HouseH.R. 9227119th Congress
Magnets Value Chain Support Act of 2026
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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9227 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 9227
To amend the Internal Revenue Code of 1986 to incentivize the domestic
production and use of permanent magnets, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 9, 2026
Mr. Moolenaar (for himself and Mr. Khanna) 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 incentivize the domestic
production and use of permanent magnets, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Magnets Value Chain Support Act of
2026''.
SEC. 2. CONGRESSIONAL FINDINGS.
Congress finds the following:
(1) The United States is strategically dependent on foreign
sources--principally 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.
(2) In 2025, a Select Committee on China investigation
found that the PRC government engaged in a decades-long
strategy to dominate the rare earth supply chain.
(3) Domestic metallization and magnet-manufacturing
capabilities have atrophied and require targeted, market-
oriented incentives to restore competitive production and
reduce foreign dependence.
(4) Motors, generators, robotics, and high-performance
electronics constitute the majority of global permanent magnet
demand and are essential to the economic and national security
of the United States.
(5) Reshoring the magnet supply chain requires both
upstream incentives for magnet metal and permanent magnet
production, and downstream incentives for the adoption of such
materials by industrial, energy, automotive, aerospace, and
electronics manufacturers.
(6) Competitive market incentives are necessary to counter
non-market foreign production and to strengthen the domestic
industrial base.
SEC. 3. ESTABLISHMENT OF MAGNET VALUE CHAIN SUPPORT CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 45BB. MAGNET VALUE CHAIN SUPPORT CREDIT.
``(a) Allowance of Credit.--For purposes of section 38, the magnet
value chain support credit for any taxable year is an amount equal to
the sum of--
``(1) the permanent magnet production credit,
``(2) the magnet metal production credit, plus
``(3) the rare earth oxide production credit.
``(b) Permanent Magnet Production Credit; Magnet Metal Production
Credit; Rare Earth Oxide Production Credit.--For purposes of this
section--
``(1) Permanent magnet production credit.--
``(A) In general.--The permanent magnet production
credit with respect to any eligible taxpayer for any
taxable year is the applicable amount with respect to
each kilogram of qualified permanent magnet--
``(i) manufactured by such taxpayer during
such taxable year in the United States, and
``(ii) sold by such taxpayer to an
unrelated person during such taxable year.
``(B) Applicable amount.--For purposes of
subparagraph (A), the term `applicable amount' means,
with respect to each kilogram of qualified permanent
magnet--
``(i) $20 per kilogram, if--
``(I) such permanent magnet is a
rare earth-free permanent magnet, and
``(II) none of the magnet metal
inputs incorporated within such
permanent magnet were produced by a
prohibited foreign entity,
``(ii) $20 per kilogram, if--
``(I) such permanent magnet is a
high-performance permanent magnet,
``(II) at least 75 percent of the
magnet metal inputs (by weight)
incorporated within such permanent
magnet were produced in the United
States or in a partner country, and
``(III) none of the magnet metal
inputs incorporated within such
permanent magnet were produced by a
prohibited foreign entity,
``(iii) $30 per kilogram, if--
``(I) such permanent magnet is a
high-performance permanent magnet,
``(II) at least 90 percent of the
magnet metal inputs (by weight)
incorporated within such permanent
magnet were produced in the United
States or in a partner country, and
``(III) none of the magnet metal
inputs incorporated within such
permanent magnet were produced by a
prohibited foreign entity,
``(iv) $33 per kilogram, if--
``(I) such permanent magnet is an
advanced high-performance permanent
magnet,
``(II) at least 75 percent of the
magnet metal inputs (by weight)
incorporated within such permanent
magnet were produced in the United
States or in a partner country, and
``(III) none of the magnet metal
inputs incorporated within such
permanent magnet were produced by a
prohibited foreign entity, and
``(v) $40 per kilogram, if--
``(I) such permanent magnet is an
advanced high-performance permanent
magnet,
``(II) at least 90 percent of the
magnet metal inputs (by weight)
incorporated within such permanent
magnet were produced in the United
States or in a partner country, and
``(III) none of the magnet metal
inputs incorporated within such
permanent magnet were produced by a
prohibited foreign entity.
