Building Ships in America Act of 2025
The Building Ships in America Act of 2025 would significantly reshape U.S. tax policy to promote domestic shipbuilding, U.S.-flag vessels, and related maritime infrastructure. It creates new tax credits aimed at spurring construction, repowering, and operation of vessels that are United States–owned, built, or managed, and it expands support for U.S. shipyards and the broader maritime workforce. Key features include a United States Vessel Investment Credit (under section 48F) and a Shipyard Investment Credit (section 48G), funding/security provisions related to maritime operations, and a pathway to treat maritime activities and zones as favorable for tax purposes similar to other domestic economic development tools. The bill also tightens national-security screening around who can access credits and the vessels that qualify, and it broadens certain benefits to cover related maritime security payments, fuel parity, and opportunities zones designed to promote maritime industry activity. Overall, if enacted, the bill would increase the financial incentives for building and operating U.S.-flag vessels and upgrading U.S. shipyards, while embedding tighter screening against foreign influence and adding new mechanisms to support maritime infrastructure and workforce development. The provisions are designed to advance national defense and economic security by strengthening domestic shipbuilding capacity, port and harbor facilities, and the U.S. maritime labor force.
Key Points
- 1United States Vessel Investment Credit (section 48F)
- 2- Provides a credit against tax for qualified investments in qualified vessels built, repowered, or reconstructed in U.S. shipyards by eligible (non-foreign) entities.
- 3- Base credit equals 33% of qualified investment, plus potential increments of 5% (if the vessel has U.S.-domiciled protection/indemnity insurance from a U.S.-based insurer approved by the Maritime Administrator) and 2% (if the vessel is classified by a U.S.–based American Bureau of Shipping or a U.S.-recognized classification society).
- 4- Qualified vessel must be U.S. flag or U.S.-owned foreign flag, meet size/operational criteria, be used in U.S. foreign trade, and enter into a long-term (at least 10 years) U.S. operations agreement with the Maritime Administrator; must begin construction before January 1, 2033 and avoid certain foreign entities of concern.
- 5Shipyard Investment Credit (section 48G)
- 6- A separate 25% credit for qualified investments in qualified U.S. shipyard facilities that construct or repair oceangoing vessels, or manufacture components/equipment essential to such vessels.
- 7- Applies to qualified shipyard facilities located in the U.S. and ends for property placed in service after December 31, 2032.
- 8- Includes rules to prevent double benefits with 48F and provides for elective payment/transfer of the credit.
- 9Qualifying Vessel and Shipyard Definitions; crackdown on “foreign entities of concern”
- 10- Defines a “qualified vessel” with criteria including U.S. flag ownership, minimum deadweight or design for high seas use, exclusive use in U.S. foreign trade during the election, and a long-term U.S.-based operation commitment.
- 11- Excludes vessels owned, operated by, or built in shipyards owned/operated by foreign entities of concern. It also restricts credits for vessels associated with such entities and for certain foreign-flag or foreign-owned carriers.
- 12Elective Payment, Transfer, and Tax Attributes
- 13- Allows the credit to be paid out in cash (elective payment) and permits transfer of the credit to other taxpayers/entities under certain conditions.
- 14- Aligns related tax provisions to treat the credit as a distinct eligible credit for purposes of tax payments and transfers, and makes it an explicit option for taxpayers.
- 15Other Related Provisions (connected to the broader maritime policy)
- 16- Exclusion of maritime security payments from gross income (several U.S. Code sections) to avoid double benefits and adjust tax bases.
- 17- Elimination of a 30-day restriction on domestic operations, broadening the activities that count toward domestic qualification.
- 18- Revisions to the definition of qualifying shipping activities and related tax provisions to emphasize carriage of goods and U.S. trade involvement.
- 19- Maritime prosperity zones (new section 1400Z-3) treated as opportunity zones to encourage investment in designated maritime areas, with a defined list of eligible codes (including shipbuilding) and a five-year designation window.
- 20- Fuel tax parity improvements to ensure fuel used by certain vessels engaged in U.S. Atlantic/Pacific trade receives parity in existing tax treatment.
- 21- Exemption for student incentive payments under certain U.S. maritime agreements from gross income, and related administrative provisions.
- 22Effective Date
- 23- Most amendments apply to property placed in service after December 31, 2025.