STAR Act of 2025

This bill would expand a federal tax credit to cover U.S.-based chip design work, not just building chip factories. Companies could get a 25% tax credit for qualified semiconductor design costs done in the United States, on top of the existing 25% credit for investing in advanced manufacturing facilities. The design work must be real R&D aimed at improving how a chip functions, performs, or its reliability or quality; routine testing, market research, copying others’ designs, or cosmetic changes don’t count.

Covered costs include wages for employees doing or directly supporting design, supplies, certain computer time, and payments to outside designers, as long as the design is done in the U.S. (including U.S. territories) . Startups can qualify for in-house design costs even if they aren’t selling products yet, as long as they plan to use the results in a future business. You can’t also claim the regular research credit for the same expenses. The new design credit would apply to costs after the bill becomes law and would end after December 31, 2036 .

• Who is affected: Companies doing semiconductor design in the U.S., including startups planning a future business.
• What changes: A 25% tax credit for qualified chip design costs, alongside the existing 25% factory credit; no double-dipping with the research credit .
• What counts: Employee wages, supplies, certain computer use, and outside contract design—if the work is true R&D and done in the U.S. or its territories .
• When: Applies to costs after enactment; ends after December 31, 2036.