No CRS summary available for this bill.
This section provides the short title of the Act as the “Rare Earth Magnet Security Act of 2025.”
This section establishes a new production tax credit under 26 U.S.C. § 45BB for rare earth magnets, equal to $20 per kilogram for magnets manufactured or produced in the United States and sold to an unrelated person, or $30 per kilogram if at least 90 percent by weight of the component rare earth materials are produced within the United States. As background, rare earth magnets are permanent magnets used in electric vehicles, wind turbines, electronics, defense systems, and other advanced manufacturing applications. The credit applies to magnets manufactured or produced by the taxpayer in the ordinary course of a trade or business and allows related-party sales to be treated as sales to unrelated persons if the taxpayer makes an election; the Secretary of the Treasury may require registration or other information to prevent duplication, fraud, or excessive claims. This section limits the credit by prohibiting claims if any component rare earth material used in the magnet is produced in a non-allied foreign nation, except that this sourcing restriction does not apply to dysprosium, terbium, samarium, and gadolinium used in magnets manufactured or produced before January 1, 2027. It also authorizes the Secretary to treat certain magnets that do not meet the coercivity requirement as qualifying magnets if they are produced by an eligible manufacturer, defined as a manufacturer receiving a Department of Energy or Department of Defense grant or contract and committing to place in service a domestic manufacturing facility that the Secretary determines has technological, supply chain, or national security merit. This section phases out the credit for magnets manufactured or produced after December 31, 2034, by reducing the otherwise allowable credit to 70 percent for magnets produced in calendar year 2035, 35 percent for magnets produced in calendar years 2036 and 2037, and 0 percent for magnets produced after December 31, 2037. It also allows taxpayers to elect direct payment treatment for the credit, under which the elected portion is treated as a payment against tax for the taxable year.