Rare Earth Magnet Security Act of 2025
SB 1979, the Rare Earth Magnet Security Act of 2025, would create a new federal tax credit for the domestic production of high-performance rare earth magnets. The credit would be available to taxpayers that manufacture or produce qualifying magnets in the United States and sell them to unrelated persons, with a base credit of $20 per kilogram and a higher credit of $30 per kilogram if at least 90 percent of the component rare earth materials by weight are also produced in the United States. The bill defines qualifying magnets, component materials, and manufacturing activities broadly enough to include milling, pressing, sintering, and recycling.
The bill also includes restrictions intended to limit reliance on adversarial foreign supply chains. No credit would be allowed if any component rare earth material used in the magnet is produced in a non-allied foreign nation, subject to a delayed application for certain materials until January 1, 2027. It also creates a special exception for materials seized from a non-allied foreign nation during wartime by Ukraine or an allied country, and it allows the Secretary of the Treasury to treat certain magnets that do not meet the coercivity standard as qualifying if they are made by eligible manufacturers working under Department of Energy or Department of Defense support and building domestic manufacturing capacity. The credit would be part of the general business credit and could be taken as an elective payment in some cases.
The bill would amend the Internal Revenue Code by adding a new section 45BB and conforming the general business credit rules in section 38. It would apply to taxable years beginning after December 31, 2024, and would phase down for magnets produced after 2034, ending entirely after 2037. In practical terms, the legislation is designed to incentivize U.S.-based rare earth magnet production, strengthen domestic supply chains, and support industries tied to defense, energy, and advanced manufacturing.
Because there are no recorded committee transcripts or votes in the provided context, the overall sentiment cannot be measured from debate or roll call history. The bill’s bipartisan sponsorship suggests support across party lines, and the structure of the proposal indicates a generally pro-manufacturing, pro-national-security framing. Potential points of contention are likely to center on the cost of the tax credit, the complexity of verifying sourcing and certification requirements, and the policy choice to exclude materials from non-allied foreign nations while creating narrow exceptions for wartime seizure and certain defense-related manufacturers.
The bill would add a new Internal Revenue Code provision, section 45BB, creating a production tax credit for qualifying rare earth magnets and incorporating that credit into the general business credit under section 38. It would also require Treasury to administer new rules on eligibility, sourcing restrictions, certification, elective payment treatment, and phase-out timing. The affected parties are U.S. magnet manufacturers, suppliers of rare earth materials, and taxpayers engaged in domestic advanced manufacturing, especially those tied to defense and energy supply chains.
No committee discussion or vote record is provided, so there is no direct evidence of support or opposition from hearings or floor action. The bill’s bipartisan introduction by Senators Cortez Masto, Mullin, and Graham suggests cross-party interest and a generally favorable outlook. The policy is framed around domestic manufacturing, supply-chain security, and national security, which typically attracts broad support, though the tax-credit design may prompt scrutiny over fiscal cost and implementation details.
The main likely points of contention are the size and structure of the credit, the administrative burden of proving domestic content and foreign sourcing compliance, and the exclusion of component materials produced in non-allied foreign nations. The delayed restriction for certain materials, the wartime-seizure exception for Ukraine or allied countries, and the Secretary’s discretion to treat some defense-backed manufacturers as eligible could also draw questions about fairness, enforceability, and how broadly the credit should reach.