296 
(d) VESSELS.—In coordination with the Secretary of 
the Navy, the Maritime Administrator shall rotate train-
ing vessels to ensure that each training vessel described 
in subsection (a) has an equal opportunity to participate 
in such exercises. 
Subtitle D—Maritime 
Credentialing Modernization 
SEC. 631. MERCHANT MARINER CREDENTIALING MOD-
ERNIZATION. 
(a) MERCHANT MARINER CREDENTIALING MOD-
ERNIZATION.—The Secretary of the department in which 
the Coast Guard is operating shall carry out necessary 
system and process changes to carry out the activities de-
scribed in paragraphs (1) through (4). 
(1) LICENSING, CERTIFICATION, AND
DOCU-
MENTATION DATABASE.—Replacement of the mer-
chant mariner licensing, certification, and docu-
mentation database such that the database allows 
for— 
(A) the electronic submission of merchant 
mariner credential applications (including sea 
service, professional qualifications, course com-
pletion data, safety and suitability, and medical 
records) and course approval requests; 
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(B) direct submission of sea service infor-
mation from employers and course completion 
data from training providers and other stake-
holders to provide data securely and directly so 
that documentation does not need to be sub-
mitted later by the merchant mariner; and 
(C) the electronic processing and evalua-
tion of information for the issuance of creden-
tials and course approvals, including the capa-
bility for the Secretary to complete remote eval-
uation of the information submitted. 
(2) SYSTEM FOR DATA EXCHANGE.—Implemen-
tation of a system that provides for the exchange of 
data with government agencies and industry stake-
holders, which provides the Maritime Administration 
and other agencies, as appropriate, anonymized and 
aggregated data showing the following: 
(A) The total amount of sea service for in-
dividuals with a valid merchant mariner creden-
tial. 
(B) The number of credentialed mariners 
by individual rating and the capability to filter 
data by endorsements. 
(C) Demographic information, including 
age, gender, ethnicity, and address or location. 
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(D) National Maritime Center processing 
times. 
(E) The number of Coast Guard approved 
training providers, and, for each such training 
provider, the number of courses taken by indi-
viduals who have, or who are applying for, a 
merchant mariner credential from that training 
provider. 
(3) PUBLIC FACING PORTAL.—Implementation 
of a system that includes a public facing portal in 
the .gov domain instead of the .mil domain to accept 
merchant mariner applicant information, including 
credential applications, course completion data, and 
course approval requests, that complies with the re-
quirements for cybersecurity and privacy information 
of electronic systems in the .gov domain. 
(4) EXAMINATION PROCESSES.—Upgrading the 
examination processes for merchant mariner exami-
nations, by— 
(A) implementing an examination regime 
that provides for electronic and third party ad-
ministration of examinations; 
(B) reassessing the content of tests 
through the development of job task analysis 
for all credentials; and 
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(C) implementing a robust system to ana-
lyze examination data. 
(b) REPORT.—The Secretary of the department in 
which the Coast Guard is operating shall submit— 
(1) an annual report to the Committee on Com-
merce, Science, and Transportation, the Committee 
on Appropriations, and the Committee on Armed 
Services of the Senate, and the Committee on 
Transportation and Infrastructure, the Committee 
on Appropriations, and the Committee on Armed 
Services of the House of Representatives, on the 
progress of the system and process changes required 
under subsection (a); and 
(2) a final report to those Committees 1 year 
after full operating capability of the complete sys-
tem, comprised of all 4 systems required under sub-
section (a). 
(c) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated out of the Maritime Secu-
rity Trust Fund, established under section 50301(b) of 
title 46, United States Code, to carry out this section, 
$20,000,000 for fiscal year 2026, to remain available until 
expended. 
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SEC. 632. REVISING MERCHANT MARINER DECK TRAINING 
REQUIREMENTS. 
