STAR Act of 2025

Bill Number

H.R. 802

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-01-28: Referred to the House Committee on Ways and Means.

Last Updated

2026-06-11T23:26:42Z

AI-Generated Summary

Purpose of the Legislation

The Semiconductor Technology Advancement and Research Act of 2025 (STAR Act of 2025) aims to encourage investment in semiconductor design and manufacturing within the United States by expanding a tax credit. It promotes domestic innovation in semiconductors—key components in electronics like computers and phones—by providing financial incentives for research and design activities conducted in the U.S.

Key Provisions

• Tax Credit Expansion: Eligible taxpayers (businesses) can claim a 25% tax credit on qualified semiconductor design expenditures, in addition to the existing 25% credit for investments in advanced manufacturing facilities (under Section 48D of the Internal Revenue Code).
• Definition of Qualified Semiconductor Design Expenditures:
• In-House Expenses: Includes wages paid to employees for design work, costs of supplies used in design, and fees for computer usage in design activities, all performed in the U.S. "Qualified services" cover direct design, supervision, or support of experimental processes aimed at improving semiconductor function, performance, reliability, or quality.
• Contract Expenses: Covers 100% of payments to non-employees (e.g., contractors) for U.S.-based semiconductor design.
• What Qualifies as Semiconductor Design: Focuses on developing product designs, specifications, trade secrets, or technology for semiconductor manufacturing through experimentation. It excludes non-innovative activities like cosmetic changes, duplicating existing products, or routine market research and quality checks.
• Special Rule for Startups: New or early-stage companies can qualify for the credit on in-house design costs even if they lack an active business at the time, as long as the design supports a planned future business.
• Aggregation and Location Rules: Expenditures from related companies are combined for credit calculation. "United States" includes U.S. territories.
• Coordination with Other Credits: Design expenditures used for this credit cannot also qualify for the separate research and development (R&D) tax credit under Section 41.
• Effective Dates: Applies to expenditures after the bill's enactment; the credit ends for design costs after December 31, 2036, and for facility investments after that date as well.

Significant Changes to Existing Law

• Amends Section 48D of the Internal Revenue Code to broaden the advanced manufacturing investment credit beyond just facility construction to include semiconductor design costs.
• Redesignates subsections (e.g., moves definitions and termination rules) and updates cross-references in related tax sections (e.g., Section 56A) to accommodate the new provisions.
• Introduces detailed definitions for design-related terms, drawing from existing R&D credit language (Section 41) but tailoring them specifically to semiconductors, ensuring no double-dipping with the R&D credit.

Potential Impacts

• On Government Agencies: The Internal Revenue Service (IRS) will need to administer the expanded credit, potentially increasing workload for audits and compliance. It may reduce federal tax revenue in the short term due to credits claimed by businesses.
• On Citizens: Could create or sustain jobs in semiconductor design, benefiting workers in tech sectors, particularly in states with strong tech hubs. Indirectly supports economic growth by strengthening U.S. tech supply chains, potentially lowering costs for consumer electronics over time.
• On International Relations: Enhances U.S. competitiveness in the global semiconductor industry, reducing reliance on foreign manufacturing (e.g., from Asia). This could improve national security by bolstering domestic capabilities in critical technologies, but might strain trade relations if seen as protectionist.

Main Stakeholders Affected

• Semiconductor Companies: Primary beneficiaries, including large firms (e.g., those investing in design teams) and startups, who gain tax savings to fund U.S.-based innovation.
• Employees and Contractors: Designers, engineers, and support staff whose wages or fees qualify for credits, potentially leading to higher employment or pay in the sector.
• U.S. Government and Taxpayers: The IRS handles implementation; broader taxpayers fund the revenue loss through credits.
• Related Industries: Suppliers of design tools (e.g., software, computers) and broader tech ecosystem, which may see increased demand.

Notable Legal, Constitutional, or Political Implications

• Legal: Relies on IRS regulations for implementation (e.g., rules on computer usage and aggregation), which could lead to future guidance or disputes over what counts as "qualified" design. Ensures no overlap with existing R&D credits to avoid legal challenges on double benefits.
• Constitutional: Aligns with Congress's power to tax and spend (Article I, Section 8), using incentives as a tool for economic policy without raising broader constitutional concerns.
• Political: Bipartisan sponsorship (from both parties) signals broad support for advancing U.S. technology leadership amid global competition. It builds on prior laws like the CHIPS and Science Act, emphasizing strategic investments in semiconductors for economic and security reasons, but could spark debate over tax breaks favoring specific industries.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Moore, Blake D. [R-UT-1]

Cosponsors (25)

Rep. DelBene, Suzan K. [D-WA-1], Rep. McCaul, Michael T. [R-TX-10], Rep. Matsui, Doris O. [D-CA-7], Rep. Moolenaar, John R. [R-MI-2], Rep. Krishnamoorthi, Raja [D-IL-8], Rep. Tenney, Claudia [R-NY-24], Rep. Khanna, Ro [D-CA-17], Rep. Morelle, Joseph D. [D-NY-25], Rep. Buchanan, Vern [R-FL-16], Rep. Carson, André [D-IN-7], Rep. Gottheimer, Josh [D-NJ-5], Rep. Sewell, Terri A. [D-AL-7], Rep. Panetta, Jimmy [D-CA-19], Rep. Neguse, Joe [D-CO-2], Rep. Soto, Darren [D-FL-9], Rep. Baird, James R. [R-IN-4], Rep. McDonald Rivet, Kristen [D-MI-8], Rep. McBride, Sarah [D-DE-At Large], Rep. Brownley, Julia [D-CA-26], Rep. Bonamici, Suzanne [D-OR-1], Rep. Landsman, Greg [D-OH-1], Rep. Vindman, Eugene Simon [D-VA-7], Rep. Stanton, Greg [D-AZ-4], Rep. Suozzi, Thomas R. [D-NY-3], Rep. Min, Dave [D-CA-47]

Recent Actions

• 2025-01-28: Referred to the House Committee on Ways and Means.
• 2025-01-28: Introduced in House
• 2025-01-28: Introduced in House

Bill Versions

• Semiconductor Technology Advancement and Research Act of 2025 — issued 2025-01-28 — PDF (9 pages)