Congress quietly subsidizes rare earth magnet makers with $20–$30 per kilogram
H.R. 1496 — Rare Earth Magnet Security Act of 2025 · Filed by Guy Reschenthaler (R-PA) · 29 cosponsors · Introduced Feb 21, 2025 · Referred to committee
Your members of Congress
Enter a ZIP to see where your representative and both senators stood on this bill.
Looked up on this device — your ZIP is never stored on our servers.
What it does
This bill creates a federal tax credit of $20–$30 per kilogram for companies that manufacture rare earth magnets in the United States, with a higher rate ($30/kg) if at least 90% of the component materials are also sourced domestically. The credit phases out after 2034 and includes restrictions on sourcing materials from non-allied foreign nations (with a delayed restriction until 2027 for certain materials). The bill is designed to incentivize domestic rare earth magnet production for national security and supply-chain resilience.
Why we flagged it
The bill's core mechanism is a direct federal tax credit to manufacturers, structured as an incentive for domestic production. While framed as a national-security measure, it functions as a targeted subsidy to a specific industrial sector.
What the text implies
- The $20–$30/kg credit may incentivize overproduction or inefficient manufacturing if demand does not match subsidized supply, creating stranded capacity after the 2037 phase-out.
- The 90% domestic-content threshold for the higher credit rate ($30/kg) may create pressure to source materials domestically even if foreign sources are more cost-effective, potentially raising magnet prices for downstream industries (automotive, defense, renewable energy).
The full analysis lists 5 implications of this text.
Who stands to gain
Rare earth magnet manufacturers; Domestic rare earth mining and processing companies; Defense contractors and aerospace suppliers dependent on rare earth magnets