119-hr1496

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1496 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 1496

 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.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 February 21, 2025

 Mr. Reschenthaler (for himself, Mr. Swalwell, Mr. Hudson, Ms. Lee of 
 Nevada, Mr. Calvert, Ms. Castor of Florida, Mr. Obernolte, Mr. Tonko, 
Mr. Moolenaar, Mr. Deluzio, Mr. Meuser, Mr. Panetta, Mr. Mills, and Ms. 
 Houlahan) introduced the following bill; which was referred to the 
 Committee on Ways and Means

_______________________________________________________________________

 A BILL

 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.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Rare Earth Magnet Security Act of 
2025''.

SEC. 2. CREDIT FOR PRODUCTION OF RARE EARTH MAGNETS.

    (a) In General.--The Internal Revenue Code of 1986 is amended by 
inserting the following new section after 

section 45AA:

``

SEC. 45BB. CREDIT FOR PRODUCTION OF RARE EARTH MAGNETS.

 ``

    (a) In General.--
 ``

    (1) Allowance of credit.--For purposes of 

section 38, the 
 credit for production of rare earth magnets determined under 
 this section for any taxable year is an amount equal to the sum 
 of the credit amounts determined under subsection

    (b) with 
 respect to rare earth magnets which are--
 ``
        (A) manufactured or produced by the taxpayer, and
 ``
        (B) sold by such taxpayer to an unrelated person 
 during the taxable year.
 ``

    (2) Unrelated person.--
 ``
        (A) In general.--For purposes of this subsection, 
 a taxpayer shall be treated as selling rare earth 
 magnets to an unrelated person if such magnet is sold 
 to such person by a person related to the taxpayer.
 ``
        (B) Election.--
 ``
            (i) In general.--At the election of the 
 taxpayer (in such form and manner as the 
 Secretary may prescribe), a sale of rare earth 
 magnets by such taxpayer to a related person 
 shall be deemed to have been made to an 
 unrelated person.
 ``
            (ii) Requirement.--As a condition of, and 
 prior to, any election described in clause
            (i) , 
 the Secretary may require such information or 
 registration as the Secretary deems necessary 
 for purposes of preventing duplication, fraud, 
 or any improper or excessive amount determined 
 under paragraph

    (1) .
 ``

    (b) Credit Amount.--
 ``

    (1) In general.--The amount determined under this 
 subsection is--
 ``
        (A) $20 per kilogram of rare earth magnets 
 manufactured or produced in the United States by the 
 taxpayer during the taxable year which are not 
 described in subparagraph
        (B) , and
 ``
        (B) $30 per kilogram of rare earth magnets 
 manufactured or produced in the United States by the 
 taxpayer during the taxable year if not less than 90 
 percent by weight of the component rare earth materials 
 of such magnets are produced within the United States.
 ``

    (2) Phase-out.--
 ``
        (A) In general.--In the case of any rare earth 
 magnet manufactured or produced after December 31, 
 2034, the amount determined under this section with 
 respect to such rare earth magnet shall be equal to the 
 product of--
 ``
            (i) the amount determined under paragraph

    (1) with respect to such rare earth magnet, as 
 determined without regard to this subsection, 
 multiplied by
 ``
            (ii) the phase-out percentage described 
 in subparagraph
        (B) .
 ``
        (B) Phase-out percentage.--The phase-out 
 percentage described in this paragraph is--
 ``
            (i) in the case of any rare earth magnet 
 manufactured or produced in calendar year 2035, 
 70 percent,
 ``
            (ii) in the case of any rare earth magnet 
 manufactured or produced in calendar year 2036 
 or 2037, 35 percent, or
 ``
            (iii) in the case of any rare earth 
 magnet manufactured or produced after December 
 31, 2037, 0 percent.
 ``
            (c) === Definitions. ===
-For the purposes of this section--
 ``

    (1) Rare earth magnet.--The term `rare earth magnet' 
 means a permanent magnet--
 ``
        (A) with an intrinsic coercivity

