[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1536 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 1536
To amend the Internal Revenue Code of 1986 to support the national
defense and economic security of the United States by supporting
vessels, ports, and shipyards of the United States and the United
States maritime workforce through tax policy.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 30, 2025
Mr. Kelly (for himself, Mr. Young, Ms. Murkowski, Ms. Baldwin, and Mr.
Fetterman) introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to support the national
defense and economic security of the United States by supporting
vessels, ports, and shipyards of the United States and the United
States maritime workforce through tax policy.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Building Ships in
America Act of 2025''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. United States vessel investment credit.
Sec. 3. Certain payments for maritime security excluded from gross
income.
Sec. 4. Elimination of 30-day limitation on domestic operations.
Sec. 5. Qualifying shipping activities.
Sec. 6. Qualifying vessel.
Sec. 7. Credit for construction of shipyard facilities.
Sec. 8. Tax incentives relating to merchant marine capital construction
funds.
Sec. 9. Exemption of student incentive payment agreements from gross
income.
Sec. 10. Maritime fuel tax parity.
Sec. 11. Treatment of maritime prosperity zones as opportunity zones.
SEC. 2. UNITED STATES VESSEL INVESTMENT CREDIT.
(a) In General.--Subpart E of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 48E the following new section:
``SEC. 48F. UNITED STATES VESSEL INVESTMENT CREDIT.
``(a) In General.--For purposes of section 46, the United States
Vessel Investment credit for any taxable year is an amount equal to the
applicable percentage of any qualified investment for such taxable year
with respect to any qualified vessel.
``(b) Applicable Percentage.--For purposes of subsection (a), the
applicable percentage with respect to any qualified vessel shall be an
amount equal to the sum of--
``(1) 33 percent, plus
``(2) in the case of any qualified vessel for which the
owner of such vessel will, as part of the agreement described
in subsection (d)(1)(F) and for the duration of such agreement,
obtain protection and indemnity insurance with respect to such
vessel from an insurance company that is domiciled and
headquartered in the United States and is an underwriter that
is approved by the Maritime Administrator, 5 percent, plus
``(3) in the case of any qualified vessel which is
classified by and designed in accordance with the rules of the
American Bureau of Shipping or any other classification society
headquartered in the United States and recognized by the
Secretary of the department in which the Coast Guard is
operating in accordance with section 3316 of title 46, United
States Code, 2 percent.
``(c) Qualified Investment.--For purposes of subsection (a), the
qualified investment with respect to any qualified vessel is equal to
the amount paid or incurred by the taxpayer in connection with the
construction, repowering, or reconstruction of such vessel--
``(1) in a shipyard of the United States, and
``(2) by an entity which is not a foreign entity of
concern.
``(d) Qualified Vessel.--
``(1) In general.--For purposes of this section, the term
`qualified vessel' means a cargo vessel--
``(A) which is a United States flag vessel (as
defined in section 1355),
``(B) which, in the case of any repowering or
reconstruction of such vessel, was originally
constructed in the United States,
``(C) which operates in providing transportation in
the United States foreign trade (as such term is
defined in section 1355(a)),
``(D) which is not a passenger vessel, as defined
in section 2101 of title 46, United States Code,
``(E) which is--
``(i) a bulk carrier vessel,
``(ii) a tanker vessel,
``(iii) a roll-on/roll-off vessel,
``(iv) a container vessel,
``(v) a multi-purpose vessel,
``(vi) a cable vessel,
``(vii) a heavy-lift vessel, or
``(viii) any other type of vessel
determined appropriate by the Maritime
Administrator,
``(F) which, pursuant to an agreement between the
taxpayer and the Maritime Administrator, operates as a
vessel of the United States for a period of not less
than 10 years,
``(G) which has entered into an emergency
preparedness agreement under section 53107 or 53407 of
title 46, United States Code, or a contingency
agreement under section 53207 of such title, or has
otherwise entered into a voluntary agreement and plan
of action with the Administrator of the Maritime
Administration as authorized under section 708(c) of
the Defense Production Act of 1950 (50 U.S.C. 4558(c)),
and
``(H) the construction of which begins before
January 1, 2033.
