Sponsors (30)
The bill subsidizes domestic rare-earth magnet production to strengthen supply chains, national security, and clean‑energy adoption, but it does so at public cost, excludes firms tied to non‑allied suppliers, and leaves some market distortions and investment‑certainty concerns.
Domestic rare-earth magnet manufacturers receive a per-kilogram tax credit ($20/kg or $30/kg if ≥90% domestic components), lowering production costs and improving competitiveness.
U.S. onshoring of critical magnet supply chains (neodymium, dysprosium, terbium, samarium, gadolinium, cobalt) is incentivized, strengthening domestic supply and national-security resilience.
Manufacturers (and taxpayers) can elect to treat all or part of the credit as an elective payment against tax, providing near-term cash flow benefits when filing returns.
Taxpayers bear the fiscal cost of the credit through reduced federal revenue, increasing the budgetary burden.
Manufacturers that rely on inputs from non-allied foreign nations are barred from the credit, excluding some domestic firms with existing global supply chains and reducing eligibility.
The credit phases out after 2034, creating uncertainty for long-term investment decisions in magnet production facilities.
Based on analysis of 2 sections of legislative text.
Creates a U.S. production tax credit for rare earth magnets ($20/kg, $30/kg if ≥90% domestic components), with sourcing limits and a phaseout after 2034.
Creates a new federal production tax credit for rare earth magnets made in the United States and sold to unrelated buyers. The credit pays $20 per kilogram (rising to $30/kg if at least 90% of component rare earth materials are U.S.-produced), runs for production beginning in tax years after 2024, phases down after 2034, and bars credits when components come from designated non-allied foreign nations (with a short exception for four elements through 12/31/2026). The bill also allows certain taxpayers to treat the credit as an elective payment against tax and adds the credit to the general business credit rules.
Introduced February 21, 2025 by Guy Reschenthaler · Last progress February 21, 2025