Rare Earth Magnet Security Act of 2025

Tax credit for U.S. rare earth magnets

If enacted, U.S. rare-earth magnet makers would be able to claim a new production tax credit for magnets they make and sell in the United States. The credit would pay $20 per kilogram, or $30 per kilogram if at least 90% by weight of the magnet's component rare-earth materials are produced in the U.S. Component materials include neodymium, praseodymium, dysprosium, terbium, samarium, gadolinium, and cobalt. Qualifying magnets generally must meet an intrinsic coercivity test (HCj ≥ 10 kOe at 68°F), though the Secretary may allow some lower-coercivity magnets if made by manufacturers with DOE or DOD support who commit to a domestic plant. The credit would be disallowed if any component material was produced in a non-allied foreign nation, except for certain dysprosium/terbium/samarium/gadolinium used before Jan 1, 2027, and for wartime-seized material when the taxpayer provides the required certification. The credit would phase down after 2024: full through 2034, 70% in 2035, 35% in 2036–2037, and 0% after 2037. Taxpayers could elect to treat part of the credit as a payment against tax; the elected amount would count as paid on the later of the return due date or the filing date. The new credit would also be included in the general business credit aggregation rules under section 38.