(a) GENERAL DEFINITIONS.—Section 2101 of title 
46, United States Code, is amended— 
(1) by redesignating paragraphs (20) through 
(56) as paragraphs (21) through (57), respectively; 
and 
(2) by inserting after paragraph (19) the fol-
lowing: 
‘‘(20) ‘merchant mariner credential’ means a 
merchant mariner license, certificate, or document 
that the Secretary is authorized to issue pursuant to 
this title.’’. 
(b) EXAMINATIONS.—Section 7116 of title 46, 
United States Code, is amended by striking subsection (c). 
(c) MERCHANT MARINERS DOCUMENTS.— 
(1) GENERAL
REQUIREMENTS.—Section 7306 
of title 46, United States Code, is amended to read 
as follows: 
‘‘§ 7306. General requirements and classifications for 
members of deck departments 
‘‘(a) IN GENERAL.—The Secretary may issue a mer-
chant mariner credential, to members of the deck depart-
ment in the following classes: 
‘‘(1) Able Seaman-Unlimited. 
‘‘(2) Able Seaman-Limited. 
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‘‘(3) Able Seaman-Special. 
‘‘(4) Able Seaman-Offshore Supply Vessels. 
‘‘(5) Able Seaman-Sail. 
‘‘(6) Able Seaman-Fishing Industry. 
‘‘(7) Ordinary Seaman. 
‘‘(b) CLASSIFICATION OF CREDENTIALS.—The Sec-
retary may classify the merchant mariner credential issued 
under subsection (a) based on— 
‘‘(1) the tonnage and means of propulsion of 
vessels; 
‘‘(2) the waters on which vessels are to be oper-
ated; or 
‘‘(3) other appropriate standards. 
‘‘(c) CONSIDERATIONS.—In issuing the credential 
under subsection (a), the Secretary may consider the fol-
lowing qualifications of the merchant mariner: 
‘‘(1) Age. 
‘‘(2) Character. 
‘‘(3) Habits of life. 
‘‘(4) Experience. 
‘‘(5) Professional qualifications demonstrated 
by satisfactory completion of applicable examinations 
or other educational requirements. 
‘‘(6) Physical condition, including sight and 
hearing. 
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‘‘(7) Other requirements established by the Sec-
retary, including career patterns and service appro-
priate to the particular service, industry, or job 
functions the individual is engaged.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 73 of title 46, United States Code, 
is amended by striking the item relating to section 
7306 and inserting the following: 
‘‘7306. General requirements and classifications for members of deck depart-
ments.’’. 
(3) GENERAL
REQUIREMENTS
FOR
MEMBERS 
OF ENGINE DEPARTMENTS.—Section 7313(b) of title 
46, United States Code, is amended by striking 
‘‘and coal passer’’. 
(4) TRAINING.—Section 7315 of title 46, 
United States Code, is amended— 
(A) by amending subsection (a) to read as 
follows: 
‘‘(a) Graduation from a nautical school program ap-
proved by the Secretary may be substituted for the service 
requirements under sections 7307 through 7311a and 
7314.’’; 
(B) in subsection (b)— 
(i) by striking ‘‘one-third’’ and insert-
ing ‘‘one-half’’; and 
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(ii) by striking ‘‘7307–7311 of this 
title’’ and inserting ‘‘7307–7311a and 
7314’’; and 
(C) by striking subsection (c). 
(d) REDUCTION OF LENGTHS OF CERTAIN PERIODS 
OF SERVICE.— 
(1) IN
GENERAL.—Title 46, United States 
Code, is amended— 
(A) in section 7307, by striking ‘‘3 years’’ 
and inserting ‘‘18 months’’; 
(B) in section 7308, by striking ‘‘18 
months’’ and inserting ‘‘12 months’’; and 
(C) in section 7309, by striking ‘‘12 
months’’ and inserting ‘‘6 months’’. 
