‘‘(c) QUALIFIED MEDICAL
AND DRUG MANUFAC-
TURING INCOME.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified medical 
and drug manufacturing income’ for any taxable 
year means an amount equal to the excess (if any) 
of— 
‘‘(A) the taxpayer’s domestic medical and 
drug manufacturing gross receipts for the tax-
able year, over 
‘‘(B) the sum of— 
‘‘(i) the cost of goods sold that are al-
locable to such receipts, and 
‘‘(ii) other expenses, losses, or deduc-
tions which are properly allocable to such 
receipts. 
‘‘(2) ALLOCATION
METHOD.—The Secretary 
shall prescribe rules for the proper allocation of 
items described in paragraph (1)(B) for purposes of 
determining qualified medical and drug manufac-
turing income. Such rules shall provide for the prop-
er allocation of items whether or not such items are 
directly allocable to domestic medical and drug man-
ufacturing gross receipts. 
‘‘(3) 
SPECIAL
RULES
FOR
DETERMINING 
COSTS.— 
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‘‘(A) IN GENERAL.—For purposes of deter-
mining costs under clause (i) of paragraph 
(1)(B), any item or service brought into the 
United States shall be treated as acquired by 
purchase, and its cost shall be treated as not 
less than its value immediately after it entered 
the United States. 
‘‘(B) EXPORTS FOR FURTHER MANUFAC-
TURE.—In the case of any property described 
in subparagraph (A) that had been exported by 
the taxpayer for further manufacture, the in-
crease in cost or adjusted basis under subpara-
graph (A) shall not exceed the difference be-
tween the value of the property when exported 
and the value of the property when brought 
back into the United States after the further 
manufacture. 
‘‘(4) DOMESTIC MEDICAL AND DRUG MANUFAC-
TURING GROSS RECEIPTS.— 
‘‘(A) IN
GENERAL.—The term ‘domestic 
medical and drug manufacturing gross receipts’ 
means the gross receipts of the taxpayer which 
are derived from any sale, exchange, or other 
disposition of— 
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‘‘(i) any active pharmaceutical ingre-
dient, or 
‘‘(ii) any covered countermeasure, 
which was manufactured or produced by the 
taxpayer in whole or in significant part within 
the United States. 
‘‘(B) ACTIVE
PHARMACEUTICAL
INGRE-
DIENT.—The term ‘active pharmaceutical ingre-
dient’ means any substance or mixture of sub-
stances intended to be used in the manufacture 
of a drug product and (when so used) becomes 
an active ingredient in the drug product. 
‘‘(C) COVERED
COUNTERMEASURE.—The 
term ‘covered countermeasure’ has the meaning 
given such term in section 319F–3(i)(1) of the 
Public Health Service Act (42 U.S.C. 247d– 
6d(i)(1)). 
‘‘(D) PARTNERSHIPS
OWNED
BY
EX-
PANDED
AFFILIATED
GROUPS.—For purposes 
of this paragraph, if all of the interests in the 
capital and profits of a partnership are owned 
by members of a single expanded affiliated 
group at all times during the taxable year of 
such partnership, the partnership and all mem-
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bers of such group shall be treated as a single 
taxpayer during such period. 
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) APPLICATION OF SECTION TO PASS-THRU 
ENTITIES.— 
‘‘(A) PARTNERSHIPS
AND
S
CORPORA-
TIONS.—In the case of a partnership or S cor-
poration— 
‘‘(i) this section shall be applied at the 
partner or shareholder level, 
‘‘(ii) each partner or shareholder shall 
take into account such person’s allocable 
share of each item described in subpara-
graph (A) or (B) of subsection (c)(1) (de-
termined without regard to whether the 
items described in such subparagraph (A) 
exceed the items described in such sub-
paragraph (B)), and 
‘‘(iii) each partner or shareholder 
shall be treated for purposes of subsection 
(b) as having W–2 wages for the taxable 
year in an amount equal to such person’s 
allocable share of the W–2 wages of the 
partnership or S corporation for the tax-
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able year (as determined under regulations 
prescribed by the Secretary). 
‘‘(B) TRUSTS AND ESTATES.—In the case 
of a trust or estate— 
‘‘(i) the items referred to in subpara-
graph (A)(ii) (as determined therein) and 
the W–2 wages of the trust or estate for 
the taxable year, shall be apportioned be-
tween the beneficiaries and the fiduciary 
(and among the beneficiaries) under regu-
lations prescribed by the Secretary, and 
‘‘(ii) for purposes of paragraph (2), 
adjusted gross income of the trust or es-
tate shall be determined as provided in sec-
tion 67(e) with the adjustments described 
in such paragraph. 
‘‘(C) REGULATIONS.—The Secretary may 
prescribe rules requiring or restricting the allo-
cation of items and wages under this paragraph 
and may prescribe such reporting requirements 
as the Secretary determines appropriate. 
