Shipbuilding Investment and Workforce Act
- Sponsor
- Rep. Kelly, Mike [R-PA-16]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jul 23, 2026
Bottom line
The bill expands the Qualified Opportunity Zone program to strategically target and stimulate private investment in the U.S. maritime industry, including shipbuilding, ports, and related sectors, through tax incentives.
What it actually does
This bill amends the Internal Revenue Code of 1986 to permit the designation of "maritime prosperity zones" as qualified opportunity zones. It establishes a process for the Secretary of Commerce, in consultation with other federal officials, to nominate these zones, which are population census tracts deemed appropriate for maritime industry operations. Investments in these zones through Qualified Maritime Prosperity Funds would be eligible for the same capital gains tax incentives as existing opportunity zones.
Proponents argue
Proponents argue that this bill will revitalize critical maritime infrastructure, strengthen the domestic shipbuilding industry, and create high-paying jobs in areas vital for national security and economic competitiveness. They emphasize that directing private capital to this strategic sector will enhance supply chain resilience and modernize the U.S. maritime industrial base.
Opponents contend
Opponents might contend that expanding opportunity zones to include maritime prosperity zones could divert investment from existing low-income community opportunity zones, create new tax loopholes for specific industries, or primarily benefit large corporations and wealthy investors rather than genuinely distressed communities. Concerns could also be raised about the effectiveness and oversight of such targeted tax incentives.
The bill is concise and its core provisions are clearly stated, making it accessible for a quick understanding of its intent and mechanisms.
Section 2(a), amending Section 1400Z-1 of the Internal Revenue Code of 1986, adding subsection (f).
Establishment of Maritime Prosperity Zones as Qualified Opportunity Zones
This provision allows certain population census tracts, identified as "maritime prosperity zones," to be designated as qualified opportunity zones. The Secretary of Commerce, in consultation with the Secretaries of Defense, Navy, Transportation, the U.S. Trade Representative, and the Director of the Office of Management and Budget, nominates these tracts. Once certified by the Secretary of the Treasury, these zones become eligible for the tax benefits associated with the Qualified Opportunity Zone program, expanding the program's scope beyond traditional low-income communities.
Supporters argue
Supporters argue this provision will direct much-needed private capital into the maritime sector, stimulating growth, modernizing infrastructure, and creating high-paying jobs in a strategically important industry vital for national security and economic resilience.
Critics contend
Critics may contend that this expansion broadens the scope of tax incentives beyond their original intent of aiding distressed communities, potentially leading to 'zone-shopping' by investors and diluting the program's focus on low-income areas.
Tradeoffs
This provision balances the goal of targeted economic development in critical maritime sectors with concerns about the broader efficacy and potential for abuse of the Opportunity Zone program, and whether it diverts capital from other needy areas.
Section 2(a), amending Section 1400Z-1(f)(3) and (f)(4)(A)(ii).
Definition of Maritime Prosperity Zone and Maritime Industry
A 'maritime prosperity zone' is defined as a population census tract determined by the Secretary of Commerce (in consultation with specified officials) to be an appropriate site for maritime industry operations. The 'maritime industry' is broadly defined to include any industry supporting the construction, repair, or refurbishment of shipyards, ports, harbor facilities, or vessels. The bill explicitly lists several 2022 North American Industry Classification System (NAICS) codes, such as Ship and Boat Building (336611), Engineering Services (541330), and various water transportation activities, as qualifying maritime industries.
Section 2(a), amending Section 1400Z-1(f)(4).
Special Rules and Limitations for Maritime Prosperity Zones
This section imposes specific conditions for maritime prosperity zones. It requires that for property or a trade or business to qualify for opportunity zone benefits within these zones, 'substantially all' of its use or operation must be in connection with a maritime industry. Furthermore, the total number of maritime prosperity zones that can be designated at any time is capped at 100 nationwide. Importantly, these 100 designations do not count against the existing limitation on the number of low-income community opportunity zones.
Section 2(b), amending Section 1400Z-2(b)(2) of the Code.
Basis Increase for Investments in Qualified Maritime Prosperity Funds
This provision extends the existing tax benefit of a basis increase for long-term investments to 'qualified maritime prosperity funds.' Specifically, if an investment in such a fund is held for at least 10 years, the investor's basis in that investment is adjusted to its fair market value on the date it is sold or exchanged. This effectively makes any appreciation in the investment tax-free, providing a significant incentive for long-term capital deployment in maritime prosperity zones.
Section 2(d) and (e).
Effective Date and Deadline for Nomination Process
The amendments made by this Act are set to take effect beginning after December 31, 2026. Additionally, the bill mandates that the Secretary of Commerce must initiate the nomination and notification process for maritime prosperity zones by July 1, 2027. This establishes a clear timeline for both the legal implementation of the tax changes and the administrative actions required to designate the new zones.
This provision explicitly lists specific 2022 North American Industry Classification System (NAICS) codes that are automatically treated as 'maritime industries' for the purpose of qualifying for opportunity zone benefits. These include Fabricated Metal Product Manufacturing (332), Ship and Boat Building (3366), various crane and navigation system manufacturing codes (333923, 334511), support activities for water transportation (4883), different types of freight transportation (483111, 483113, 483211), and Engineering Services (541330).
Section 2(a), amending Section 1400Z-1(f)(4)(A)(ii)(II).
Why it matters:This is standard legislative practice to provide detailed technical specifications within definitions to ensure clarity and avoid ambiguity in the application of the law, offering precise guidance to implementing agencies and businesses.
Case for: Supporters argue that explicitly listing NAICS codes provides certainty for businesses and investors, streamlining the process of identifying eligible industries and ensuring that incentives are directed to the intended sectors without subjective interpretation.
Case against: Critics might argue that such specific listings can be overly rigid, potentially excluding emerging or niche maritime-related industries not covered by these codes, or conversely, including industries that are only tangentially related to core maritime infrastructure.
Estimated impact: This provision directly impacts the eligibility of potentially thousands of businesses across the country for significant tax incentives, shaping investment flows into these specific sectors and influencing regional economic development strategies.
This provision defines 'qualified maritime prosperity fund' by cross-referencing the existing definition of 'qualified rural opportunity fund,' with the specific substitution of 'maritime prosperity zone (as defined in section 1400Z-1(f)(3)(A))' for 'qualified opportunity zone comprised entirely of a rural area.' This means a Qualified Maritime Prosperity Fund must be an investment vehicle organized as a partnership or corporation for the purpose of investing in qualified opportunity zone property and holding at least 90% of its assets in such property, but specifically within maritime prosperity zones.
Section 2(b)(2), amending Section 1400Z-2(b)(2) of the Code.
Why it matters:This is a common legislative drafting technique to avoid redundancy by leveraging existing definitions and structures within the tax code, ensuring consistency with established Opportunity Zone regulations.
Case for: Supporters would argue this approach ensures consistency with existing Opportunity Zone regulations and simplifies the legislative text by not re-creating an identical definition, thereby leveraging familiar frameworks for investors and administrators.
Case against: Critics might argue that defining by reference makes the bill less accessible to non-experts and could obscure subtle differences or implications compared to a fully self-contained definition, potentially leading to misinterpretations.
Estimated impact: This provision establishes the legal and operational framework for the investment vehicles that will channel capital into maritime prosperity zones, directly impacting how funds are structured, managed, and audited to qualify for the associated tax benefits.