I 
118TH CONGRESS 
1ST SESSION H. R. 2849 
To amend the Internal Revenue Code of 1986 to establish a credit for 
the domestic production of rare earth magnets, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 25, 2023 
Mr. RESCHENTHALER (for himself and Mr. SWALWELL) introduced the 
following bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to establish 
a credit for the domestic production of rare earth 
magnets, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Rare Earth Magnet 
Manufacturing Production Tax Credit Act of 2023’’. 
SEC. 2. CREDIT FOR PRODUCTION OF RARE EARTH 
MAGNETS. 
(a) IN GENERAL.—The Internal Revenue Code of 
1986 is amended by inserting the following new section 
after section 45AA: 
VerDate Sep 11 2014 
23:00 May 01, 2023
Jkt 039200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H2849.IH
H2849
kjohnson on DSK79L0C42PROD with BILLS
‘‘SEC. 45BB. CREDIT FOR PRODUCTION OF RARE EARTH 
MAGNETS. 
‘‘(a) IN GENERAL.— 
‘‘(1) ALLOWANCE OF CREDIT.—For purposes of 
section 38, the credit for production of rare earth 
magnets determined under this section for any tax-
able year is an amount equal to the sum of the cred-
it amounts determined under subsection (b) with re-
spect to rare earth magnets which are— 
‘‘(A) manufactured or produced by the tax-
payer, and 
‘‘(B) sold by such taxpayer to an unrelated 
person during the taxable year. 
‘‘(2) UNRELATED PERSON.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, a taxpayer shall be treated as selling 
rare earth magnets to an unrelated person if 
such magnet is sold to such person by a person 
related to the taxpayer. 
‘‘(B) ELECTION.— 
‘‘(i) IN GENERAL.—At the election of 
the taxpayer (in such form and manner as 
the Secretary may prescribe), a sale of rare 
earth magnets by such taxpayer to a re-
lated person shall be deemed to have been 
made to an unrelated person. 
VerDate Sep 11 2014 
23:00 May 01, 2023
Jkt 039200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H2849.IH
H2849
kjohnson on DSK79L0C42PROD with BILLS
‘‘(ii) REQUIREMENT.—As a condition 
of, and prior to, any election described in 
clause (i), the Secretary may require such 
information or registration as the Sec-
retary deems necessary for purposes of 
preventing duplication, fraud, or any im-
proper or excessive amount determined 
under paragraph (1). 
‘‘(b) CREDIT AMOUNT.— 
‘‘(1) IN
GENERAL.—The amount determined 
under this subsection is— 
‘‘(A) $20 per kilogram of rare earth 
magnets manufactured or produced in the 
United States by the taxpayer during the tax-
able year, and 
‘‘(B) $30 per kilogram of rare earth 
magnets manufactured or produced in the 
United States by the taxpayer during the tax-
able year if not less than 90 percent of the com-
ponent rare earth materials of such magnets 
are produced within the United States. 
‘‘(2) PHASE-OUT.— 
‘‘(A) IN
GENERAL.—In the case of any 
rare earth magnet manufactured or produced 
after December 31, 2032, the amount deter-
VerDate Sep 11 2014 
23:00 May 01, 2023
Jkt 039200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H2849.IH
H2849
kjohnson on DSK79L0C42PROD with BILLS
mined under this section with respect to such 
rare earth magnet shall be equal to the product 
of— 
‘‘(i) the amount determined under 
paragraph (1) with respect to such rare 
earth magnet, as determined without re-
gard to this subsection, multiplied by 
‘‘(ii) the phase-out percentage de-
scribed in subparagraph (B). 
‘‘(B) 
PHASE-OUT
PERCENTAGE.—The 
phase-out percentage described in this para-
graph is— 
‘‘(i) in the case of any rare earth 
magnet manufactured or produced in cal-
endar year 2033, 70 percent, 
‘‘(ii) in the case of any rare earth 
magnet manufactured or produced in cal-
endar year 2034 or 2035, 35 percent, or 
‘‘(iii) in the case of any rare earth 
magnet manufactured or produced after 
December 31, 2035, 0 percent. 
