Congress subsidizes rare earth magnets—with no spending cap or wage rules.

What it does

This bill creates a federal tax credit for companies that manufacture high-performance rare earth magnets in the United States. Manufacturers receive $20 per kilogram of magnets produced domestically, or $30 per kilogram if at least 90% of the rare earth 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 on certain materials until 2027. Companies can elect to receive the credit as a direct payment rather than a tax offset.

Why we flagged it

The bill is a targeted tax credit designed to incentivize domestic production of a specific strategic material. It is industrial policy—a government subsidy to a private sector—not a broad tax reform or public-safety measure.

What the text implies

• The 'elective payment' mechanism (subsection e) allows manufacturers to claim the credit as a refundable payment even if they owe no federal income tax, effectively converting the credit into a direct cash subsidy—a more generous benefit than a standard tax credit.
• The delayed restriction on certain rare earth materials (dysprosium, terbium, samarium, gadolinium) until January 1, 2027 permits two years of credit claims using foreign-sourced materials, potentially subsidizing imports before domestic sourcing is required.
• The 'eligible manufacturer' exception (subsection d(3)) allows the Secretary to waive the coercivity requirement for manufacturers receiving DoD or DoE grants, creating a discretionary carve-out that could favor politically connected firms.
• The bill does not cap total credit claims or establish an aggregate spending limit, meaning the cost to the federal budget is open-ended and depends entirely on production volumes and manufacturer claims.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

The bill subsidizes domestic rare earth magnet production, which may strengthen supply chains and create manufacturing jobs—a public benefit. However, the cost is borne by taxpayers through foregone federal revenue, and the primary beneficiaries are corporations in the rare earth and defense-adjacent sectors, not the general public. The trade-off between industrial policy and fiscal cost is genuine.

Who stands to gain

• rare earth magnet manufacturers
• defense contractors and suppliers
• companies receiving Department of Defense or Department of Energy grants

Named in the bill

Internal Revenue Code of 1986, Section 45BB (new tax credit), Department of Energy, Department of Defense, rare earth magnet manufacturers, non-allied foreign nations

Where it stands

29 cosponsors: 18 Democrats, 11 Republicans.

• Feb 21, 2025 — Introduced · Congress.gov: “Introduced in House”
• Feb 21, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

3 lobbying clients named this bill on 4 disclosure filings across 3 quarters, Dec 2025 to Jun 2026. Those filings disclosed $430,000 in lobbying spend. A filing names 2 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 61% of bills with at least one filing.

Guy Reschenthaler, the sponsor, reported $1,273,000 in PAC receipts in the 2026 cycle.

• Mp Materials Corp. — $230,000 on 1 filing
• Niron Magnetics — $180,000 on 2 filings
• Elk Creek Resources Corp. — $20,000 on 1 filing

Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.