H.R. 802: Semiconductor Technology Advancement and Research Act of 2025

The Semiconductor Technology Advancement and Research Act of 2025, also known as the STAR Act of 2025, aims to enhance support for semiconductor design activities within the United States by amending the Internal Revenue Code.

Key Provisions

1. Advanced Manufacturing Investment Credit: The bill proposes to include “qualified semiconductor design expenditures” when determining the advanced manufacturing investment credit a taxpayer can claim. This credit is designed to encourage investment in manufacturing facilities and processes.
2. Qualified Semiconductor Design Expenditures: The term 'qualified semiconductor design expenditures' refers to expenses incurred for semiconductor design within the U.S. These include:
   • In-house design expenses, such as wages for employees engaged in semiconductor design and costs for necessary supplies.
   • Contract design expenses paid to outside firms or individuals for semiconductor design services.
3. Details on In-house and Contract Design Expenses:
   • In-house expenses cover wages, supplies, and potentially fees for using computers for design.
   • Contract expenses are fully deductible for any amounts paid for such services.
4. Eligibility and Trade or Business Requirement: The Act allows certain startup ventures to qualify for tax benefits even if they have not yet started a trade or business, as long as the design expenses aim to contribute to future business operations.
5. Qualified Semiconductor Design Definition: It focuses on the development of product designs and specifications aimed at improving semiconductor manufacturing. This does not include expenses related to aesthetic enhancements or post-production designs.
6. Limitations on Credit Use: If taxpayers claim credits for qualified semiconductor design expenditures, they cannot include these amounts when calculating other research and development tax credits in the same year.
7. Effective Dates and Limits: The provisions apply to expenditures paid or incurred after the bill is enacted, and the credits will not be applicable to expenditures after December 31, 2036.

Overall Purpose

Ultimately, the Act seeks to promote domestic semiconductor design and manufacturing by providing tax incentives, potentially leading to increased technological innovation and economic growth in this field.

Relevant Companies

• INTC (Intel Corporation) - Likely to benefit from increased tax credits that enhance their semiconductor design and manufacturing expenditures, which could lead to increased competitiveness and development projects.
• AMD (Advanced Micro Devices) - Could gain from expanded credits for design activities, supporting their research and production capabilities domestically.
• NVDA (NVIDIA Corporation) - Similar benefits to AMD and Intel as they engage heavily in semiconductor design and would qualify for the proposed tax incentives.