``(C) Eligible taxpayer.--For purposes of
subparagraph (A), the term `eligible taxpayer' means
any taxpayer who certifies to the Secretary (at such
time and in such manner as the Secretary may prescribe)
that at least 3 percent of such taxpayer's annual
domestic production capacity of qualified permanent
magnets has been maintained in an available and
unencumbered state, capable of accepting and fulfilling
orders placed pursuant to--
``(i) a priority rating under the Defense
Priorities and Allocations System, as
established by the Defense Production Act of
1950, or
``(ii) a contract entered into under
chapter 137 of title 10, United States Code.
The Secretary may waive the requirement of the preceding
sentence with respect to any taxpayer if the Secretary
determines that such requirement would impose an undue burden
given the taxpayer's production scale or stage of development.
In the case of a taxpayer who otherwise fails to comply with
such requirements, any credit allowed under this section shall
be recaptured in such manner as the Secretary determines
appropriate.
``(2) Magnet metal production credit.--
``(A) In general.--The magnet metal production
credit with respect to any taxpayer for any taxable
year is the applicable amount with respect to each
kilogram of magnet metal--
``(i) produced by such taxpayer during such
taxable year in the United States, and
``(ii) either--
``(I) sold by such taxpayer to an
unrelated person during such taxable
year for use in an eligible production
step, or
``(II) used by such taxpayer for an
eligible production step during such
taxable year.
``(B) Applicable amount.--For purposes of
subparagraph (A), the term `applicable amount' means,
with respect to each kilogram of magnet metal--
``(i) $15 per kilogram, if--
``(I) at least 75 percent of any
rare earth oxides or metallic
precursors (by weight) used in the
production of such magnet metal were
produced or refined in the United
States or in a partner country, and
``(II) none of the magnet metal
inputs were produced by a prohibited
foreign entity, and
``(ii) $25 per kilogram, if--
``(I) at least 90 percent of any
rare earth oxides or metallic
precursors (by weight) used in the
production of such magnet metal were
produced or refined in the United
States, and
``(II) none of the magnet metal
inputs were produced by a prohibited
foreign entity.
``(C) Denial of credit.--No credit shall be allowed
under this section for any magnet metal with respect to
which a credit has been allowed under section 45X for
the same taxable year. The taxpayer shall elect, prior
to claiming a credit under this section, whether to
claim such credit under this section or under section
45X, and such election shall be irrevocable for the
taxable year.
``(3) Rare earth oxide production credit.--
``(A) In general.--The rare earth oxide production
credit with respect to any taxpayer for any taxable
year is $5 per kilogram of any qualified rare earth
oxide--
``(i) produced by such taxpayer during such
taxable year in the United States, and
``(ii) either--
``(I) sold by such taxpayer to an
unrelated person during such taxable
year for use in an eligible production
step, or
``(II) used by such taxpayer for an
eligible production step during such
taxable year.
``(B) Denial of credit.--No credit shall be allowed
under this section for any qualified rare earth oxide
with respect to which a credit has been allowed under
section 45X for the same taxable year. The taxpayer
shall elect, prior to claiming a credit under this
section, whether to claim such credit under this
section or under section 45X, and such election shall
be irrevocable for the taxable year.
``(c) Definitions.--For purposes of this section--
``(1) Qualified permanent magnet.--
``(A) In general.--The term `qualified permanent
magnet' means any permanent magnet--
``(i) which is comprised entirely of
eligible materials, and
``(ii) which is--
``(I) a rare earth-free permanent
magnet,
``(II) a high-performance permanent
magnet,
``(III) an advanced high-
performance permanent magnet, or
``(IV) a specified permanent
magnet.
``(B) Rare earth-free permanent magnet.--The term
`rare earth-free permanent magnet' means any permanent
magnet--
``(i) within which no rare earth elemental
constituents are incorporated,
``(ii) which has an intrinsic coercivity
(HCj) of at least 2 kilooersteds at 302 degrees
Fahrenheit (150 degrees Celsius), and
``(iii) which has a magnetic remanence (Br)
of at least 8 kilogauss (0.8 Tesla) at 68
degrees Fahrenheit (20 degrees Celsius).
