119-s1536

[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.
 <all>