(2) TEMPORARY REDUCTION OF LENGTHS OF 
CERTAIN PERIODS OF SERVICE.—Section 3534(j) of 
the National Defense Authorization Act for Fiscal 
Year 2024 (Public Law 118–31) is repealed. 
(e) MERCHANT MARINER CREDENTIALS.—Section 
7510 of title 46, United States Code, is amended by strik-
ing subsection (d). 
(f) IMPLEMENTATION.—The Secretary of the depart-
ment in which the Coast Guard is operating shall imple-
ment the amended requirements under subsections (c)(3), 
(c)(4), and (d)(1) of this section without regard to chap-
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ters 5 and 6 of title 5, United States Code, and Executive 
Orders 12866 and 13563 (5 U.S.C. 601 note). 
SEC. 633. INSPECTIONS FOR TRANSPORTATION SECURITY. 
(a) IN GENERAL.—Chapter 81 of part F of subtitle 
II of title 46, United States Code, is amended by adding 
at the end the following: 
‘‘§ 8109. Inspections for transportation security 
‘‘(a) IN GENERAL.— 
‘‘(1) INSPECTION.—The Secretary shall periodi-
cally, but not less than once annually, inspect each 
covered facility to verify that the owner or operator 
of the covered facility has a valid exemption under 
subsection (c) of section 30 of the Outer Continental 
Shelf Lands Act (43 U.S.C. 1356(c)). 
‘‘(2) COVERED FACILITY.—In this subsection, 
the term ‘covered facility’ means a vessel, rig, plat-
form, or other vehicle or structure that, but for an 
exemption under subsection (c) of section 30 of the 
Outer Continental Shelf Lands Act (43 U.S.C. 
1356(c)) would otherwise be subject to the regula-
tions under subsection (a)(3) of such section. 
‘‘(b) TRANSPORTATION SECURITY CARD.—During an 
inspection under this section, the Secretary shall confirm 
that all crew members that are required to have a trans-
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portation worker identification credential pursuant to sec-
tion 70105 have such a credential.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 81 of title 46, United States Code, is amended 
by adding at the end the following: 
‘‘8109. Inspections for transportation security.’’. 
SEC. 634. RENEWAL OF MERCHANT MARINER LICENSES 
AND DOCUMENTS. 
Section 7507 of title 46, United States Code, is 
amended by adding at the end the following: 
‘‘(d) RENEWAL.—With respect to any renewal of a 
valid merchant mariner credential issued under this part 
that is not an extension under subsection (a) or (b), the 
validity period of such credential shall begin the day after 
the expiration of the current credential.’’. 
SEC. 635. MERCHANT SEAMEN LICENSES, CERTIFICATES, 
AND DOCUMENTS; MANNING OF VESSELS. 
(a) CITIZENSHIP OR NONCITIZEN NATIONALITY.— 
(1) IN
GENERAL.—Section 7102 of title 46, 
United States Code, is amended— 
(A) in the section heading, by inserting 
‘‘or noncitizen nationality’’ after ‘‘Citi-
zenship’’; and 
(B) by inserting ‘‘or noncitizen nationals 
(as such term is described in section 308 of the 
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Immigration and Nationality Act (8 U.S.C. 
1408))’’ after ‘‘citizens of the United States’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 71 of title 46, United States Code, 
is amended by striking the item relating to section 
7102 and inserting the following: 
‘‘7102. Citizenship or noncitizen nationality.’’. 
(b) CITIZENSHIP OR NONCITIZEN NATIONALITY NO-
TATION ON MERCHANT MARINERS’ DOCUMENTS.— 
(1) IN
GENERAL.—Section 7304 of title 46, 
United States Code, is amended— 
(A) in the section heading, by inserting 
‘‘or noncitizen nationality’’ after ‘‘Citi-
zenship’’; and 
(B) by inserting ‘‘or noncitizen national 
(as such term is described in section 308 of the 
Immigration and Nationality Act (8 U.S.C. 