‘‘(2) APPLICATION
TO
INDIVIDUALS.—In the 
case of an individual, subsection (a)(2) shall be ap-
plied by substituting ‘adjusted gross income’ for 
‘taxable income’. For purposes of the preceding sen-
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tence, adjusted gross income shall be determined 
after application of sections 86, 135, 137, 219, 221, 
222, and 469. 
‘‘(3) 
SPECIAL
RULE
FOR
AFFILIATED 
GROUPS.— 
‘‘(A) IN GENERAL.—All members of an ex-
panded affiliated group shall be treated as a 
single corporation for purposes of this section. 
‘‘(B) EXPANDED
AFFILIATED
GROUP.— 
For purposes of this section, the term ‘ex-
panded affiliated group’ means an affiliated 
group as defined in section 1504(a), deter-
mined— 
‘‘(i) by substituting ‘more than 50 
percent’ for ‘at least 80 percent’ each place 
it appears, and 
‘‘(ii) without regard to paragraphs (2) 
and (4) of section 1504(b). 
‘‘(C) ALLOCATION OF CREDIT.—Except as 
provided in regulations, the credit under sub-
section (a) shall be allocated among the mem-
bers of the expanded affiliated group in propor-
tion to each member’s respective amount (if 
any) of qualified medical and drug manufac-
turing income. 
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‘‘(4) TRADE
OR
BUSINESS
REQUIREMENT.— 
This section shall be applied by only taking into ac-
count items which are attributable to the actual con-
duct of a trade or business. 
‘‘(5) COORDINATION WITH MINIMUM TAX.—For 
purposes of determining alternative minimum tax-
able income under section 55, qualified medical and 
drug manufacturing income shall be determined 
without regard to any adjustments under sections 56 
through 59. 
‘‘(6) UNRELATED
BUSINESS
TAXABLE
IN-
COME.—For purposes of determining the tax im-
posed by section 511, subsection (a)(1)(B) shall be 
applied by substituting ‘unrelated business taxable 
income’ for ‘taxable income’. 
‘‘(7) REGULATIONS.—The Secretary shall pre-
scribe such regulations as are necessary to carry out 
the purposes of this section, including regulations 
which prevent more than 1 taxpayer from being al-
lowed a credit under this section with respect to any 
activity described in subsection (c)(4)(A).’’. 
(b) TREATMENT UNDER BASE EROSION TAX.—Sec-
tion 59A(b)(1)(B)(ii) of such Code is amended by striking 
‘‘plus’’ at the end of subclause (I), by redesignating sub-
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clause (II) as subclause (III), and by inserting after sub-
clause (I) the following new subclause: 
‘‘(II) the credit allowed under 
section 38 for the taxable year which 
is properly allocable to the domestic 
medical and drug manufacturing cred-
it determined under section 45U(a), 
plus’’. 
(c) PART OF GENERAL BUSINESS CREDIT.—Section 
38(b) of such Code is amended by striking ‘‘plus’’ at the 
end of paragraph (32), by striking the period at the end 
of paragraph (33) and inserting ‘‘, plus’’, and by adding 
at the end the following new paragraph: 
‘‘(34) the domestic medical and drug manufac-
turing credit determined under section 45U(a).’’. 
(d) CREDIT ALLOWED AGAINST ALTERNATIVE MIN-
IMUM TAX.—Section 38(c)(4)(B) of such Code is amended 
by redesignating clauses (x) through (xii) as clauses (xi) 
through (xiii), respectively, and by inserting after clause 
(ix) the following new clause: 
‘‘(x) the credit determined under sec-
tion 45U,’’. 
(e) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
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of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 45U. Domestic medical and drug manufacturing credit.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 
3. 
QUALIFYING 
ADVANCED 
MEDICAL 
MANUFAC-
TURING EQUIPMENT CREDIT. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 48D. QUALIFYING ADVANCED MEDICAL MANUFAC-
TURING EQUIPMENT CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 46, the 
qualifying advanced medical manufacturing equipment 
credit determined under this section for any taxable year 
is the applicable percentage of the basis of any qualifying 
advanced medical manufacturing equipment placed in 
service during such taxable year. 
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 
subsection (a), the applicable percentage is— 
‘‘(1) 30 percent in the case of equipment which 
is placed in service before January 1, 2029, 
‘‘(2) 20 percent in the case of equipment which 
is placed in service during calendar year 2029, 
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‘‘(3) 10 percent in the case of equipment which 
is placed in service during calendar year 2030, and 
‘‘(4) 0 percent in the case of equipment which 
is placed in service after December 31, 2030. 
‘‘(c) QUALIFYING ADVANCED MEDICAL MANUFAC-
TURING EQUIPMENT.—For purposes of this section, the 
term ‘qualifying advanced medical manufacturing equip-
ment’ means property— 
‘‘(1) which is machinery or equipment that is 
designed and used to manufacture a— 
‘‘(A) drug (as such term is defined in sec-
tion 201(g)(1) of the Federal Food, Drug, and 
Cosmetic Act), 
‘‘(B) device (as such term is defined in sec-
tion 201(h) of such Act), or 
‘‘(C) biological product (as such term is 
defined in section 351(i) of the Public Health 
Service Act), 
‘‘(2) which has been identified by the Secretary 
(after consultation with the Secretary of Health and 
Human Services) as machinery or equipment that— 
‘‘(A) incorporates novel technology or uses 
an established technique or technology in a new 
or innovative way, or 
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‘‘(B) that can improve medical product 
quality, address shortages of medicines, and 
speed time-to-market, 
‘‘(3) which is placed in service in the United 
States by the taxpayer, and 
‘‘(4) with respect to which depreciation is allow-
able. 