‘‘(c) DEFINITIONS.—For the purposes of this sec-
tion— 
VerDate Sep 11 2014 
23:00 May 01, 2023
Jkt 039200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H2849.IH
H2849
kjohnson on DSK79L0C42PROD with BILLS
‘‘(1) RARE EARTH MAGNET.—The term ‘rare 
earth magnet’ means a permanent magnet com-
prised of— 
‘‘(A) an alloy of neodymium, iron, and 
boron, which may also include praseodymium, 
terbium, or dysprosium, or 
‘‘(B) an alloy of samarium and cobalt, 
which may also include gadolinium or any asso-
ciated host mineral of a component rare earth 
material. 
‘‘(2) COMPONENT
RARE
EARTH
MATERIAL.— 
The term ‘component rare earth material’ means ne-
odymium, praseodymium, dysprosium, terbium, sa-
marium, gadolinium, and cobalt. 
‘‘(3) MANUFACTURED.—The term ‘manufac-
tured’ means the manufacturing of a rare earth 
magnet, including the alloying, reduction, strip cast-
ing, milling, sintering, recycling, pressing, and 
metallization of component rare earth material. 
‘‘(4) NON-ALLIED FOREIGN NATION.—The term 
‘non-allied foreign nation’ has the meaning given to 
the term ‘covered nation’ in section 4872(d) of title 
10, United States Code. 
‘‘(5) UNITED STATES AND POSSESSION OF THE 
UNITED
STATES.—The terms ‘United States’ and 
VerDate Sep 11 2014 
23:00 May 01, 2023
Jkt 039200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H2849.IH
H2849
kjohnson on DSK79L0C42PROD with BILLS
‘possession of the United States’ have the meaning 
given such terms in section 638. 
‘‘(d) SPECIAL RULES.— 
‘‘(1) 
RESTRICTION
ON
COMPONENT 
SOURCING.—No credit shall be allowed under this 
section with respect to a rare earth magnet if any 
component rare earth material used to manufacture 
or produce such magnet is produced in a non-allied 
foreign nation. 
‘‘(2) TRADE OR BUSINESS REQUIREMENT.—No 
credit shall be allowed under this section with re-
spect to a rare earth magnet unless such magnet is 
manufactured or produced in the ordinary course of 
a trade or business of the taxpayer. 
‘‘(e) ELECTIVE PAYMENT
FOR PRODUCTION
OF 
RARE EARTH MAGNETS.— 
‘‘(1) IN GENERAL.—In the case of a taxpayer 
making an election (at such time and in such man-
ner as the Secretary may provide) under this section 
with respect to any portion of the credit allowed 
under subsection (a), such taxpayer shall be treated 
as making a payment against the tax imposed by 
this subtitle for the taxable year equal to the amount 
of such portion. 
VerDate Sep 11 2014 
23:00 May 01, 2023
Jkt 039200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H2849.IH
H2849
kjohnson on DSK79L0C42PROD with BILLS
‘‘(2) TIMING.—The payment described in para-
graph (1) shall be treated as made on the later of 
the due date of the return of tax for such taxable 
year or the date on which such return is filed.’’. 
(b) CREDIT TO BE PART OF GENERAL BUSINESS 
CREDIT.—Section 38(b) of such Code is amended by strik-
ing ‘‘plus’’ at the end of paragraph (40), by striking the 
period at the end of paragraph (41) and inserting ‘‘, plus’’, 
and by adding at the end the following new paragraph: 
‘‘(42) the credit for production of rare earth 
magnets determined under section 45BB(a).’’. 
(c) CONFORMING AMENDMENT.—The table of sec-
tions for subpart D of part IV of subchapter A of chapter 
1 of such Code is amended by inserting after the item 
relating to section 45AA the following new item: 
‘‘Sec. 45BB. Credit for production of rare earth magnets.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this Act shall apply to taxable years beginning after De-
cember 31, 2023. 
Æ 
VerDate Sep 11 2014 
23:00 May 01, 2023
Jkt 039200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6301
E:\BILLS\H2849.IH
H2849
kjohnson on DSK79L0C42PROD with BILLS