentivize $200 billion in domestic investment over the next five years. Joint Committee on Taxation Analysis
Impact on the Semiconductor Industry
The semiconductor industry is a primary focus of the Onshoring Act, given its strategic importance to national security and economic competitiveness. The Act builds upon the CHIPS and Science Act of 2022, providing additional incentives for semiconductor manufacturers to establish or expand domestic production facilities. Intel, such as, announced a $10 billion expansion of its Ohio fabrication facility in October 2024, citing the Onshoring Act as a key factor in their decision. Intel Newsroom
small and medium-Sized Enterprise (SME) support
Recognizing the challenges faced by SMEs in relocating manufacturing, the Onshoring Act establishes a $15 billion loan guarantee program administered by the Small Business Management (SBA). This program provides guarantees for up to 75% of loans made to SMEs for onshoring-related expenses. The SBA reported that, as of December 31, 2025, it had approved $8.2 billion in loan guarantees under the program, supporting 350 SMEs. SBA Press Release
Criticisms and Concerns
Despite its goals,the Onshoring Act has faced criticism from some economists and industry analysts. concerns have been raised about the potential for increased costs, the effectiveness of the Onshoring Zones, and the possibility of unintended consequences, such as trade disputes. A report by the Peterson Institute for International Economics, published in February 2025, argued that the Act’s protectionist measures could lead to higher prices for consumers and reduced global trade. Peterson Institute for International Economics Policy Brief
Future Outlook and Amendments
The Department of Commerce is currently conducting a review of the Onshoring Act’s implementation, with a report due to Congress in March 2026. Several members of Congress have already indicated their intention to propose amendments to the Act, focusing on streamlining the permitting process, expanding the scope of eligible expenses for the tax credit, and addressing concerns about the impact on international trade. The Act is expected to remain a significant topic of debate in Washington for the foreseeable future.