I
119THCONGRESS
1
STSESSION H. R. 802
To amend the Internal Revenue Code of 1986 to add qualified semiconductor
design expenditures to the advanced manufacturing investment credit.
IN THE HOUSE OF REPRESENTATIVES
JANUARY28, 2025
Mr. M
OOREof Utah (for himself, Ms. DELBENE, Mr. MCCAUL, Ms. MATSUI,
Mr. M
OOLENAAR, Mr. KRISHNAMOORTHI, Ms. TENNEY, Mr. KHANNA,
Mr. M
ORELLE, Mr. BUCHANAN, Mr. CARSON, Mr. GOTTHEIMER, Ms. SE-
WELL, and Mr. PANETTA) introduced the following bill; which was re-
ferred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to add quali-
fied semiconductor design expenditures to the advanced
manufacturing investment credit.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Semiconductor Tech-4
nology Advancement and Research Act of 2025’’ or the 5
‘‘STAR Act of 2025’’. 6
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•HR 802 IH
SEC. 2. QUALIFIED SEMICONDUCTOR DESIGN EXPENDI-1
TURES ADDED TO ADVANCED MANUFAC-2
TURING INVESTMENT CREDIT. 3
(a) I
NGENERAL.—Section 48D of the Internal Rev-4
enue Code of 1986 is amended— 5
(1) in subsection (a), by striking ‘‘an amount 6
equal to’’ and all that follows through the period and 7
inserting ‘‘, with respect to an eligible taxpayer, an 8
amount equal to the sum of— 9
‘‘(1) 25 percent of the qualified investment for 10
such taxable year with respect to any advanced man-11
ufacturing facility of such taxpayer, and 12
‘‘(2) 25 percent of the qualified semiconductor 13
design expenditures paid or incurred by such tax-14
payer during the taxable year.’’, 15
(2) by redesignating subsections (c), (d), and 16
(e) as subsections (e), (f), and (g), respectively, 17
(3) by inserting after subsection (b) the fol-18
lowing new subsections: 19
‘‘(c) Q
UALIFIEDSEMICONDUCTOR DESIGNEXPENDI-20
TURES.— 21
‘‘(1) I
N GENERAL.—For purposes of subsection 22
(a)(2), the term ‘qualified semiconductor design ex-23
penditures’ means the sum of the following amounts 24
which are paid or incurred by the taxpayer during 25
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•HR 802 IH
the taxable year in carrying on any trade or business 1
of the taxpayer for— 2
‘‘(A) in-house semiconductor design ex-3
penses for semiconductor design conducted in 4
the United States, and 5
‘‘(B) contract design expenses for semicon-6
ductor design conducted in the United States. 7
‘‘(2) I
N-HOUSE SEMICONDUCTOR DESIGN EX -8
PENSES.— 9
‘‘(A) I
N GENERAL.—The term ‘in-house 10
semiconductor design expenses’ means— 11
‘‘(i) any wages paid or incurred to an 12
employee for qualified services performed 13
by such employee, 14
‘‘(ii) any amount paid or incurred for 15
supplies used in the conduct of qualified 16
semiconductor design, and 17
‘‘(iii) under regulations prescribed by 18
the Secretary, any amount paid or in-19
curred to another person for the right to 20
use computers in the conduct of qualified 21
semiconductor design. 22
Clause (iii) shall not apply to any amount to 23
the extent that the taxpayer (or any person 24
with whom the taxpayer must aggregate ex-25
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•HR 802 IH
penditures under paragraph (7) receives or ac-1
crues any amount from any other person for 2
the right to use substantially identical personal 3
property. 4
‘‘(B) Q
UALIFIED SERVICES.—The term 5
‘qualified services’ means services consisting 6
of— 7
‘‘(i) engaging in qualified semicon-8
ductor design, or 9
‘‘(ii) engaging in the direct super-10
vision or direct support of design activities 11
which constitute qualified semiconductor 12
design. 13
If substantially all of the services performed by 14
an individual for the taxpayer during the tax-15
able year consists of services meeting the re-16
quirements of clause (i) or (ii), the term ‘‘quali-17
fied services’’ means all of the services per-18
formed by such individual for the taxpayer dur-19
ing the taxable year. 20
‘‘(C) S
UPPLIES.—The term ‘supplies’ has 21
the meaning given such term in section 22
41(b)(2)(C). 23
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•HR 802 IH
‘‘(D) WAGES.—The term ‘wages’ has the 1
meaning given such term in section 2
41(b)(2)(D). 3
‘‘(3) C
ONTRACT DESIGN EXPENSES .— 4
‘‘(A) I
N GENERAL.—The term ‘contract 5
design expenses’ means 100 percent of any 6
amount paid or incurred by the taxpayer to any 7
person (other than an employee of the tax-8
payer) for qualified semiconductor design. 9
‘‘(B) P
REPAID AMOUNTS.—If any contract 10
design expenses paid or incurred during any 11
taxable year are attributable to qualified semi-12
conductor research to be conducted after the 13
close of such taxable year, such amount shall be 14
