Magnets Value Chain Support Act of 2026

Bill Number

H.R. 9227

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Taxation

Status

Introduced

Latest Action

2026-06-09: Referred to the House Committee on Ways and Means.

Last Updated

2026-06-29T06:04:34Z

AI-Generated Summary

Purpose

• The legislation aims to reduce U.S. dependence on foreign sources, primarily the People's Republic of China, for magnet metals and permanent magnets used in electric motors, generators, robotics, industrial machinery, advanced electronics, and national defense systems.
• It provides targeted tax incentives to restore domestic production capabilities in the magnet value chain through market-oriented credits for production and use.

Key Provisions

• Magnet Value Chain Support Credit (Section 45BB): Creates a new tax credit equal to the sum of three components:
• Permanent magnet production credit: Offers $20–$40 per kilogram based on magnet type (rare earth-free, high-performance, or advanced high-performance), domestic or partner country content thresholds (75% or 90%), and exclusion of prohibited foreign entity inputs.
• Magnet metal production credit: Provides $15–$25 per kilogram for magnet metals produced in the U.S., with requirements for U.S. or partner country rare earth oxides and no prohibited foreign entity involvement.
• Rare earth oxide production credit: Grants $5 per kilogram for qualified rare earth oxides produced in the U.S. under binding offtake agreements.
• Domestic Magnet Input Usage Credit (Section 45CC): Provides a credit of 15%, 10%, or 5% (phasing down through 2038) on qualified expenditures for domestic permanent magnets used in manufacturing covered products, such as motors, generators, and components for defense, robotics, and electronics.
• Both credits are added to the general business credit under Section 38, are transferable under Section 6418, and require elections by taxpayers.
• Definitions and Restrictions: Establishes detailed criteria for qualified magnets, metals, and oxides; prohibits credits for materials involving prohibited foreign entities; mandates supply chain reporting and transparency; and excludes credits for exports (except to partner countries) or stockpiling.
• Partner Countries and Waivers: Defines partner countries (NATO members, Japan, Australia, South Korea, Canada, Mexico) and allows limited waivers or facility designations for supply chain resilience.

Significant Changes to Existing Law

• Introduces new Sections 45BB and 45CC to the Internal Revenue Code of 1986, creating specialized production and usage incentives not previously available.
• Coordinates with existing Section 45X by requiring taxpayers to elect between credits and denying double benefits for the same materials.
• Adds requirements for domestic production capacity reserves tied to Defense Priorities and Allocations System ratings or DoD contracts.

Potential Impacts

• Government Agencies: Increases administrative responsibilities for the Department of the Treasury (regulations, certifications, waivers, and reporting); involves consultations with the Departments of Defense, Energy, and Commerce for designations and reviews.
• Citizens and Economy: Encourages job creation and investment in domestic manufacturing; may lower long-term costs for industries reliant on magnets through incentives, while imposing compliance burdens on producers.
• International Relations: Strengthens ties with partner countries through content incentives; restricts engagement with prohibited foreign entities, potentially affecting global supply chains and trade dynamics.

Main Stakeholders Affected

• Domestic manufacturers of rare earth oxides, magnet metals, and permanent magnets.
• Companies producing covered products, including those in automotive, aerospace, electronics, robotics, and defense sectors.
• U.S. government agencies such as the Departments of Treasury, Defense, Energy, and Commerce.
• Foreign suppliers and entities from prohibited countries, as well as partner country facilities.

Notable Legal, Constitutional, or Political Implications

• Focuses on national security and supply chain resilience, with ties to the Defense Production Act and DoD contracts, raising potential implications for federal procurement priorities.
• Requires extensive disclosure of supply chain and pricing data, with protections for confidential business information.
• Bipartisan introduction and termination provisions after 2038 indicate a time-limited policy approach to industrial incentives.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Moolenaar, John R. [R-MI-2]

Cosponsors (2)

Rep. Khanna, Ro [D-CA-17], Rep. Krishnamoorthi, Raja [D-IL-8]

Recent Actions

• 2026-06-09: Referred to the House Committee on Ways and Means.
• 2026-06-09: Introduced in House
• 2026-06-09: Introduced in House

Bill Versions

• Magnets Value Chain Support Act of 2026 — issued 2026-06-09 — PDF (32 pages)