Sponsors (3)
The bill strengthens U.S. magnet and rare‑earth supply chains and boosts domestic manufacturing and defense readiness through targeted tax incentives, but does so at significant fiscal cost and with added compliance burdens, market restrictions, and potential trade and confidentiality risks.
U.S. manufacturers and defense suppliers will face reduced reliance on a single foreign source for permanent magnets and rare-earth materials, strengthening supply-chain resilience and national defense readiness.
Domestic magnet, magnet‑metal, and rare‑earth oxide producers would receive per‑kilogram production tax credits that lower production costs, improve competitiveness, and attract investment.
Manufacturers that buy domestically produced permanent magnets (e.g., EV and renewable-energy component makers) can claim a purchase tax credit, lowering input costs for energy, transportation, and defense-related products.
Taxpayers would bear substantial fiscal costs from multi‑year producer and purchaser credits, reducing federal revenues available for other priorities or requiring offsetting measures.
Businesses and taxpayers face new and sometimes detailed compliance, documentation, and reporting burdens (origin, volume, price, contracts) to qualify for credits, raising administrative costs.
Eligibility limits (exclusions for materials tied to 'prohibited foreign entities') and restrictions on exports, stockpiling, and required offtake agreements could shrink supplier options and raise input prices or complicate commercial sales.
Based on analysis of 4 sections of legislative text.
Creates per-kilogram production tax credits and a time-limited purchase credit to incentivize domestic production and use of permanent magnets, magnet metals, and rare earth oxides.
Official title: To amend the Internal Revenue Code of 1986 to incentivize the domestic production and use of permanent magnets, and for other purposes.
Introduced June 9, 2026 by John Moolenaar · Last progress June 9, 2026
Creates a package of production and purchase tax credits to boost U.S. domestic production and use of permanent magnets, magnet metals, and rare earth oxides used in electric motors, generators, robotics, electronics, and defense systems. The bill establishes per-kilogram production credits for permanent magnets, magnet metals, and rare earth oxides and a time-limited credit for buying qualified domestic magnets used in U.S. manufacturing. The credits include sliding values that depend on magnet type, domestic content thresholds, and prohibitions on materials produced by designated foreign "prohibited" entities; some credits require an irrevocable annual election and include documentation, safe-harbor, and certification rules. The magnet-purchase credit phases down over time and the tax provisions apply beginning for taxable years after Dec. 31, 2026, with the purchase credit terminating after taxable years beginning Dec. 31, 2038.