treated as paid or incurred during the period 15
during which the qualified semiconductor design 16
is conducted. 17
‘‘(4) T
RADE OR BUSINESS REQUIREMENT DIS -18
REGARDED FOR IN -HOUSE DESIGN EXPENSES OF 19
CERTAIN STARTUP VENTURES .—In the case of in- 20
house semiconductor design expenses, a taxpayer 21
shall be treated as meeting the trade or business re-22
quirement of paragraph (1) if, at the time such in- 23
house semiconductor design expenses are paid or in-24
curred, the principal purpose of the taxpayer in 25
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•HR 802 IH
making such expenditures is to use the results of the 1
design in the active conduct of a future trade or 2
business— 3
‘‘(A) of the taxpayer, or 4
‘‘(B) of 1 or more persons who with the 5
taxpayer are treated as single taxpayer under 6
paragraph (7). 7
‘‘(5) Q
UALIFIED SEMICONDUCTOR DESIGN .— 8
‘‘(A) I
N GENERAL.—The term ‘qualified 9
semiconductor design’— 10
‘‘(i) means the development (or direc-11
tion of the development) of product design, 12
design specifications, trade secrets, tech-13
nology, or other intellectual property for 14
the purpose of semiconductor manufac-15
turing, substantially all of the activities of 16
which constitute elements of a process of 17
experimentation for a purpose described in 18
subparagraph (B)(i), and 19
‘‘(ii) does not include any activity de-20
scribed in subparagraph (B)(ii). 21
‘‘(B) P
URPOSES FOR WHICH RESEARCH 22
MAY QUALIFY FOR CREDIT .—For purposes of 23
subparagraph (A)— 24
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•HR 802 IH
‘‘(i) IN GENERAL.—Semiconductor de-1
sign shall be treated as conducted for a 2
purpose described in this paragraph if it 3
relates to— 4
‘‘(I) a new or improved function, 5
‘‘(II) performance, or 6
‘‘(III) reliability or quality. 7
‘‘(ii) C
ERTAIN PURPOSES NOT QUALI -8
FIED.—Semiconductor design shall in no 9
event be treated as conducted for a pur-10
pose described in this paragraph if it is 11
conducted for purposes of— 12
‘‘(I) style, taste, cosmetic, or 13
other design factors unrelated to a 14
purpose described in clause (i), 15
‘‘(II) design after the commence-16
ment of commercial production of the 17
semiconductor, unless such design is 18
related to firmware, software, or man-19
ufacturing process activities that 20
would otherwise meet the require-21
ments of clause (i), 22
‘‘(III) duplication of an existing 23
semiconductor product (in whole or in 24
part) from a physical examination of 25
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•HR 802 IH
the semiconductor itself or from 1
plans, blueprints, detailed specifica-2
tions, or publicly available information 3
with respect to such semiconductor, or 4
‘‘(IV) surveys or studies related 5
to— 6
‘‘(aa) efficiency, 7
‘‘(bb) management function 8
or techniques, 9
‘‘(cc) market research, test-10
ing, or development, including 11
advertising and promotions, 12
‘‘(dd) routine data collec-13
tion, or 14
‘‘(ee) routine or ordinary 15
testing or inspection for quality 16
control. 17
‘‘(6) U
NITED STATES.—For purposes of this 18
subsection, the term ‘United States’ includes the 19
possessions of the United States. 20
‘‘(7) A
GGREGATION OF EXPENDITURES .—For 21
purposes of this subsection, in determining the 22
amount of qualified semiconductor design expendi-23
tures, rules similar to the rules of section 41(f)(1) 24
shall apply. 25
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‘‘(d) COORDINATIONWITHCREDIT FORINCREASING 1
R
ESEARCH EXPENDITURES.—Any qualified semicon-2
ductor design expenditures for which a credit is allowed 3
under this section shall not be taken into account for pur-4
poses of determining the credit allowable under section 41 5
for such taxable year.’’, and 6
(4) by amending subsection (g) (as so redesig-7
nated) to read as follows:, by inserting ‘‘or qualified 8
semiconductor design expenditures paid or incurred 9
after December 31, 2026’’ before the period. 10
‘‘(g) T
ERMINATION OFCREDIT.—The credit allowed 11
under this section shall not apply to— 12
‘‘(1) property the construction of which begins 13
after December 31, 2036, or 14
‘‘(2) qualified semiconductor design expendi-15
tures paid or incurred after December 31, 2036.’’. 16
(b) C
ONFORMINGAMENDMENT.—Section 56A(c)(9) 17
of the Internal Revenue Code of 1986 is amended by strik-18
ing ‘‘48D(d)’’ and inserting ‘‘48D(f)’’. 19
(c) E
FFECTIVEDATE.—The amendments made by 20
this section shall apply to amounts paid or incurred after 21
the date of the enactment of this Act. 22
Æ
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