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The ONSHORE Manufacturing Act creates three new tax credits to encourage domestic production of critical medical supplies and pharmaceuticals. First, it establishes a 10.5 percent credit on income from manufacturing essential medicines, medical devices, and related ingredients in the United States, capped at 50 percent of employee wages paid. Second, it provides a 30 percent tax credit for purchasing advanced manufacturing equipment before 2031, stepping down to zero by 2033. Third, it offers a matching 30 percent credit for environmental compliance equipment used in medical manufacturing, also phasing out by 2033. The bill applies to taxable years beginning after December 31, 2026, and affects pharmaceutical companies, medical device manufacturers, and businesses producing active pharmaceutical ingredients that are on federal lists of critical or essential medicines. Beginning in 2027, the Internal Revenue Service, Department of Defense, Department of Veterans Affairs, and Food and Drug Administration must submit annual reports to Congress measuring how these credits impact domestic drug manufacturing capacity and government procurement of domestically made medical products.

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