STAR Act of 2025
Introduced January 28, 2025 · Last action January 28, 2025
Plain English Summary
This bill adds semiconductor design work done in the United States to the federal advanced manufacturing investment tax credit, allowing companies to claim a 25% tax credit for semiconductor design expenditures (wages for design employees, supplies, computer rental, and contracted design work). The credit applies to design work that develops new or improved semiconductor functions, performance, reliability, or quality, but excludes cosmetic changes, post-production modifications, reverse engineering, and market research. The credit expires on December 31, 2036.
Who benefits
Semiconductor design companies (including fabless semiconductor firms like Qualcomm, AMD, Nvidia, and smaller design startups), integrated device manufacturers (Intel, Samsung, TSMC subsidiaries in the U.S.), and large technology companies with in-house semiconductor design teams (Apple, Microsoft, Meta, Google). Employees of these firms performing semiconductor design will indirectly benefit through job creation and wage growth. U.S.-based contract design service firms will benefit from 100% credit eligibility for their services.
Who pays / loses
U.S. federal treasury loses tax revenue equal to the credits claimed. Semiconductor companies that outsource design to non-U.S. vendors or conduct design outside the United States receive no benefit. Foreign semiconductor design firms lose competitive advantage relative to U.S.-based designers. Domestic non-semiconductor industries do not benefit and implicitly bear a higher share of federal tax burden relative to semiconductor sector.
Funding & Lobbying Interests
Semiconductor industry and fabless design companies have a direct financial interest in this bill passing. Bipartisan sponsorship (Moore of Utah, DelBene of Washington, McCaul of Texas, Matsui of California, Moolenaar of Michigan, Krishnamoorthi of Illinois, Khanna of California, Panetta of California) reflects geographic concentration of semiconductor design activity in California, Washington, Texas, Utah, and Michigan. No sponsor finance data provided, but the semiconductor lobby—including Semiconductor Industry Association, Fabless Semiconductor Association, and individual company lobbying efforts from Qualcomm, AMD, Nvidia, Intel, and others—consistently seeks R&D and manufacturing tax credits. Tech sector companies with design operations (Apple, Google, Meta, Microsoft) also benefit.
Political Impact
Affected Groups
Semiconductor design engineers and technical employees in the United States (estimated tens of thousands across fabless firms, IDMs, and tech companies). Semiconductor design companies with U.S. operations, concentrated in California, Washington, Texas, Utah, Arizona, and Massachusetts. Startups in the semiconductor space gain ability to conduct design before revenue generation. Foreign-based semiconductor design firms lose competitive parity on tax-advantaged design costs. Non-semiconductor manufacturing and tech workers face no direct impact.
Political Subtext
Proponents frame this as necessary support for U.S. semiconductor competitiveness against China and Taiwan, extending existing advanced manufacturing credits to the design phase rather than only fabrication facilities. Bipartisan sponsorship suggests consensus that semiconductor design is strategically important to U.S. technological leadership and national security. Critics (if any) would likely argue the credit provides corporate welfare to already-profitable tech companies without requiring measurable returns in U.S. job creation or manufacturing output, and that design tax credits lack the tangible productive impact of manufacturing facility credits. Non-partisan evidence on tax credit efficacy is limited; Government Accountability Office and Congressional Budget Office have raised concerns about R&D tax credits generally producing duplicative rather than incremental research spending, though semiconductor-specific analysis is not widely available in public record.
Real-World Stakes
If enacted, companies will shift semiconductor design accounting to maximize the 25% federal tax credit, potentially lowering effective tax rates for design-heavy firms like Qualcomm, AMD, Nvidia, and Apple. The provision allowing startups to claim credits before active business operation may incentivize early-stage semiconductor venture formation in the U.S. Sunset in 2036 creates a 11-year window of incentive. Precedent: The existing Section 48D advanced manufacturing credit (enacted 2022) and Section 41 research credit (enacted 1981, repeatedly extended) both show that manufacturing and R&D credits tend to be claimed by large, profitable corporations rather than creating new marginal research activity—companies conduct similar design work with or without the credit, shifting accounting rather than adding output. CBO and academic research generally finds R&D tax credits have high deadweight loss (most credits reward inframarginal spending). No published CBO score for this bill.
Sponsor
Sponsor information not available.
Vote Record
No recorded votes.
Campaign Finance — Primary Sponsor
No campaign finance data available yet.
501(c)(4) disclosure: Contributions from 501(c)(4) "dark money" organizations are not required to be publicly disclosed and are not reflected in the figures above. Data sourced from FEC public disclosure filings.
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