H.R. 9227: Magnets Value Chain Support Act of 2026

This bill would create new federal tax credits to encourage more production and use of permanent magnets and related materials in the United States.

What it does

• Sets up a new tax credit for companies that make permanent magnets in the U.S.
• Sets up a second credit for companies that produce magnet metals in the U.S., such as key rare earth and other magnet-related metals.
• Sets up a third credit for companies that produce certain rare earth oxides in the U.S.
• Creates another credit for businesses that buy and use U.S.-made magnets in certain covered products, like motors, generators, robotics systems, telecommunications equipment, and some defense-related equipment.

How the credits work

The bill gives different dollar amounts per kilogram or a percentage of spending, depending on what is produced and how much of the supply chain is based in the U.S. or in approved partner countries.

• Permanent magnet makers could receive credits ranging from $20 to $40 per kilogram, depending on the type of magnet and how much of the input material comes from the U.S. or partner countries.
• Magnet metal producers could receive $15 or $25 per kilogram, depending on how much of the raw material was produced or refined in the U.S.
• Rare earth oxide producers could receive $5 per kilogram.
• Companies using domestic magnets in covered products could receive a credit equal to 15%, 10%, or 5% of qualifying spending, depending on the taxable year.

Eligibility rules and limits

• The credits generally apply only to materials made in the United States and, in some cases, to materials from defined partner countries such as NATO members, Japan, Australia, South Korea, Canada, and Mexico.
• The bill excludes materials tied to a prohibited foreign entity, which is defined by existing tax law.
• Taxpayers would have to elect to use these credits, and in some cases the election would be irrevocable for the taxable year.
• The bill tries to prevent double benefits, so the same material generally cannot receive multiple credits under overlapping rules or be counted more than once.
• Some credits cannot be claimed for materials made for stockpiling, resale, or export, with limited exceptions such as certain sales to the U.S. government or some exports to partner countries under binding supply agreements.

Reporting and compliance

Companies claiming the credits would have to provide detailed information to the Treasury Department about their supply chains, including where materials were produced and processed, who suppliers and purchasers are, quantities involved, and pricing information. The Treasury could use this information to assess supply-chain risks and monitor the market, while protecting confidential business information.

Administration and timing

• The Treasury Secretary would issue regulations or guidance to carry out the law.
• The new magnet production credit would apply to taxable years beginning after December 31, 2026, and would end after December 31, 2038.
• The domestic magnet input usage credit would also begin after December 31, 2026 and end after December 31, 2038.
• Some special rules for “specified permanent magnets” would end after December 31, 2031 unless extended by the Treasury Secretary.

Overall effect

In practical terms, the bill is designed to make it cheaper and more attractive for companies to build U.S.-based supply chains for permanent magnets and their key inputs, and to encourage manufacturers to use those domestic materials in certain strategic products.

Relevant Companies

• MP — MP Materials could be directly affected because it is involved in rare earth materials and magnet supply-chain development in the U.S.
• TSLA — Tesla could be affected if it increases use of domestically sourced permanent magnets in vehicles or related systems.
• GE — General Electric could be affected through motors, generators, and industrial equipment that use permanent magnets.
• HON — Honeywell could be affected through aerospace, industrial, and automation products that use magnet-based components.
• RTX — RTX could be affected through defense systems and components that use permanent magnets or magnet-related inputs.
• LMT — Lockheed Martin could be affected through defense manufacturing and procurement of magnet-containing components.
• NVDA — NVIDIA could be indirectly affected if data center or high-performance electronics supply chains shift toward covered domestic components, though the effect would likely be less direct than for materials producers.