I 
119TH CONGRESS 
1ST SESSION H. R. 1496 
To amend the Internal Revenue Code of 1986 to establish a credit for 
the domestic production of high-performance rare earth magnets, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 21, 2025 
Mr. RESCHENTHALER (for himself, Mr. SWALWELL, Mr. HUDSON, Ms. LEE 
of Nevada, Mr. CALVERT, Ms. CASTOR of Florida, Mr. OBERNOLTE, Mr. 
TONKO, Mr. MOOLENAAR, Mr. DELUZIO, Mr. MEUSER, Mr. PANETTA, 
Mr. MILLS, and Ms. HOULAHAN) 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 high-performance 
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 
Security Act of 2025’’. 
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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: 
‘‘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.— 
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‘‘(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. 
‘‘(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 which are not described in subpara-
graph (B), and 
‘‘(B) $30 per kilogram of rare earth 
magnets manufactured or produced in the 
United States by the taxpayer during the tax-
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able year if not less than 90 percent by weight 
of the component 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, 2034, the amount deter-
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 2035, 70 percent, 
‘‘(ii) in the case of any rare earth 
magnet manufactured or produced in cal-
endar year 2036 or 2037, 35 percent, or 
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‘‘(iii) in the case of any rare earth 
magnet manufactured or produced after 
December 31, 2037, 0 percent. 
‘‘(c) DEFINITIONS.—For the purposes of this sec-
tion— 
‘‘(1) RARE EARTH MAGNET.—The term ‘rare 
earth magnet’ means a permanent magnet— 
‘‘(A) with an intrinsic coercivity (HCj) of 
10 kOe or higher at 68°F (20°C), and 
‘‘(B) comprised of— 
‘‘(i) an alloy of neodymium, iron, and 
boron, which may also include praseo-
dymium, terbium, or dysprosium, or 
‘‘(ii) an alloy of samarium and cobalt, 
which may also include gadolinium or any 
associated 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 milling, pressing, sintering, 
and recycling of component rare earth material. 
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‘‘(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 
‘possession of the United States’ have the meaning 
given such terms in section 638. 
‘‘(d) SPECIAL RULES.— 
‘‘(1) 
RESTRICTION
ON
COMPONENT 
SOURCING.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), 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. 
‘‘(B) DELAYED RESTRICTION FOR CERTAIN 
COMPONENT RARE EARTH MATERIALS.—In the 
case of the rare earth materials dysprosium, 
terbium, samarium, and gadolinium, the restric-
tion under subparagraph (A) shall not apply to 
magnets manufactured or produced using such 
materials before January 1, 2027. 
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