I 
117TH CONGRESS 
1ST SESSION H. R. 5033 
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 
AUGUST 13, 2021 
Mr. SWALWELL (for himself and Mr. RESCHENTHALER) 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 2021’’. 
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 45T: 
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‘‘SEC. 45U. CREDIT FOR PRODUCTION OF RARE EARTH 
MAGNETS. 
‘‘(a) IN GENERAL.—For the purposes of section 38, 
the credit for production of rare earth magnets determined 
under this section for any taxable year is an amount equal 
to the sum of— 
‘‘(1) $20 per kilogram of rare earth magnets 
manufactured in the United States by the taxpayer 
during the taxable year, or 
‘‘(2) $30 per kilogram of rare earth magnets 
manufactured in the United States by the taxpayer 
during the taxable year if all of the component rare 
earth material of such magnets are produced within 
the United States. 
‘‘(b) PHASE-OUT.— 
‘‘(1) IN GENERAL.—In the case of any rare 
earth magnet produced after December 31, 2030, 
the amount determined under this section with re-
spect to such rare earth magnet shall be equal to the 
product of— 
‘‘(A) the amount determined under sub-
section (a) with respect to such rare earth mag-
net, as determined without regard to this sub-
section, multiplied by 
‘‘(B) the phase-out percentage described in 
paragraph (2). 
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‘‘(2) PHASE-OUT PERCENTAGE.—The phase-out 
percentage described in this paragraph is— 
‘‘(A) in the case of any rare earth magnet 
produced in calendar year 2031, 70 percent, 
‘‘(B) in the case of any rare earth magnet 
produced in calendar year 2032, 35 percent, or 
‘‘(C) in the case of any rare earth magnet 
produced after December 31, 2033, 0 percent. 
‘‘(c) RESTRICTION ON COMPONENT SOURCING.—A 
taxpayer is not eligible for the credit determined under 
subsection (a) with respect to a rare earth magnet if any 
component rare earth material used to produce such mag-
net was produced in a non-allied foreign nation. 
‘‘(d) DEFINITIONS.—For the purposes of this sec-
tion— 
‘‘(1) RARE EARTH MAGNET.—The term ‘rare 
earth magnet’ means a permanent magnet com-
prised of— 
‘‘(A) an alloy of neodymium, praseo-
dymium, iron, boron, terbium, or dysprosium, 
or 
‘‘(B) an alloy of samarium, gadolinium, 
and cobalt. 
‘‘(2) COMPONENT
RARE
EARTH
MATERIAL.— 
The term ‘component rare earth material’ means ne-
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odymium, praseodymium, dysprosium, terbium, sa-
marium, gadolinium, and cobalt. 
‘‘(3) 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. 
‘‘(4) MANUFACTURED.—The term ‘manufac-
tured’ means the manufacturing of a rare earth 
magnet, including the alloying, reduction, strip cast-
ing, and metallization of component rare earth mate-
rial. 
‘‘(5) NON-ALLIED FOREIGN NATION.—The term 
‘non-allied foreign nation’ has the meaning given to 
the term ‘covered nation’ in section 2533c(d) of title 
10, United States Code. 
‘‘(e) TRADE OR BUSINESS REQUIREMENT.—No cred-
it shall be allowed under this section with respect to any 
property unless such property is manufactured in the ordi-
nary course of a trade or business of the taxpayer. 
‘‘(f) 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 under sub-
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section (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. 
‘‘(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. 
‘‘(3) EXCLUSION FROM GROSS INCOME.—Gross 
income of the taxpayer shall be determined without 
regard to this subsection.’’. 
(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 (32), by striking the 
period at the end of paragraph (33) and inserting ‘‘, plus’’, 
and by adding at the end the following new paragraph: 
‘‘(34) the credit for production of rare earth 
magnets determined under section 45U(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 45T the following new item: 
‘‘Sec. 45U. Credit for production of rare earth magnets.’’. 
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(d) EFFECTIVE DATE.—The amendments made by 
this Act shall apply to taxable years beginning after De-
cember 31, 2021. 
Æ 
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