The Rare Earth Magnet Security Act provides federal tax credits to encourage domestic manufacturing of rare earth magnets, which are critical components for defense, energy, and technology applications. Companies that produce these magnets in the United States will receive $20 per kilogram, or $30 per kilogram if at least 90 percent of the raw rare earth materials are also sourced domestically. The bill includes restrictions on using materials from non-allied foreign nations (with limited exceptions for certain materials until 2027 and for materials seized during wartime), and the credits phase out completely after 2037. The tax credits apply to qualifying manufacturers starting in taxable years after December 31, 2024, and companies can elect to treat the credits as direct payments rather than traditional tax deductions to improve cash flow.
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