HB802, the “Semiconductor Technology Advancement and Research Act of 2025” or “STAR Act of 2025,” would expand the federal advanced manufacturing investment credit in section 48D of the Internal Revenue Code. The bill adds a new credit equal to 25 percent of qualified semiconductor design expenditures, in addition to the existing 25 percent credit for qualified investment in an advanced manufacturing facility. The new design credit would apply to both in-house semiconductor design costs and contract design costs, so long as the design work is conducted in the United States.
The bill defines qualified semiconductor design broadly but with specific limits. Covered costs include wages for qualified design services, supplies, and certain computer-use expenses for in-house work, as well as payments to outside contractors for qualifying design work. The bill also includes rules for startup ventures, aggregation of related taxpayers, and coordination with the research credit so the same expenses cannot be used for both credits. The credit would apply to amounts paid or incurred after enactment, and the semiconductor design credit would phase out for expenses paid or incurred after December 31, 2036, while the underlying advanced manufacturing credit remains subject to its existing termination rules.
The bill would amend federal tax law rather than state law, specifically changing the Internal Revenue Code and a related conforming provision in section 56A. Its practical effect would be to lower federal tax liability for semiconductor design firms and other eligible taxpayers investing in domestic chip design activities, potentially encouraging more U.S.-based semiconductor research, engineering, and intellectual property development. It would also extend the policy focus of the advanced manufacturing credit beyond physical manufacturing facilities to include design-stage innovation.
Because there are no committee transcripts or recorded votes in the provided materials, there is no documented debate or roll-call sentiment to assess. Based on the bill’s bipartisan and cross-party list of sponsors, the measure appears to have been introduced with broad initial support and a pro-manufacturing, pro-innovation purpose. No opposition points are recorded in the available context, but likely areas of scrutiny would include the cost of the tax credit, whether the definition of qualifying design work is too broad, and how to prevent overlap with existing research tax incentives.
Impact
HB802 would amend section 48D of the Internal Revenue Code to create a new federal tax credit for qualified semiconductor design expenditures, affecting semiconductor designers, chip companies, startups, and contractors performing qualifying U.S.-based design work. It also makes a conforming change to section 56A and coordinates the new credit with the existing research credit under section 41 so the same expenses cannot be double-counted. The bill does not change state statutes, but it would alter federal tax treatment for domestic semiconductor design activities.
Sentiment
No committee discussion or votes are provided, so there is no recorded floor or committee sentiment to summarize. The bill’s sponsorship by members from both parties suggests a generally favorable, bipartisan policy posture centered on strengthening U.S. semiconductor competitiveness, domestic innovation, and advanced manufacturing capacity.
Contention
No specific points of contention are documented in the supplied materials. Potential issues that could arise in debate include the fiscal cost of expanding the credit, whether the definition of qualified semiconductor design is sufficiently narrow to target true R&D, how to distinguish qualifying design from excluded activities like market research or post-production changes, and whether the credit should favor larger firms over startups or contract designers.
In Pennsylvania Economic Development for a Growing Economy (PA EDGE) tax credits relating to semiconductor manufacturing and biomedical manufacturing and research, further providing for definitions and for application and approval of tax credit.
In Pennsylvania Economic Development for a Growing Economy (PA EDGE) tax credits relating to semiconductor manufacturing and biomedical manufacturing and research, further providing for definitions, for eligibility, for application and approval of tax credit and for sale or assignment.