For purposes of the preceding sentence, the intrinsic
coercivity and remanence requirements shall be
determined on the permanent magnet final product and
may not be satisfied through measurements conducted on
powders, flakes, compacts, billets, or other
intermediate precursor forms.
``(C) High-performance permanent magnet.--The term
`high-performance permanent magnet' means any permanent
magnet with an intrinsic coercivity (HCj) of at least
10 kilooersteds at 68 degrees Fahrenheit (20 degrees
Celsius). For purposes of the preceding sentence, the
intrinsic coercivity requirement shall be determined on
the permanent magnet final product and may not be
satisfied through measurements conducted on powders,
flakes, compacts, billets, or other intermediate
precursor forms.
``(D) Advanced high-performance permanent magnet.--
The term `advanced high-performance permanent magnet'
means any permanent magnet--
``(i) with an intrinsic coercivity (HCj) of
at least 20 kilooersteds at 68 degrees
Fahrenheit (20 degrees Celsius), and
``(ii) with a magnetic remanence (Br) of at
least 12 kilogauss (1.2 Tesla) at 68 degrees
Fahrenheit (20 degrees Celsius).
For purposes of the preceding sentence, the intrinsic
coercivity and magnetic remanence requirements shall be
determined on the permanent magnet final product and
may not be satisfied through measurements conducted on
powders, flakes, compacts, billets, or other
intermediate precursor forms.
``(E) Specified permanent magnet.--
``(i) In general.--The term `specified
permanent magnet' means any permanent magnet--
``(I) within which no rare earth
elemental constituents are
incorporated, and
``(II) which is manufactured in the
United States--
``(aa) pursuant to a grant
from, or contract with, the
Department of Defense or the
Department of Energy--
``(AA) valued at
$5,000,000 or greater,
and
``(BB) specifically
for the production of
permanent magnets at
commercial or pilot-
production scale, and
``(bb) by a taxpayer who
commits (in such manner as the
Secretary may prescribe) to
place in service within the
United States a qualified
permanent magnet manufacturing
facility which meets such
standards as the Secretary, in
consultation with the Secretary
of Defense and the Secretary of
Energy, determines to
demonstrate technological,
supply chain, or national
security merit.
A permanent magnet meeting the
requirements of subclauses (I) and (II)
shall be treated as a specified
permanent magnet unless the Secretary,
in consultation with the Secretary of
Defense and the Secretary of Energy,
determines within 120 days of receiving
notification from the taxpayer (in such
form and manner as the Secretary shall
prescribe) that such magnet does not
demonstrate technological, supply
chain, or national security merit. If
the Secretary does not make such a
determination within 120 days, the
magnet shall be conclusively treated as
a specified permanent magnet for the
taxable year and all subsequent taxable
years until the Secretary makes a
determination to the contrary upon
review. The Secretary shall review each
determination under this clause not
less frequently than every 3 years.
``(ii) Termination.--No permanent magnet
may be treated as a specified permanent magnet
in any taxable year beginning after December
31, 2031 unless such period is extended by the
Secretary.
``(F) Eligible materials.--The term `eligible
materials' means--
``(i) neodymium-iron-boron alloys,
``(ii) samarium-cobalt alloys,
``(iii) alnico alloys,
``(iv) ferrite alloys,
``(v) iron-nitride magnets,
``(vi) manganese-based permanent magnet
alloys, and
``(vii) any other alloy, successor, or
compound determined by the Secretary to--
``(I) be appropriate for the
manufacture of a permanent magnet
described in subparagraph (B), (C),
(D), or (E), and
``(II) be essential for motors,
generators, robotics, energy systems,
or advanced electronic systems.
``(G) Manufactured.--The term `manufactured' means
the processes necessary to form a sintered permanent
magnet body, including alloy production, milling,
pressing, and sintering. Such term includes sintered
magnet blocks, whether or not subsequently machined,
coated, or magnetized.
