Congress quietly raises tax break for rare earth miners to 22 percent
H.R. 4772 — Critical Minerals Investment Tax Modernization Act of 2025 · Filed by Adrian Smith (R-NE) · 3 cosponsors · Introduced Jul 25, 2025 · Referred to committee
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What it does
This bill increases the tax deduction (percentage depletion allowance) that mining companies can claim when extracting rare earth elements and scandium from 15% to 22% of gross income. The higher deduction reduces taxable income and thus federal tax liability for rare earth miners, effective immediately upon enactment.
Why we flagged it
The bill's sole operative mechanism is a tax deduction increase for a specific extractive industry. It is a straightforward, narrowly-scoped tax carve-out with no broader policy justification stated in the text.
What the text implies
- The 22% depletion rate applies to gross income, not net profit, meaning miners receive the deduction even in loss years or low-margin operations, amplifying the subsidy effect.
- No sunset clause or performance requirement ties the deduction to domestic production, investment, or supply-chain resilience — the benefit flows regardless of whether mining activity increases or rare earth supply improves.
The full analysis lists 3 implications of this text.
Who stands to gain
rare earth mining companies; scandium mining operations; mineral extraction sector