1408))’’ after ‘‘citizen of the United States’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 73 of title 46, United States Code, 
is amended by striking the item relating to section 
7304 and inserting the following: 
‘‘7304. Citizenship or noncitizen nationality notation on merchant mariners’ doc-
uments.’’. 
(c) CITIZENSHIP OR NONCITIZEN NATIONALITY.— 
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(1) IN
GENERAL.—Section 8103 of title 46, 
United States Code, is amended— 
(A) in the section heading by inserting ‘‘or 
noncitizen nationality’’ after ‘‘Citizen-
ship’’; 
(B) in subsection (a), by inserting ‘‘or non-
citizen national’’ after ‘‘citizen of the United 
States’’; 
(C) in subsection (b)— 
(i) in paragraph (1)(A)(i), by insert-
ing ‘‘or noncitizen national’’ after ‘‘citizen 
of the United States’’; and 
(ii) in paragraph (3)— 
(I) in the matter preceding sub-
paragraph (A), by inserting ‘‘or non-
citizen nationality’’ after ‘‘citizen-
ship’’; and 
(II) in subparagraph (C), by in-
serting ‘‘or noncitizen nationals’’ after 
‘‘citizens of the United States’’; 
(D) in subsection (c), by inserting ‘‘or non-
citizen nationals’’ after ‘‘citizens of the United 
States’’; 
(E) in subsection (d)— 
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(i) in paragraph (1), by inserting ‘‘or 
noncitizen nationals’’ after ‘‘citizens of the 
United States’’; and 
(ii) in paragraph (2), by inserting ‘‘or 
noncitizen national’’ after ‘‘citizen of the 
United States’’ each place it appears; 
(F) in subsection (e), in the matter pre-
ceding paragraph (1), by inserting ‘‘or noncit-
izen national’’ after ‘‘citizen of the United 
States’’ each place it appears; 
(G) in subsection (i)(1)(A), by inserting 
‘‘or noncitizen national’’ after ‘‘citizen of the 
United States’’; 
(H) in subsection (k)(1)(A), by inserting 
‘‘or noncitizen national’’ after ‘‘citizen of the 
United States’’; and 
(I) by adding at the end the following: 
‘‘(l) NONCITIZEN NATIONAL DEFINED.—In this sec-
tion, the term ‘noncitizen national’ means an individual 
described in section 308 of the Immigration and Nation-
ality Act (8 U.S.C. 1408).’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 81 of title 46, United States Code, 
is amended by striking the item relating to section 
8103 and inserting the following: 
‘‘8103. Citizenship or noncitizen nationality and Navy Reserve requirements.’’. 
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(d) COMMAND OF DOCUMENTED VESSELS.—Section 
12131(a) of title 46, United States Code, is amended by 
inserting ‘‘or noncitizen national (as such term is de-
scribed in section 308 of the Immigration and Nationality 
Act (8 U.S.C. 1408))’’ after ‘‘citizen of the United 
States’’. 
(e) INVALIDATION
OF CERTIFICATES
OF DOCU-
MENTATION.—Section 12135(2) of title 46, United States 
Code, is amended by inserting ‘‘or noncitizen national (as 
such term is described in section 308 of the Immigration 
and Nationality Act (8 U.S.C. 1408))’’ after ‘‘citizen of 
the United States’’. 
SEC. 636. REACTIVATION OF EXPIRED LICENSE. 
(a) IN GENERAL.—Chapter 75 of subtitle II of part 
E, of title 46, United States Code, is amended by adding 
at the end the following: 
‘‘§ 7512. Authority for reactivation of United States 
Merchant Mariner credentials 
‘‘(a) LICENSES AND CERTIFICATES OF REGISTRY.— 
Notwithstanding sections 7106 and 7107, the Secretary 
of the department in which the Coast Guard is operating 
may renew for not more than 2 years an expired license 
or certificate of registry issued for an individual under 
chapter 71 if the Secretary determines that the renewal 
is in response to a national emergency declared by Con-
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gress or declared under section 201 of the National Emer-
gencies Act (50 U.S.C. 1621), as deemed necessary by the 
Secretary. 