``(2) Qualified rare earth oxide.--The term `qualified rare
earth oxide' means any separated rare earth oxide, including
neodymium oxide, praseodymium oxide, neodymium-praseodymium
oxide, samarium oxide, dysprosium oxide, terbium oxide,
dysprosium-terbium oxide, and such other separated rare earth
oxides as the Secretary determines are essential to the
production of qualified permanent magnets, which--
``(A) is produced in the United States,
``(B) is not derived from, or processed using, any
materials, technology, or services of a prohibited
foreign entity, and
``(C) is produced pursuant to a binding offtake
agreement for use in the production of rare earth
metals, alloys, or permanent magnets in the United
States or in a partner country.
``(3) Magnet metal.--The term `magnet metal' means
neodymium, praseodymium, neodymium-praseodymium alloy,
dysprosium, terbium, dysprosium-terbium alloy, samarium,
gadolinium, cobalt, iron nitride, and any successor permanent
magnet precursor materials.
``(4) Magnet metal input.--The term `magnet metal input'
means, for purposes of calculating content threshold under this
section, the rare earth elemental metallic constituents
intentionally incorporated into a permanent magnet alloy to
impart or enhance permanent magnetic properties, including
neodymium, praseodymium, neodymium-praseodymium alloys,
dysprosium, terbium, dysprosium-terbium alloy, samarium,
gadolinium, and any other rare earth element listed as a magnet
metal under paragraph (3), measured on a contained-metal basis.
Permanent magnets that do not incorporate rare earth elemental
constituents and that are described in subparagraph (B), (C),
(D), or (E) of paragraph (1) shall be deemed to satisfy the
magnet metal input requirements of clauses (i) through (v) of
subsection (b)(1)(B) without further threshold calculation.
``(5) Eligible production step.--The term `eligible
production step' means--
``(A) the manufacturing of qualified permanent
magnets for purposes of the permanent magnet production
credit,
``(B) the production of magnet metals for purposes
of the magnet metal production credit, and
``(C) the production of qualified rare earth oxides
for purposes of the rare earth oxide production credit.
``(6) Partner country.--
``(A) In general.--The term `partner country'
means--
``(i) any member state of the North
Atlantic Treaty Organization,
``(ii) Japan,
``(iii) Australia,
``(iv) South Korea,
``(v) Canada, and
``(vi) Mexico.
``(B) Facility designation.--The Secretary, in
consultation with the Secretary of Defense, the
Secretary of Commerce, and the United States Trade
Representative, may designate a specific facility
located in a non-partner country as a qualifying
facility for purposes of this section if the Secretary
determines that--
``(i) the facility is not owned,
controlled, or influenced by a prohibited
foreign entity,
``(ii) the facility operates under supply
chain transparency, traceability, and export
control practices consistent with those
required of facilities located in partner
countries, and
``(iii) such designation shall serve the
national security and supply chain resilience
objectives of this section.
Materials produced at a facility designated under the preceding
sentence shall be treated as produced in a partner country for
purposes of this section. The Secretary shall submit to
Congress notification of any such designation not later than 30
days before it takes effect, and shall review each designation
not less frequently than every 3 years.
``(7) Prohibited foreign entity.--The term `prohibited
foreign entity' has the meaning given such term in section
7701(a)(51)(A).
``(d) Special Rules.--For purposes of this section--
``(1) Election required.--This section shall not apply
unless the taxpayer has elected (at such time and in such
manner as the Secretary may prescribe) the application of this
section. Such election shall apply to the taxable year for
which it is made and all subsequent taxable years and may not
be revoked.
``(2) Denial of double benefit.--No credit shall be allowed
under this section with respect to any material for which a
credit is granted under section 45X.
``(3) Prohibited foreign entity restriction.--
``(A) In general.--No credit shall be allowed under
this section for any material--
``(i) metallized, alloyed, or refined by a
prohibited foreign entity,
``(ii) manufactured as a permanent magnet
by a prohibited foreign entity,
``(iii) which incorporates magnet metals
sourced from a prohibited foreign entity, or
``(iv) sold or transferred by the taxpayer
to a prohibited foreign entity.
