Sponsors (30)
The bill subsidizes domestic rare-earth magnet production to strengthen supply chains, national security, and clean-energy deployment, but does so at a measurable cost to taxpayers while excluding some foreign-dependent firms, creating short-term supply frictions and limited long-term certainty.
Domestic rare-earth magnet manufacturers (including small businesses) receive a per-kilogram production tax credit ($20/kg or $30/kg if ≥90% U.S. components), lowering production costs and improving competitiveness.
U.S. onshoring of critical magnet supply chains and domestic production of neodymium, dysprosium, terbium, samarium, gadolinium and cobalt is incentivized, strengthening supply-chain resilience and national security.
Support for domestic magnet production improves availability of components used in electric vehicles, wind turbines, and other clean-energy technologies, which can help lower clean-energy deployment costs over time.
All taxpayers bear the fiscal cost of the credit through reduced federal revenue, increasing the federal budget burden.
Firms that rely on inputs from 'non-allied foreign nations' are barred from the credit, excluding some existing manufacturers and complicating supply-chain relationships.
Smaller suppliers and foreign-enabled manufacturers that cannot relocate sourcing may be disadvantaged, potentially raising short-term costs or reducing availability of magnets for downstream users (e.g., transportation, hospitals, health systems).
Based on analysis of 2 sections of legislative text.
Creates a $20/kg ($30/kg with 90% U.S. content) production tax credit for rare earth magnets made in the U.S., with source restrictions and a phaseout after 2034.
Official title: To amend the Internal Revenue Code of 1986 to establish a credit for the domestic production of high-performance rare earth magnets, and for other purposes.
Introduced February 21, 2025 by Guy Reschenthaler · Last progress February 21, 2025
Creates a new federal production tax credit for rare earth magnets manufactured in the United States and sold to unrelated customers, effective for tax years beginning after Dec 31, 2024. The credit pays $20 per kilogram (rises to $30/kg if ≥90% of component rare earth materials are U.S.-produced), phases down after 2034, and disallows credits when component materials come from specified "non-allied foreign nations" (with a limited delay for four specific elements). Taxpayers may elect to use the credit as a refundable-like payment against tax liability on certain timing rules.