‘‘(b) MERCHANT MARINER DOCUMENTS.—Notwith-
standing section 7302(g), the Secretary may renew for not 
more than 2 years an expiring merchant mariner’s docu-
ment issued for an individual under chapter 73 if the Sec-
retary determines that the renewal is in response to a na-
tional emergency proclaimed by the President or declared 
by Congress, as deemed necessary by the Secretary. 
‘‘(c) MANNER OF RENEWAL.—Any renewal granted 
under this section may be granted to individual seamen 
or a specifically identified group of seamen.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 75 of title 46, United States Code, is amended 
by adding at the end the following: 
‘‘7512. Authority for reactivation of United States Merchant Mariner creden-
tials.’’. 
TITLE 
VII—AMENDMENTS 
TO 
THE 
INTERNAL 
REVENUE 
CODE OF 1986 
SEC. 701. UNITED STATES VESSEL INVESTMENT CREDIT. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 48E the fol-
lowing new section: 
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‘‘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 under-
writer that is approved by the Maritime Adminis-
trator, 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 oper-
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ating in accordance with section 3316 of title 46, 
United States Code, 2 percent. 
‘‘(c) QUALIFIED INVESTMENT.—For purposes of sub-
section (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 sec-
tion, the term ‘qualified vessel’ means a cargo ves-
sel— 
‘‘(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 transpor-
tation 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, 
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fense Production Act of 1950 (50 U.S.C. 
4558(c)), and 
‘‘(H) the construction of which begins be-
fore January 1, 2033. 
‘‘(2) EXCLUSION RELATED TO FOREIGN ENTI-
TIES OF CONCERN.—The term ‘qualified vessel’ shall 
not include a vessel which— 
‘‘(A) is, or was previously, owned or oper-
ated by a foreign entity of concern, 
‘‘(B) was constructed, repowered, or recon-
structed in a shipyard which is owned or oper-
ated 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.— 
‘‘(1) VESSELS.—For purposes of subsection 
(d)(1)(E), any term used in such paragraph which 
is also used in chapter 536 of title 46, United States 
Code, shall have the same meaning as when used in 
such chapter. 
‘‘(2) FOREIGN ENTITY OF CONCERN; FOREIGN 
COUNTRY OF CONCERN.—For purposes of this sec-
tion, the terms ‘foreign entity of concern’ and ‘for-
eign country of concern’ have the same meaning 
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given such terms under section 4 of the Shipbuilding 
and Harbor Infrastructure for Prosperity and Secu-
rity for America Act of 2025. 
‘‘(f) CERTAIN
PROGRESS
EXPENDITURE
RULES 
MADE APPLICABLE.—Rules similar to the rules of sub-
sections (c)(4) and (d) of section 46 (as in effect on the 
day before the date of the enactment of the Revenue Rec-
onciliation Act of 1990) shall apply for purposes of sub-
section (a). 
‘‘(g) REGULATIONS.—The Secretary, in consultation 
with the Maritime Administrator, shall issue such regula-
tions or other guidance as may be necessary or appro-
priate 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 deter-
mined under this section with respect to any qualified ves-
sel, 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— 
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(A) in paragraph (6), by striking ‘‘and’’ at 
the end, 
(B) in paragraph (7), by striking the pe-
riod at the end and inserting ‘‘, and’’, and 
(C) by adding at the end the following: 
‘‘(8) the United States Vessel Investment cred-
it.’’. 
(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 ves-
sel (as defined in section 48F(d)), the por-
tion of the basis of such vessel attributable 
to amounts paid or incurred by the tax-
payer in connection with the construction, 
repowering, or reconstruction of such ves-
sel.’’. 