``(2) Exclusion related to foreign entities of concern.--
The term `qualified vessel' shall not include a vessel which--
``(A) is, or was previously, owned or operated by a
foreign entity of concern,
``(B) was constructed, repowered, or reconstructed
in a shipyard which is owned or operated by a foreign
entity of concern, or
``(C) was registered as a vessel of a foreign
country of concern at any time prior to being placed in
service by the taxpayer.
``(e) Definitions.--For purposes of this section--
``(1) Foreign country of concern.--The term `foreign
country of concern' means--
``(A) a country that is a covered nation (as
defined in section 4872(d) of title 10, United States
Code), and
``(B) any country that the Maritime Administrator,
in consultation with the Secretary of Defense, the
Secretary of State, the Director of National
Intelligence, and the Chair of the Federal Maritime
Commission, determines to be engaged in conduct that is
detrimental to the national security or foreign policy
of the United States.
``(2) Foreign entity.--The term `foreign entity'--
``(A) means--
``(i) a government of a foreign country or
a foreign political party, as those terms are
defined in section 1 of the Foreign Agents
Registration Act of 1938, as amended (22 U.S.C.
611),
``(ii) a natural person who is not a lawful
permanent resident of the United States, a
citizen of the United States, or any other
protected individual (as such term is defined
in section 274B(a)(3) of the Immigration and
Nationality Act (8 U.S.C. 1324b(a)(3))), or
``(iii) a partnership, association,
corporation, organization, or other combination
of persons organized under the laws of or
having its principal place of business in a
foreign country, and
``(B) includes--
``(i) any person (including an owner or
operator of a vessel) owned by, controlled by,
or subject to the direction of an entity listed
in subparagraph (A),
``(ii) any person, wherever located, who
acts as an agent, representative, or employee
of an entity listed in subparagraph (A),
``(iii) any person who acts in any other
capacity at the order, request, or under the
direction or control, of an entity listed in
subparagraph (A), or of a person whose
activities are directly or indirectly
supervised, directed, controlled, financed, or
subsidized in whole or in major part by an
entity listed in subparagraph (A),
``(iv) any person who directly or
indirectly through any contract, arrangement,
understanding, relationship, or otherwise, owns
25 percent or more of the equity interests of
an entity listed in subparagraph (A),
``(v) any person with significant
responsibility to control, manage, or direct an
entity listed in subparagraph (A),
``(vi) any person, wherever located, who is
a citizen or resident of a country controlled
by an entity listed in subparagraph (A), or
``(vii) any corporation, partnership,
association, or other organization organized
under the laws of a country controlled by an
entity listed in subparagraph (A).
``(3) Foreign entity of concern.--The term `foreign entity
of concern' means any foreign entity that is--
``(A) designated as a foreign terrorist
organization by the Secretary of State under section
219 of the Immigration and Nationality Act (8 U.S.C.
1189),
``(B) included on the list of specially designated
nationals and blocked persons maintained by the Office
of Foreign Assets Control of the Department of the
Treasury,
``(C) owned by, controlled by, or subject to the
jurisdiction or direction of a government of a foreign
country of concern,
``(D) alleged by the Attorney General to have been
involved in activities for which a conviction was
obtained under--
``(i) chapter 37 of title 18, United States
Code (commonly known as the `Espionage Act')
(18 U.S.C. 792 et seq.),
``(ii) section 951 or 1030 of title 18,
United States Code,
``(iii) chapter 90 of title 18, United
States Code (commonly known as the `Economic
Espionage Act of 1996'),
``(iv) the Arms Export Control Act (22
U.S.C. 2751 et seq.),
``(v) section 224, 225, 226, 227, or 236 of
the Atomic Energy Act of 1954 (42 U.S.C. 2274,
2275, 2276, 2277, and 2284),
``(vi) the Export Control Reform Act of
2018 (50 U.S.C. 4801 et seq.), or
``(vii) the International Emergency
Economic Powers Act (50 U.S.C. 1701 et seq.),
``(E) designated by the Federal Maritime Commission
as a controlled carrier under chapter 407 of title 46,
United States Code,
``(F) found by the Federal Maritime Commission to
be practicing unfavorable conditions in foreign trade
under chapter 421 or 423 of title 46, United States
Code, or
``(G) determined by the Maritime Administrator, in
consultation with the Secretary of Defense, the
Secretary of State, the Director of National
Intelligence, and the Chair of the Federal Maritime
Commission, to be engaged in unauthorized conduct that
is detrimental to the national security or foreign
policy of the United States.
