H.R. 9227, the Magnets Value Chain Support Act of 2026, addresses U.S. dependence on China for critical magnet materials and permanent magnets essential to defense, manufacturing, and clean energy by creating two federal tax credits to rebuild domestic production capacity. The bill establishes a tax credit for U.S. manufacturers of permanent magnets, magnet metals, and rare earth oxides, offering per-kilogram payments ranging from $5 to $40 based on product type and domestic content levels, with higher incentives for magnets with at least 90% U.S. or partner-country inputs and advanced high-performance magnets. A second tax credit provides companies 15% reimbursement for qualified expenses when using domestically-manufactured permanent magnets in advanced electronics, defense products, motors, generators, and robotics through 2034, declining to 10% from 2035-2036 and 5% from 2037-2038. Both credits include safeguards such as requiring magnet producers to reserve 3% of domestic capacity for defense orders and prohibiting participation by certain foreign entities, with the credits sunset on December 31, 2038. These incentives are designed to reduce national reliance on foreign magnet supply chains while supporting the domestic advanced manufacturing sector.
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