(3) The table of sections for subpart E of part 
IV of subchapter A of chapter 1 of such Code is 
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amended by inserting after the item relating to sec-
tion 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 appli-
cable 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 para-
graph (7), 
(3) by inserting after paragraph (5) the fol-
lowing new paragraph: 
‘‘(6) FAILURE TO OPERATE QUALIFIED VESSEL 
AS A VESSEL OF THE UNITED STATES.— 
‘‘(A) IN GENERAL.—If an applicable tax-
payer violates any of the requirements of the 
agreement described in section 48F(d)(1)(F) 
during the duration of such agreement with re-
spect 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 per-
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318 
cent of the aggregate decrease in the credits al-
lowed under section 38 for all prior taxable 
years which would have resulted solely from re-
ducing to zero any credit determined under sec-
tion 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 dem-
onstrates to the satisfaction of the Secretary 
and the Maritime Administrator that the tax-
payer is in compliance with the agreement de-
scribed 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 guid-
ance which provide for requirements for record-
keeping or information reporting for purposes 
of administering the requirements of this para-
graph.’’, and 
(4) in paragraph (7) (as redesignated by para-
graph (2))— 
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319 
(A) in subparagraph (C), by striking ‘‘or 
(3)’’ and inserting ‘‘(3), or (4)’’, and 
(B) by striking subparagraph (E) and in-
serting the following: 
‘‘(E) APPLICABLE
TAXPAYER.—For pur-
poses of this subsection, the term ‘applicable 
taxpayer’ means any taxpayer who has been al-
lowed— 
‘‘(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 CRED-
IT.— 
(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)— 
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(i) in subparagraph (E), by striking 
‘‘(C), or (D)’’ each place it appears and in-
serting ‘‘(C), (D), or (E)’’, 
(ii) by redesignating subparagraph 
(E) (as amended by clause (i)) as subpara-
graph (F), and 
(iii) by inserting after subparagraph 
(D) the following: 
‘‘(E) 
ELECTION
WITH
RESPECT
TO 
UNITED
STATES
VESSEL
INVESTMENT
CRED-
IT.—If a taxpayer other than an entity de-
scribed 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 quali-
fied 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 de-
scribed in subsection (b)(13).’’. 
(2) TRANSFER.—Section 6418(f)(1)(A) of the 
Internal Revenue Code of 1986 is amended by add-
ing at the end the following: 
‘‘(xii) The United States Vessel In-
vestment credit under section 48F.’’. 
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(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 tax-
payer under section 48F.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2025. 
SEC. 702. CERTAIN PAYMENTS FOR MARITIME SECURITY 
EXCLUDED FROM GROSS INCOME. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting after section 139I the following new sub-
section: 
‘‘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 53801 of such title, 
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‘‘(3) section 53206 of such title, 
‘‘(4) section 53406 of such title, 
‘‘(5) section 53604 of such title, 
‘‘(6) section 54101 of such title, or 
‘‘(7) section 54301 of such title. 
‘‘(b) DENIAL OF DOUBLE BENEFIT.—No deduction 
or credit shall be allowed for, or by reason of, any expendi-
ture to the extent of the amount excluded under sub-
section (a) for any payment which was provided with re-
spect to such expenditure. The adjusted basis of any prop-
erty shall be reduced by the amount excluded under sub-
section (a) which was provided with respect to such prop-
erty.’’. 
(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. 703. ELIMINATION OF 30-DAY LIMITATION ON DOMES-
TIC OPERATIONS. 
(a) IN GENERAL.—Section 1355 of the Internal Rev-
enue Code of 1986 is amended— 
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(1) in subsection (f), by striking paragraph (4), 
and 
(2) in subsection (g)(2), by striking subpara-
graph (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. 704. QUALIFYING SHIPPING ACTIVITIES. 