``(f) Certain Progress Expenditure Rules Made Applicable.--Rules
similar to the rules of subsections (c)(4) and (d) of section 46 (as in
effect on the day before the date of the enactment of the Revenue
Reconciliation Act of 1990) shall apply for purposes of subsection (a).
``(g) Regulations.--The Secretary, in consultation with the
Maritime Administrator, shall issue such regulations or other guidance
as may be necessary or appropriate to carry out the purposes of this
section, including any regulations or guidance which may be necessary
or appropriate to recapture the benefit of any credit determined under
this section with respect to any qualified vessel, or any increase in
the applicable percentage under subsection (b) with respect to any
qualified vessel, in the case of any taxpayer which fails to comply
with the terms of the agreement described in subsection (d)(1)(F) with
respect to such qualified vessel.''.
(b) Conforming Amendments.--
(1) Section 46 of the Internal Revenue Code of 1986, as
amended by section 13702(b)(1) of Public Law 117-169, is
amended--
(A) in paragraph (6), by striking ``and'' at the
end,
(B) in paragraph (7), by striking the period at the
end and inserting ``, and'', and
(C) by adding at the end the following:
``(8) the United States Vessel Investment credit.''.
(2) Section 49(a)(1)(C) of such Code, as amended by section
13702(b)(2) of Public Law 117-169, is amended--
(A) in clause (vii), by striking ``and'' at the
end,
(B) in clause (viii), by striking the period at the
end and inserting ``, and'', and
(C) by adding at the end the following:
``(ix) with respect to any qualified vessel
(as defined in section 48F(d)), the portion of
the basis of such vessel attributable to
amounts paid or incurred by the taxpayer in
connection with the construction, repowering,
or reconstruction of such vessel.''.
(3) The table of sections for subpart E of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
after the item relating to section 48E the following new item:
``Sec. 48F. United States Vessel Investment credit.''.
(c) Recapture for Failure To Operate as a Vessel of the United
States.--Section 50(a) of the Internal Revenue Code of 1986 is
amended--
(1) in paragraph (4), by striking ``or any applicable
transaction to which paragraph (3)(A) applies'' and inserting
``any applicable transaction to which paragraph (3)(A) applies,
or any violation to which paragraph (6)(A) applies'',
(2) by redesignating paragraph (6) as paragraph (7),
(3) by inserting after paragraph (5) the following new
paragraph:
``(6) Failure to operate qualified vessel as a vessel of
the united states.--
``(A) In general.--If an applicable taxpayer
violates any of the requirements of the agreement
described in section 48F(d)(1)(F) during the duration
of such agreement with respect to any investment credit
property which is eligible for the United States Vessel
Investment credit under section 48F(a), then the tax
under this chapter for the taxable year in which such
violation occurs shall be increased by 100 percent of
the aggregate decrease in the credits allowed under
section 38 for all prior taxable years which would have
resulted solely from reducing to zero any credit
determined under section 46 which is attributable to
the United States Vessel Investment credit under
section 48F(a) with respect to such property.
``(B) Exception.--Subparagraph (A) shall not apply
if the applicable taxpayer demonstrates to the
satisfaction of the Secretary and the Maritime
Administrator that the taxpayer is in compliance with
the agreement described in section 48F(d)(1)(F) within
30 days of a determination and notice by the Secretary.
