H.R.802 - Semiconductor Technology Advancement and Research Act of 2025; STAR Act of 2025 (119th Congress)
Summary
H.R. 802, the Semiconductor Technology Advancement and Research Act of 2025 (STAR Act), aims to amend the Internal Revenue Code of 1986 by adding qualified semiconductor design expenditures to the advanced manufacturing investment credit. This bill introduces a 25% tax credit for qualified semiconductor design expenditures, encouraging companies to invest in semiconductor design within the United States. The credit applies to both in-house and contract design expenses.
Expected Effects
The likely effect of this bill is to incentivize semiconductor companies to conduct more design and research activities within the United States. This could lead to increased domestic semiconductor production and reduce reliance on foreign sources. The bill also defines specific criteria for qualified expenditures, including wages, supplies, and computer usage, ensuring the credit is targeted towards genuine design activities.
Potential Benefits
- Increased Domestic Semiconductor Design: The tax credit encourages companies to invest in semiconductor design within the U.S.
- Job Creation: Increased investment in design leads to more jobs for engineers, technicians, and support staff.
- Technological Advancement: The focus on research and development fosters innovation in semiconductor technology.
- Economic Growth: The semiconductor industry is a key driver of economic growth, and this bill supports its expansion.
- Reduced Reliance on Foreign Sources: By incentivizing domestic production, the bill reduces dependence on foreign semiconductor manufacturers.
Potential Disadvantages
- Potential for Abuse: Companies may attempt to classify unrelated expenses as qualified semiconductor design expenditures.
- Complexity: The detailed definitions of qualified expenditures may create administrative burdens for both companies and the IRS.
- Cost to Taxpayers: The tax credit will reduce government revenue, potentially increasing the national debt or requiring cuts in other programs.
- Limited Scope: The credit is focused solely on semiconductor design, potentially neglecting other important areas of manufacturing.
- Temporary Effect: The credit terminates after 2036, which may limit its long-term impact.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to align with the Constitution's Article I, Section 8, which grants Congress the power to lay and collect taxes, duties, imposts, and excises to provide for the common defense and general welfare of the United States. By incentivizing domestic semiconductor production, the bill can be argued to promote economic growth and national security. The bill does not appear to infringe upon any specific individual liberties or rights protected by the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).