``(B) Waivers; reports.--The Secretary may provide
waivers for periods of no longer than 90 days at a time
if no commercially reasonable non-prohibited foreign
entity alternative is available. Not later than 30 days
after granting any waiver under this subparagraph, the
Secretary shall submit to the Committee on Ways and
Means of the House of Representatives and the Committee
on Finance of the Senate a report describing--
``(i) the identity of the recipient,
``(ii) the specific prohibited foreign
entity material or input for which the waiver
was granted,
``(iii) the duration of the waiver, and
``(iv) the basis for the Secretary's
determination that no commercially reasonable
non-prohibited foreign entity alternative was
available.
``(4) Tiered application of credits.--
``(A) In general.--A separate credit shall be
allowed under this section for each eligible production
step performed by the taxpayer in the United States,
provided that no more than one credit shall be allowed
per eligible production step with respect to the same
quantity of material.
``(B) No double counting.--A credit shall not be
allowed under this section for any quantity of material
for which a credit has already been claimed under the
same eligible production step by any taxpayer.
``(C) Coordination rule.--The Secretary shall
prescribe regulations to prevent duplication of credits
under this section and any successor provision with
respect to the same quantity of material.
``(5) Ineligible materials.--No credit shall be allowed
under this section with respect to--
``(A) any rare earth oxide, including a qualified
rare earth oxide, unless such oxide is produced
pursuant to a binding offtake agreement for use in the
production of an eligible rare earth metal, alloy, or
permanent magnet for which a credit is allowable under
this section,
``(B) any rare earth oxide, metal, alloy, or
permanent magnet that is produced for stockpiling,
resale, or export, except that a rare earth oxide,
metal, alloy, or permanent magnet--
``(i) which is exported to a partner
country pursuant to a binding offtake agreement
for use in an eligible production step that
would qualify under this section if performed
in the United States shall not be treated as
export for purposes of this subparagraph, as
certified by the taxpayer in such form and
manner as the Secretary shall prescribe, and
``(ii) which is sold to the United States
Government, pursuant to a program or authority
established for national security, defense
readiness, or strategic materials reserve
purposes shall not be treated as stockpiling
for purposes of this subparagraph, or
``(C) any material with respect to which a credit
has previously been allowed under this section or any
successor provision for the same quantity of material.
``(6) Disclosure and reporting requirements.--
``(A) In general.--No credit shall be allowed under
this section unless the taxpayer submits, at such time
and in such manner as the Secretary may prescribe,
information regarding--
``(i) the origin and processing locations
of any rare earth oxides, metals, alloys, and
permanent magnets used in any eligible
production step,
``(ii) the identification of all material
suppliers and downstream purchasers associated
with any eligible production step,
``(iii) the volume of eligible materials
produced, sold, or transferred,
``(iv) the existence and duration of any
binding offtake agreements relevant to such
materials,
``(v) transaction prices, price formulas,
or indexed pricing terms for the sale or
transfer of rare earth oxides, metals, alloys,
permanent magnets, and covered downstream
products associated with any eligible
production step, including identification of
any benchmark or reference index used, and
``(vi) such other information as the
Secretary determines appropriate.
``(B) Use of information; confidentiality.--Any
information submitted to the Secretary under
subparagraph (A) may be used for supply chain risk
assessment, market monitoring, and other purposes
determined appropriate by the Secretary for the
administration of this section. The Secretary shall
protect from public disclosure any information
submitted under subparagraph (A) that constitutes
confidential business information, trade secrets, or
proprietary commercial data, consistent with applicable
law.
``(e) Regulations.--The Secretary shall prescribe such regulations
or other guidance as may be necessary or appropriate to carry out the
purposes of this section.
``(f) Termination.--This section shall not apply to any taxable
year beginning after December 31, 2038.''.
(b) Credit Allowed as Part of General Business Credit.--Section
38(b) of such Code is amended by striking ``plus'' at the end of
paragraph (40), by striking the period at the end of paragraph (41) and
inserting ``, plus'', and by adding at the end the following new
paragraph:
``(42) the magnet value chain support credit determined
under section 45BB(a).''.
(c) Credit Transferable.--Section 6418(f)(1)(A) of such Code is
amended by adding at the end the following new clause:
``(xiii) The magnet value chain support
credit determined under section 45BB(a).''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code is amended by adding
after the item relating to section 45AA the following new item:
``Sec. 45BB. Magnet value chain support credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2026.