``(C) Regulations and guidance.--The Secretary
shall issue such regulations or other guidance as the
Secretary determines necessary or appropriate to carry
out the purposes of this paragraph, including
regulations or other guidance which provide for
requirements for recordkeeping or information reporting
for purposes of administering the requirements of this
paragraph.'', and
(4) in paragraph (7) (as redesignated by paragraph (2))--
(A) in subparagraph (C), by striking ``or (3)'' and
inserting ``(3), or (4)'', and
(B) by striking subparagraph (E) and inserting the
following:
``(E) Applicable taxpayer.--For purposes of this
subsection, the term `applicable taxpayer' means any
taxpayer who has been allowed--
``(i) for purposes of paragraph (3), a
credit under section 48D(a) for any prior
taxable year, or
``(ii) for purposes of paragraph (6), a
credit under section 48F(a) for any prior
taxable year.''.
(d) Elective Payment and Transfer of Credit.--
(1) Elective payment.--Section 6417 of the Internal Revenue
Code of 1986 is amended--
(A) in subsection (b), by adding at the end the
following:
``(13) The United States Vessel Investment credit under
section 48F.'', and
(B) in subsection (d)(1)--
(i) in subparagraph (E), by striking ``(C),
or (D)'' each place it appears and inserting
``(C), (D), or (E)'',
(ii) by redesignating subparagraph (E) (as
amended by clause (i)) as subparagraph (F), and
(iii) by inserting after subparagraph (D)
the following:
``(E) Election with respect to united states vessel
investment credit.--If a taxpayer other than an entity
described in subparagraph (A) makes an election under
this subparagraph with respect to any taxable year in
which such taxpayer has made a qualified investment
with respect to any qualified vessel (as defined in
section 48F), such taxpayer shall be treated as an
applicable entity for purposes of this section for such
taxable year, but only with respect to the credit
described in subsection (b)(13).''.
(2) Transfer.--Section 6418(f)(1)(A) of the Internal
Revenue Code of 1986 is amended by adding at the end the
following:
``(xii) The United States Vessel Investment
credit under section 48F.''.
(e) Exception Relating to Alternative Tax on Qualifying Shipping
Activities.--Section 1357(c) of the Internal Revenue Code of 1986 is
amended--
(1) in paragraph (1), by striking ``paragraph (2)'' and
inserting ``paragraph (2) or (4)'', and
(2) by adding at the end the following:
``(4) Exception for united states vessel investment
credit.--Paragraph (1) shall not apply with respect to any
credit allowed to the taxpayer under section 48F.''.
(f) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 2025.
SEC. 3. CERTAIN PAYMENTS FOR MARITIME SECURITY EXCLUDED FROM GROSS
INCOME.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting after section
139I the following new subsection:
``SEC. 139J. MARITIME SECURITY PAYMENTS.
``(a) In General.--Gross income shall not include any payment made
pursuant to--
``(1) section 53106 of title 46, United States Code,
``(2) section 53206 of such title,
``(3) section 53406 of such title,
``(4) section 54101 of such title, or
``(5) section 54301 of such title.
``(b) Denial of Double Benefit.--No deduction or credit shall be
allowed for, or by reason of, any expenditure to the extent of the
amount excluded under subsection (a) for any payment which was provided
with respect to such expenditure. The adjusted basis of any property
shall be reduced by the amount excluded under subsection (a) which was
provided with respect to such property.''.
(b) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 of such Code is amended by inserting after
the item relating to section 139I the following new item:
``Sec. 139J. Maritime security payments.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 4. ELIMINATION OF 30-DAY LIMITATION ON DOMESTIC OPERATIONS.
(a) In General.--Section 1355 of the Internal Revenue Code of 1986
is amended--
(1) in subsection (f), by striking paragraph (4), and
(2) in subsection (g)(2), by striking subparagraph (D).
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of enactment of this
Act.
SEC. 5. QUALIFYING SHIPPING ACTIVITIES.