    (HCj) of 10 kOe 
 or higher at 68F (20C), and
 ``
        (B) comprised of--
 ``
            (i) an alloy of neodymium, iron, and 
 boron, which may also include praseodymium, 
 terbium, or dysprosium, or
 ``
            (ii) an alloy of samarium and cobalt, 
 which may also include gadolinium or any 
 associated host mineral of a component rare 
 earth material.
 ``

    (2) Component rare earth material.--The term `component 
 rare earth material' means neodymium, praseodymium, dysprosium, 
 terbium, samarium, gadolinium, and cobalt.
 ``

    (3) Manufactured.--The term `manufactured' means the 
 manufacturing of a rare earth magnet, including the milling, 
 pressing, sintering, and recycling of component rare earth 
 material.
 ``

    (4) Non-allied foreign nation.--The term `non-allied 
 foreign nation' has the meaning given to the term `covered 
 nation' in 

section 4872
            (d) of title 10, United States Code.
 ``

    (5) United states and possession of the united states.--
 The terms `United States' and `possession of the United States' 
 have the meaning given such terms in 

section 638.
 ``
            (d) Special Rules.--
 ``

    (1) Restriction on component sourcing.--
 ``
        (A) In general.--Except as provided in 
 subparagraph
        (B) , no credit shall be allowed under this 
 section with respect to a rare earth magnet if any 
 component rare earth material used to manufacture or 
 produce such magnet is produced in a non-allied foreign 
 nation.
 ``
        (B) Delayed restriction for certain component 
 rare earth materials.--In the case of the rare earth 
 materials dysprosium, terbium, samarium, and 
 gadolinium, the restriction under subparagraph
        (A) shall not apply to magnets manufactured or produced 
 using such materials before January 1, 2027.
 ``

    (2) Trade or business requirement.--No credit shall be 
 allowed under this section with respect to a rare earth magnet 
 unless such magnet is manufactured or produced in the ordinary 
 course of a trade or business of the taxpayer.
 ``

    (3) Coercivity requirement exception for eligible 
 manufacturers.--
 ``
        (A) In general.--The Secretary may elect to treat 
 a magnet which does not meet the coercivity 
 requirements of subsection
            (c) (1)
        (A) as a rare earth 
 magnet if such magnet is manufactured by an eligible 
 manufacturer.
 ``
        (B) Eligible manufacturer.--For purposes of 
 subparagraph
        (A) , the term `eligible manufacturer' 
 means a manufacturer that--
 ``
            (i) receives a grant from, or is 
 contracted by, the Department of Energy or the 
 Department of Defense to produce a magnet, and
 ``
            (ii) commits to place in service a 
 domestic manufacturing facility that produces 
 magnets that the Secretary determines 
 demonstrate technological, supply chain, or 
 national security merit.
 ``

    (e) Elective Payment for Production of Rare Earth Magnets.--
 ``

    (1) In general.--In the case of a taxpayer making an 
 election (at such time and in such manner as the Secretary may 
 provide) under this section with respect to any portion of the 
 credit allowed under subsection

    (a) , such taxpayer shall be 
 treated as making a payment against the tax imposed by this 
 subtitle for the taxable year equal to the amount of such 
 portion.
 ``

    (2) Timing.--The payment described in paragraph

    (1) shall 
 be treated as made on the later of the due date of the return 
 of tax for such taxable year or the date on which such return 
 is filed.''.

    (b) Credit To Be Part of General Business Credit.--

Section 38

    (b) of 
such Code is amended by striking ``plus'' at the end of paragraph

    (40) , 
by striking the period at the end of paragraph

    (41) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
 ``

    (42) the credit for production of rare earth magnets 
 determined under 

section 45BB

    (a) .''.
            (c) Conforming Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to 

section 45AA the following new 
item:

``

Sec. 45BB. Credit for production of rare earth magnets.''.
            (d) Effective Date.--The amendments made by this Act shall apply to 
taxable years beginning after December 31, 2024.
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