Shipbuilding Bill Offers 33% Tax Credit for U.S. Vessels, Bans Chinese Cranes, and Creates New 'Maritime Opportunity Zones'

The “Building Ships in America Act of 2025” is a massive tax incentive package designed to jumpstart domestic shipbuilding by offering substantial tax breaks for companies willing to invest in U.S. shipyards and commit to long-term American operation. Think of it as a policy blueprint to rebuild the U.S. merchant fleet, backed by the IRS.

The core of the bill (SEC. 2) introduces a new United States Vessel Investment Credit worth a minimum of 33% of the cost of building or significantly upgrading a qualifying cargo vessel in a U.S. shipyard. If the owner agrees to use U.S.-domiciled insurance and U.S.-recognized classification societies, that credit can climb to 40%. This is serious money aimed at steering massive construction projects away from overseas yards and into American ports. The catch? To get the credit, the ship owner must sign an agreement promising to operate that vessel as a U.S. vessel for at least 10 years. Break that deal, and you have to pay back 100% of the credit—no partial refunds. That’s a high-stakes compliance requirement.

The Security Screen: Who Gets to Build?

This bill is hyper-focused on national security and who doesn't get to participate. The investment credit is strictly off-limits if the vessel is built in or owned by a “foreign entity of concern.” This term (SEC. 2) is broadly defined and includes entities controlled by a “foreign country of concern”—a list that the Maritime Administrator can update after consulting with intelligence and defense agencies. Essentially, the Maritime Administrator has been given a huge amount of power to blackball companies based on national security concerns, which makes the eligibility landscape a little bit of a moving target for investors and shipyard owners.

Tax Breaks for Yards and Sailors

Beyond the ships themselves, the bill also creates a new Shipyard Investment Tax Credit (SEC. 7), offering a 25% credit for investments made in qualified shipyard facilities—places that build or repair commercial and military ships. This is meant to ensure we have the dry docks and manufacturing capacity to handle the new ships the vessel credit incentivizes. Both the vessel and the shipyard credits are designed to be transferable or eligible for direct cash payment from the government, making them attractive even to companies without huge tax liabilities.

For actual people, the bill offers two key tax exclusions. First, specific payments made for maritime security (SEC. 3) will no longer count as taxable income. Second, student incentive payments (SEC. 9) received by cadets who agree to serve in the U.S. Merchant Marine will be exempt from gross income after December 31, 2025. This is a direct financial boost designed to attract and retain the next generation of U.S. mariners.

The Crane Ban and the Job Protection Clause

Section 8 updates the rules for Merchant Marine Capital Construction Funds (CCFs), the tax-advantaged savings accounts used to buy ships and equipment. Here’s where the policy gets very specific: CCF money cannot be used to purchase any cranes manufactured in the People's Republic of China. This is a direct, targeted ban that reflects growing security concerns about port infrastructure. Furthermore, CCF money cannot be used to buy fully automated cargo handling equipment if the Secretary determines it will cause a “net loss of jobs at a marine terminal.” This provision aims to protect longshore jobs, but it adds a layer of regulatory complexity and potential delay for terminal operators looking to modernize.

New “Maritime Prosperity Zones”

Finally, the bill creates a new type of tax-advantaged area called a Maritime Prosperity Zone (SEC. 11). These are census tracts nominated by the Maritime Administrator—up to 100 nationwide—that are or could be good locations for U.S. shipyards, ports, or harbor facilities. Once certified, these zones are treated like Opportunity Zones, offering tax breaks for investors. However, unlike traditional Opportunity Zones, the qualified businesses must operate in specific maritime-related industries (like deep-sea freight transportation or shipbuilding) defined by specific NAICS codes. This is a highly targeted effort to use real estate tax incentives to drive investment into specific port and shipyard communities.