Building Ships in America Act of 2025

The Building Ships in America Act of 2025 amends the Internal Revenue Code to support U.S. national defense and economic security through tax incentives for vessels, ports, shipyards, and the maritime workforce.

Sec. 2, United States vessel investment credit: Creates a tax credit for investments in qualified cargo vessels built, repowered, or reconstructed in U.S. shipyards by non-foreign entities. The credit is 33% of qualified investment, plus up to 7% more for using U.S.-based insurance and classification societies. Vessels must be U.S.-flag, operate in foreign trade, and meet other requirements including a 10-year operating agreement and emergency preparedness agreement. Construction must begin before 2033. Vessels owned or built by foreign entities of concern are excluded.

Sec. 3, Certain payments for maritime security excluded from gross income: Excludes from gross income payments made under specific maritime security statutes. Denies double benefits by reducing deductions or credits for related expenditures.

Sec. 4, Elimination of 30-day limitation on domestic operations: Removes the 30-day limit on domestic operations for certain tax provisions related to shipping.

Sec. 5, Qualifying shipping activities: Amends the definition of qualifying shipping activities to focus on the carriage of goods by sea.

Sec. 6, Qualifying vessel: Expands the definition of qualifying vessel to include self-propelled vessels, U.S.-flag or U.S.-owned foreign flag vessels, with specific size requirements, used exclusively in U.S. foreign trade. Defines U.S.-owned foreign flag vessels with conditions including U.S. citizenship, fleet ownership, strategic management from the U.S., and emergency preparedness agreements.

Sec. 7, Credit for construction of shipyard facilities: Creates a 25% tax credit for investments in qualified shipyard facilities located in the U.S. for constructing or repairing oceangoing vessels or manufacturing critical components or equipment. The credit does not apply to property for which the vessel investment credit was taken. The credit expires for property placed in service after 2032.

Sec. 8, Tax incentives relating to merchant marine capital construction funds: Modifies rules for capital construction funds, allowing deposits related to commitments to invest in new vessels or cargo handling equipment. Prohibits withdrawals for fully automated cargo handling equipment that causes net job loss and for cranes manufactured in the People's Republic of China. Reduces the holding period for certain tax treatment from 25 to 15 years.

Sec. 9, Exemption of student incentive payment agreements from gross income: Excludes from gross income student incentive payments made under agreements with the Maritime Administration, effective for payments after 2025.

Sec. 10, Maritime fuel tax parity: Extends fuel tax exemptions to vessels engaged in trade between U.S. Atlantic or Pacific ports, effective for fuel sold or used after 2025.

Sec. 11, Treatment of maritime prosperity zones as opportunity zones: Treats designated maritime prosperity zones (up to 100 census tracts containing shipyards, ports, or harbor facilities) as qualified opportunity zones, with modifications for start dates and requiring businesses to operate in specific maritime industries. Designations last up to 5 years.