Section 1356(b) of the Internal Revenue Code of 1986 (relating to
qualifying shipping activities) is amended by striking ``activities in
operating'' and inserting ``the carriage of goods (as defined in
section 1 of the Carriage of Goods by Sea Act (46 U.S.C. 30701 note))
by''.
SEC. 6. QUALIFYING VESSEL.
Section 1355(a) of the Internal Revenue Code of 1986 is amended--
(1) by striking paragraph (4) and inserting the following:
``(4) Qualifying vessel.--The term `qualifying vessel'
means a vessel which is--
``(A) self-propelled (or a combination self-
propelled and non-self-propelled),
``(B) a United States flag vessel or a United
States-owned foreign flag vessel,
``(C) either--
``(i) a vessel designed primarily for use
on the high seas which has a draft of more than
12 feet, or
``(ii) not less than 6,000 deadweight tons,
and
``(D) used exclusively in the United States foreign
trade during the period that the election under this
subchapter is in effect.'', and
(2) by adding at the end the following:
``(8) United states-owned foreign flag vessel.--The term
`United States-owned foreign flag vessel' means any vessel
which--
``(A) is documented under the laws of a country
(other than the United States) or a foreign registry
which is not a foreign country of concern (as defined
in section 48F(e)),
``(B) is owned by a person which--
``(i)(I) is a citizen of the United States
(as determined under section 50501 of title 46,
United States Code), or
``(II) is controlled (within the meaning of
section 954(d)(3)) by a citizen of the United
States (as so determined), and
``(ii) owns a fleet of United States flag
vessels,
``(C) is strategically and commercially managed
from within the United States, and
``(D) has entered into an emergency preparedness
agreement under section 53107 or 53407 of title 46,
United States Code, or a contingency agreement under
section 53207 of such title, or has otherwise entered
into a voluntary agreement and plan of action with the
Maritime Administrator as authorized under section
708(c) of the Defense Production Act of 1950 (50 U.S.C.
4558(c)).''.
SEC. 7. CREDIT FOR CONSTRUCTION OF SHIPYARD FACILITIES.
(a) In General.--Subpart E of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986, as amended by section 2(a), is
amended by inserting after section 48F the following new section:
``SEC. 48G. CREDIT FOR CONSTRUCTION OF SHIPYARD FACILITIES.
``(a) In General.--For purposes of section 46, the shipyard
investment tax credit for any taxable year is an amount equal to 25
percent of the qualified investment for such taxable year with respect
to any qualified shipyard facility of a taxpayer described in section
48D(c)(1).
``(b) Qualified Investment.--
``(1) In general.--For purposes of subsection (a), the
qualified investment with respect to any qualified shipyard
facility for any taxable year is the basis of any qualified
property placed in service by the taxpayer during such taxable
year which is part of a qualified shipyard facility.
``(2) Qualified property.--The term `qualified property'
shall have the same meaning given such term in section
48D(b)(2), except that subparagraph (A)(iv) of such section
shall be applied by substituting `qualified shipyard facility'
for `advanced manufacturing facility'.
``(3) Qualified shipyard facility.--For purposes of this
section, the term `qualified shipyard facility' means a
facility--
``(A) which is located within the United States
(including any territory or possession of the United
States), and
``(B) for which the primary purpose is--
``(i) constructing or repairing commercial
or military oceangoing vessels,
``(ii) manufacturing components which are
critical (as determined by the Secretary, in
consultation with the Secretary of the Navy and
the Maritime Administrator) to the operation of
commercial or military oceangoing vessels, or
``(iii) manufacturing equipment which is
used to produce or repair commercial or
military oceangoing vessels.
``(4) Certain progress expenditure rules made applicable.--
Rules similar to the rules of subsections (c)(4) and (d) of
section 46 (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990) shall
apply for purposes of subsection (a).
``(c) Denial of Double Benefit.--This section shall not apply to
any property placed in service by the taxpayer during the taxable year
if a credit was allowed under section 48F to such taxpayer during such
taxable year.
``(d) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section.
``(e) Termination of Credit.--The credit allowed under this section
shall not apply to property placed in service after December 31,
2032.''.