Section 1356(b) of the Internal Revenue Code of 
1986 (relating to qualifying shipping activities) is amend-
ed 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. 705. 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 ‘quali-
fying 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— 
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‘‘(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 for-
eign registry which is not a foreign country of 
concern (as defined by section 4 of the Ship-
building and Harbor Infrastructure for Pros-
perity and Security for America Act of 2025), 
‘‘(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 
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‘‘(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 pre-
paredness agreement under section 53107 or 
53407 of title 46, United States Code, or a con-
tingency agreement under section 53207 of 
such title, or has otherwise entered into a vol-
untary 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. 706. CREDIT FOR CONSTRUCTION OF SHIPYARD FA-
CILITIES. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986, as amended by section 701(a), is amended by insert-
ing after section 48F the following new section: 
‘‘SEC. 48G. CREDIT FOR CONSTRUCTION OF SHIPYARD FA-
CILITIES. 
‘‘(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 
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326 
for such taxable year with respect to any qualified ship-
yard 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 ‘quali-
fied property’ shall have the same meaning given 
such term in section 48D(b)(2), except that subpara-
graph (A)(iv) of such section shall be applied by sub-
stituting ‘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 commer-
cial or military oceangoing vessels, 
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‘‘(ii) manufacturing components which 
are critical (as determined by the Sec-
retary, in consultation with the Secretary 
of the Navy and the Maritime Adminis-
trator) 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 ap-
propriate to carry out the purposes of this section. 
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‘‘(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 701(b)(1), is amend-
ed— 
(A) in paragraph (7), by striking ‘‘and’’ at 
the end, 
(B) in paragraph (8), by striking the pe-
riod 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 701(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 prop-
erty (as defined in subsection (b)(2) of sec-
tion 48G) which is part of a qualified ship-
yard facility (as defined in subsection 
(b)(3) of such section).’’. 
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329 
(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 insert-
ing ‘‘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 701(b)(3), is amended by insert-
ing after the item relating to section 48F the fol-
lowing new item: 
‘‘Sec. 48G. Shipyard investment tax credit.’’. 
(c) ELECTIVE PAYMENT AND TRANSFER OF CRED-
IT.— 
(1) ELECTIVE PAYMENT.—Section 6417 of the 
Internal Revenue Code of 1986, as amended by sec-
tion 701, 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 in-
serting ‘‘(D), (E), or (F)’’, 
(ii) by redesignating subparagraph 
(F) (as amended by clause (i)) as subpara-
graph (G), and 
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330 
(iii) by inserting after subparagraph 
(E) the following: 
‘‘(F) ELECTION
WITH
RESPECT
TO
THE 
SHIPYARD INVESTMENT TAX CREDIT.—If a tax-
payer other than an entity described in sub-
paragraph (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 quali-
fied shipyard facility (as defined in section 
48G), such taxpayer shall be treated as an ap-
plicable 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 sec-
tion 701, is amended by adding at the end the fol-
lowing: 
‘‘(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, sec-
tion 701(e), is amended to read as follows: 
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‘‘(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. 707. TAX INCENTIVES RELATING TO MERCHANT MA-
RINE CAPITAL CONSTRUCTION FUNDS. 
(a) IN GENERAL.—Section 7518 of the Internal Rev-
enue Code of 1986 is amended— 
(1) in subsection (a)— 
(A) by striking paragraph (1) and insert-
ing 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 re-
ferred to as a ‘capital construction fund’) for a tax-
able 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 com-
mitment to invest the revenue from the capital con-
struction fund into funding the construction of new 
vessels or funding cargo handling equipment.’’, 
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332 
(B) in paragraph (2), by striking ‘‘para-
graph (1)(B)’’ each place it appears and insert-
ing ‘‘paragraph (1)’’, and 
(C) by adding at the end the following new 
paragraph: 
‘‘(4) REVENUE.—For the purposes of para-
graph (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 equip-
ment 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 re-
spect to the agreement vessels or cargo han-
dling equipment.’’, 
(2) in subsection (b)(2), by striking ‘‘Amounts 
in any capital construction fund’’ and all that fol-
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