S. 4033: Critical Minerals Investment Tax Modernization Act of 2026

The Critical Minerals Investment Tax Modernization Act of 2026 proposes an adjustment to the tax code regarding the depletion rate for certain minerals. Below are the main components of the bill:

1. Purpose of the Bill

The bill aims to enhance the financial incentives for the extraction of specific minerals termed "rare earths." These minerals include the 15 lanthanide elements, along with scandium.

2. Adjustment of Depletion Rate

The bill seeks to amend the Internal Revenue Code by modifying the percentage depletion rate for rare earths. Specifically, it introduces a 22 percent depletion rate for these minerals. This is designed to promote investment and increase production in the mining of rare earth elements, which are critical for various modern technologies and applications.

3. Effective Date

The changes made by this bill would go into effect for taxable years starting after the legislation is enacted.

4. Goals and Implications

The overarching aim of the bill is to encourage domestic mining and production of rare earth elements, which are crucial for industries such as electronics, green technologies, and defense. By providing tax benefits, the bill seeks to stimulate investment in the mining sector and reduce reliance on foreign sources of these critical minerals.

5. Definitions

Rare earths, as defined by the bill, include:

• The 15 lanthanide elements
• Scandium

Relevant Companies

• MP Materials (MP) - A leading rare earth materials producer in the United States, MP Materials may benefit from an increased tax depletion rate, potentially making operations more financially viable.
• REE Automotive (REE) - While primarily focused on electric vehicle technology, the company's operations are related to rare earth metals, and changes in mineral extraction incentives could impact its supply chain.