(b) Conforming Amendments.--
(1) Section 46 of the Internal Revenue Code of 1986, as
amended by section 2(b)(1), is amended--
(A) in paragraph (7), by striking ``and'' at the
end,
(B) in paragraph (8), by striking the period at the
end and inserting ``, and'', and
(C) by adding at the end the following:
``(9) the shipyard investment tax credit.''.
(2) Section 49(a)(1)(C) of such Code, as amended by section
2(b)(2), is amended--
(A) in clause (viii), by striking ``and'' at the
end,
(B) in clause (ix), by striking the period at the
end and inserting ``, and'', and
(C) by adding at the end the following:
``(x) the basis of any qualified property
(as defined in subsection (b)(2) of section
48G) which is part of a qualified shipyard
facility (as defined in subsection (b)(3) of
such section).''.
(3) Section 50(a)(2)(E) of such Code, as amended by section
13702(b) of Public Law 117-169, is amended by striking ``or
48E(e)'' and inserting ``48E(e), or 48G(b)(4)''.
(4) The table of sections for subpart E of part IV of
subchapter A of chapter 1 of such Code, as amended by section
2(b)(3), is amended by inserting after the item relating to
section 48F the following new item:
``Sec. 48G. Shipyard investment tax credit.''.
(c) Elective Payment and Transfer of Credit.--
(1) Elective payment.--Section 6417 of the Internal Revenue
Code of 1986, as amended by section 2, is amended--
(A) in subsection (b), by adding at the end the
following:
``(14) The shipyard investment tax credit under section
48G.'', and
(B) in subsection (d)(1)--
(i) in subparagraph (F), by striking ``(D),
or (E)'' each place it appears and inserting
``(D), (E), or (F)'',
(ii) by redesignating subparagraph (F) (as
amended by clause (i)) as subparagraph (G), and
(iii) by inserting after subparagraph (E)
the following:
``(F) Election with respect to the shipyard
investment tax credit.--If a taxpayer other than an
entity described in subparagraph (A) makes an election
under this subparagraph with respect to any taxable
year in which such taxpayer has placed in service any
qualified property which is part of a qualified
shipyard facility (as defined in section 48G), such
taxpayer shall be treated as an applicable entity for
purposes of this section for such taxable year, but
only with respect to the credit described in subsection
(b)(14).''.
(2) Transfer.--Section 6418(f)(1)(A) of the Internal
Revenue Code of 1986, as amended by section 2, is amended by
adding at the end the following:
``(xiii) The shipyard investment tax credit
under section 48G.''.
(d) Exception Relating to Alternative Tax on Qualifying Shipping
Activities.--Paragraph (4) of section 1357(c) of the Internal Revenue
Code of 1986, section 2(e), is amended to read as follows:
``(4) Exception for united states vessel investment credit
and shipyard investment tax credit.--Paragraph (1) shall not
apply with respect to any credit allowed to the taxpayer under
section 48F or 48G.''.
(e) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 2025.
SEC. 8. TAX INCENTIVES RELATING TO MERCHANT MARINE CAPITAL CONSTRUCTION
FUNDS.