‘‘(d) CERTAIN
QUALIFIED
PROGRESS
EXPENDI-
TURES RULES MADE APPLICABLE.—Rules similar to the 
rules of subsections (c)(4) and (d) of section 46 (as in 
effect on the day before the enactment of the Revenue 
Reconciliation Act of 1990) shall apply for purposes of 
this section. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary 
to carry out the purposes of this section, including regula-
tions which prevent abuse or fraud.’’. 
(b) TREATMENT UNDER BASE EROSION TAX.—Sec-
tion 59A(b)(1)(B)(ii) of such Code, as amended under sec-
tion 1 of this Act, is further amended by striking ‘‘plus’’ 
at the end of subclause (II), by redesignating subclause 
(III) as subclause (IV), and by inserting after subclause 
(II) the following new subclause: 
‘‘(III) the credit allowed under 
section 46 for the taxable year which 
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is properly allocable to the qualifying 
advanced 
medical 
manufacturing 
equipment credit determined under 
section 48D(a), plus’’. 
(c) PART OF INVESTMENT CREDIT.—Section 46 of 
such Code is amended by striking ‘‘and’’ at the end of 
paragraph (5), by striking the period at the end of para-
graph (6) and inserting ‘‘, and’’, and by adding at the 
end the following new paragraph: 
‘‘(7) the qualifying advanced medical manufac-
turing equipment credit.’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 48D. Qualifying advanced medical manufacturing equipment credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to periods after the date of the 
enactment of this section under rules similar to the rules 
of section 48(m) of the Internal Revenue Code of 1986 
(as in effect on the date of the enactment of the Revenue 
Reconciliation Act of 1990). 
SEC. 4. MEDICAL MANUFACTURING EPA COMPLIANCE 
CREDIT. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
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‘‘(1) which is used by the taxpayer in the trade 
or business of manufacturing a— 
‘‘(A) drug (as such term is defined in sec-
tion 201(g)(1) of the Federal Food, Drug, and 
Cosmetic Act), 
‘‘(B) device (as such term is defined in sec-
tion 201(h) of such Act), 
‘‘(C) biological product (as such term is 
defined in section 351(i) of the Public Health 
Service Act), or 
‘‘(D) active pharmaceutical ingredient or 
covered countermeasure (within the meaning of 
section 45U(c)(4)), 
‘‘(2) which is used to meet emissions limits 
under the Clean Air Act or wastewater standards 
under the Clean Water Act, 
‘‘(3) which is placed in service in the United 
States by the taxpayer, 
‘‘(4) with respect to which depreciation is allow-
able, and 
‘‘(5) which is not qualifying advanced medical 
manufacturing equipment (as defined in section 
48D). 
‘‘(d) CERTAIN
QUALIFIED
PROGRESS
EXPENDI-
TURES RULES MADE APPLICABLE.—Rules similar to the 
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rules of subsections (c)(4) and (d) of section 46 (as in 
effect on the day before the enactment of the Revenue 
Reconciliation Act of 1990) shall apply for purposes of 
this section. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe 
such regulations or other guidance as may be necessary 
to carry out the purposes of this section, including regula-
tions which prevent abuse or fraud.’’. 
(b) TREATMENT UNDER BASE EROSION TAX.—Sec-
tion 59A(b)(1)(B)(ii) of such Code, as amended by the 
preceding provisions of this Act, is further amended by 
striking ‘‘plus’’ at the end of subclause (III), by redesig-
nating subclause (IV) as subclause (V), and by inserting 
after subclause (III) the following new subclause: 
‘‘(IV) the credit allowed under 
section 46 for the taxable year which 
is properly allocable to the medical 
manufacturing EPA compliance credit 
determined under section 48E(a), 
plus’’. 
(c) PART OF INVESTMENT CREDIT.—Section 46 of 
such Code, as amended by the preceding provisions of this 
Act, is amended by striking ‘‘and’’ at the end of paragraph 
(6), by striking the period at the end of paragraph (7) 
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and inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(8) the medical manufacturing EPA compli-
ance credit.’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of such Code, as amended by the preceding provisions of 
this Act, is amended by adding at the end the following 
new item: 
‘‘Sec. 48E. Medical manufacturing EPA compliance credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to periods after the date of the 
enactment of this section under rules similar to the rules 
of section 48(m) of the Internal Revenue Code of 1986 
(as in effect on the date of the enactment of the Revenue 
Reconciliation Act of 1990). 
Æ 
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