Rare Earth Magnet Security Act of 2025

Key Points

• This bill creates a new tax credit for companies that manufacture high-performance rare earth magnets in the United States. These magnets are critical components in electric vehicles, wind turbines, defense systems, and other advanced technologies.
• Companies can earn $20 per kilogram of magnets they produce domestically. If at least 90% of the raw materials come from U.S. sources, the credit jumps to $30 per kilogram, rewarding companies that build fully American supply chains.
• The bill blocks the tax credit for any magnets made with materials sourced from adversarial countries like China or Russia. Certain harder-to-source materials (dysprosium, terbium, samarium, and gadolinium) get an exception until January 1, 2027, giving companies time to find alternative suppliers.
• The credits phase out over time: dropping to 70% in 2035, then 35% in 2036-2037, and reaching zero after 2037. This gives the industry roughly a decade to become self-sustaining without ongoing government support.
• The bill has strong bipartisan support, with 14 original cosponsors from both parties. It also includes an elective payment option so that even companies without a tax liability (like startups) can still benefit from the credit.