(a) In General.--Section 7518 of the Internal Revenue Code of 1986
is amended--
(1) in subsection (a)--
(A) by striking paragraph (1) and inserting the
following:
``(1) In general.--The amount deposited in a fund
established under chapter 535 of title 46 of the United States
Code (hereinafter in this section referred to as a `capital
construction fund') for a taxable year may not exceed the
amount specified in the agreement under section 53503(a) of
such title, which shall be an amount that is related to a
commitment to invest the revenue from the capital construction
fund into funding the construction of new vessels or funding
cargo handling equipment.'',
(B) in paragraph (2), by striking ``paragraph
(1)(B)'' each place it appears and inserting
``paragraph (1)'', and
(C) by adding at the end the following new
paragraph:
``(4) Revenue.--For the purposes of paragraph (1), the
revenue from the capital construction fund may include--
``(A) income attributable to the operation of any
agreement vessel in foreign commerce or domestic trade
or fisheries or the operation of a marine terminal in
the United States,
``(B) the net proceeds from the disposition of an
agreement vessel or cargo handling equipment or
insurance or indemnity attributable to the vessel or
cargo handling equipment,
``(C) the receipts from the investment or
reinvestment of amounts held in the fund, and
``(D) the amount allowable as a deduction under
section 167 for the taxable year with respect to the
agreement vessels or cargo handling equipment.'',
(2) in subsection (b)(2), by striking ``Amounts in any
capital construction fund'' and all that follows through ``(not
in excess of 60 percent)'' and inserting ``An agreed
percentage'',
(3) in subsection (e)--
(A) by striking paragraph (1) and inserting the
following:
``(1) In general.--A qualified withdrawal from the fund is
one made in accordance with the terms of the agreement but only
if it is for--
``(A) the acquisition, construction, repowering, or
reconstruction of--
``(i) a qualified vessel or a barge or
container that is part of the complement of a
qualified vessel, or
``(ii) cargo handling equipment, or
``(B) the payment of the principal on indebtedness
incurred in the acquisition, construction, repowering,
or reconstruction of--
``(i) a qualified vessel or a barge or
container that is part of the complement of a
qualified vessel, or
``(ii) cargo handling equipment.
Except to the extent provided in regulations prescribed
by the Secretary, subparagraph (A), and so much of
subparagraph (B) as relates only to barges and
containers, shall apply only with respect to barges and
containers constructed in the United States.'',
(B) by redesignating paragraph (2) as paragraph
(4), and
(C) by inserting after paragraph (1) the following:
``(2) Fully automated cargo handling equipment.--No
withdrawals may be made from a capital construction fund to
purchase fully automated cargo handling equipment that is
remotely operated or remotely monitored with or without the
exercise of human intervention or control, if the Secretary
determines such equipment would result in a net loss of jobs
within a marine terminal.
``(3) Prohibition on people's republic of china cranes.--No
withdrawals may be made from a capital construction fund to
purchase cranes manufactured in the People's Republic of
China.'',
(4) in subsection (f)--
(A) in paragraph (2), by inserting ``cargo handling
equipment,'' after ``barge,'' both places the term
appears,
(B) in paragraph (3), by inserting ``cargo handling
equipment,'' after ``barge,'' both places the term
appears, and
(C) in paragraph (4), by inserting ``cargo handling
equipment,'' after ``barges,'',
(5) in subsection (g)--
(A) in the flush matter at the end of paragraph
(2), by inserting ``cargo handling equipment,'' after
``advanced'', and
(B) in paragraph (5)(A)--
(i) in the heading, by striking ``25
years'' and inserting ``15 years'',
(ii) by striking ``26th, 27th, 28th, 29th,
or 30th taxable year'' and inserting
``following specified taxable year'', and
(iii) by striking the table contained
therein and inserting the following:
``If the amount remains in the fund The applicable percentage is-
at the close of the-
16th taxable year.................................. 20 percent
17th taxable year.................................. 40 percent
18th taxable year.................................. 60 percent
19th taxable year.................................. 80 percent
20th taxable year............................100 percent'', and
(6) in subsection (i), by striking ``as in effect on the
date of the enactment of this section''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
SEC. 9. EXEMPTION OF STUDENT INCENTIVE PAYMENT AGREEMENTS FROM GROSS
INCOME.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986, as amended by section 3, is further
amended by inserting after section 139J the following new section:
``SEC. 139K. STUDENT INCENTIVE PAYMENT AGREEMENTS.
``In the case of an individual who has entered into an agreement
described in section 51509 of title 46, United States Code, gross
income does not include any student incentive payments made to such
individual pursuant to such agreement.''.
(b) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 of the Internal Revenue Code of 1986, as
amended by section 3, is further amended by inserting after the item
relating to section 139J the following new item:
``Sec. 139K. Student incentive payment agreements.''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to payments made after December 31, 2025.
SEC. 10. MARITIME FUEL TAX PARITY.
(a) In General.--Section 4041(g) of the Internal Revenue Code of
1986 is amended by adding at the end the following new sentence: ``For
purposes of subsection (a)(2), the exemption under paragraph (1) shall
also apply to fuel sold for use or used by a vessel which is both
described in section 4042(c)(1) and actually engaged in trade between
the Atlantic or Pacific ports of the United States (including any
territory or possession of the United States).''.
(b) Effective Date.--The amendment made by this section shall apply
to fuel sold for use or used after December 31, 2025.
SEC. 11. TREATMENT OF MARITIME PROSPERITY ZONES AS OPPORTUNITY ZONES.
(a) In General.--Subchapter Z of chapter 1 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``SEC. 1400Z-3. TREATMENT OF MARITIME PROSPERITY ZONES AS OPPORTUNITY
ZONES.
``(a) In General.--A maritime prosperity zone shall be treated as a
qualified opportunity zone.
``(b) Special Rules.--In applying this subchapter to any maritime
prosperity zone which is a qualified opportunity zone solely by reason
of this section--
``(1) In general.--For purposes of determining--
``(A) whether any property which would not be
qualified opportunity fund business property without
regard to this section is qualified opportunity fund
business property, and
``(B) whether any corporation or partnership which
is not a qualified opportunity fund business without
regard to this section is a qualified opportunity fund
business,
section 1400Z-2(d) shall be applied with the modifications described in
paragraph (2).
``(2) Modifications.--The modifications described in this
paragraph are as follows:
``(A) Start date.--Subparagraphs (B)(i)(I), (C)(i),
and (D)(i)(I) of section 1400Z-2(d)(2) shall each be
applied by substituting `the date of the enactment of
the Building Ships in America Act of 2025' for
`December 31, 2017'.
``(B) Qualified business property.--Property shall
not be treated as qualified opportunity zone business
property unless such property is substantially used in
an industry which is assigned a code under the North
American Industrial Classification System which is
described in paragraph (3).
``(C) Qualified business.--A trade or business
shall not be treated as a qualified opportunity zone
business unless such trade or business operates in an
industry which is assigned a code under the North
American Industrial Classification System which is
described in paragraph (3).
``(3) Eligible north american industrial classification
system codes.--The following codes under the North American
Industrial Classification System are the codes described in
this paragraph:
``(A) 48311 (deep sea freight transportation).
``(B) 483113 (coastal and Great Lakes freight
transportation).
``(C) 483211 (inland water freight transportation).
``(D) 4883 (support activities for water
transportation).
``(E) 3366 (ship and boat building).
``(c) Maritime Prosperity Zone.--For purposes of this chapter--
``(1) In general.--The term `maritime prosperity zone'
means any population census tract that--
``(A) contains or is determined by the Maritime
Administrator to be a viable site for--
``(i) a shipyard of the United States,
``(ii) a port, or
``(iii) a harbor facility, and
``(B) is designated as a maritime prosperity zone
under paragraph (2).
``(2) Designation.--A population census tract is designated
as a maritime prosperity zone under this paragraph if--
``(A) the Maritime Administrator, in consultation
with the Secretary of the Navy, nominates the tract for
designation as a maritime prosperity zone and notifies
the Secretary in writing of such nomination, and
``(B) the Secretary certifies such nomination and
designates such tract as a qualified maritime
prosperity zone.
``(3) Number of population census tracts designated.--Not
more than 100 population census tracts may be designated as
maritime prosperity zone.
``(4) Period for which designation is in effect.--Except as
provided in paragraph (2), a designation as a maritime
prosperity zone shall remain in effect for the period--
``(A) beginning on the date of the designation, and
``(B) ending at the close of the 5th calendar year
beginning on or after such date of designation.''.
(b) Clerical Amendment.--The table of sections for subchapter Z of
chapter 1 of such Code is amended by adding at the end the following
new item:
``Sec. 1400Z-3. Treatment of maritime prosperity zones as opportunity
zones.''.
(c) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
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