SEC. 4. ESTABLISHMENT OF DOMESTIC MAGNET INPUT USAGE CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (as amended by section 3(a)) is
amended by adding at the end the following new section:
``SEC. 45CC. DOMESTIC MAGNET INPUT USAGE CREDIT.
``(a) Allowance of Credit.--For purposes of section 38, the
domestic magnet input usage credit for any taxable year is an amount
equal to the applicable percentage of qualified domestic magnet
expenditures paid or incurred by the taxpayer during such taxable year
in connection with the manufacture of a covered product in the United
States.
``(b) Applicable Percentage.--For purposes of this section, the
applicable percentage with respect to any qualified domestic magnet
expenditures paid or incurred during any taxable year is an amount
equal to--
``(1) 15 percent, in the case of such expenditures being
paid or incurred in taxable years beginning before January 1,
2035,
``(2) 10 percent, in the case of such expenditures being
paid or incurred in taxable years beginning after December 31,
2034, and ending before January 1, 2037, and
``(3) 5 percent, in the case of such expenditures being
paid or incurred in taxable years beginning after December 31,
2036, and ending before January 1, 2039.
``(c) Qualified Domestic Magnet Expenditures.--
``(1) In general.--For purposes of this section, the term
`qualified domestic magnet expenditures' means any amounts paid
or incurred by the taxpayer to an unrelated person for
qualified permanent magnets (as defined in section
45BB(c)(1)(A)) which--
``(A) are manufactured (as defined in section
45BB(c)(1)(G)) in the United States,
``(B) are not sourced from a prohibited foreign
entity, and
``(C) are substantiated (by documentation
maintained by the taxpayer to the extent sufficient to
support the credit claimed under this section) with
respect to purchase price, supplier identity, quantity,
and country of production.
``(2) Anti-manipulation rule.--For purposes of paragraph
(1), the purchase price used to calculate qualified domestic
magnet expenditures shall not exceed the arm's-length price for
qualified permanent magnets, as determined under principles
consistent with section 482. The Secretary shall prescribe
regulations establishing safe harbors for arm's-length pricing
of domestic permanent magnets, including by reference to
published benchmark prices where available.
``(d) Election and Non-Duplication.--A taxpayer shall not claim a
credit under this section for any qualified domestic magnet expenditure
for which a deduction has otherwise been taken under this chapter. The
Secretary shall prescribe regulations to prevent any double recovery of
the same cost under both credits with respect to the same quantity of
magnet material.
``(e) Covered Products.--
``(1) In general.--For purposes of this section, and except
as provided in paragraph (2), the term `covered products'
means--
``(A) any core powertrain or generation component,
including motors, generators, and rotating electrical
machinery, used in any high-performance electronic
device incorporating permanent magnets essential to
cooling, actuation, data storage, robotics, or
telecommunications, or
``(B) any core powertrain or generation component,
including motors, generators, and rotating electrical
machinery, used in power conversion, including server-
grade computers, telecommunications equipment, robotics
systems, manned and unmanned aerial vehicles, manned
and unmanned surface vessels, manned and unmanned
underwater vehicles and submersibles, medical devices,
precision munitions, attritable munitions, guided
munitions, infrared tracking systems, gimbals and
optics, and other critical defense applications.
``(2) Excluded products.--For purposes of paragraph (1),
the term `covered products' does not include--
``(A) low-power consumer appliances or disposable
devices, including toasters, blenders, basic kitchen
appliances, handheld vacuums, hair dryers, consumer-
grade fans, toys, and novelty electronics, and
``(B) any other product that the Secretary
determines, by regulation, to be non-strategic for
purposes of this section, provided that such
determination shall not apply to any product that the
Secretary finds to be materially important to United
States industrial capacity, technological leadership,
supply-chain resilience, or national security.
``(f) Other Definitions.--Except as otherwise provided in this
section, terms used in this section which are also used in section 45BB
shall have the same meaning as when used in such section.
``(g) Prohibited Foreign Entity Restriction.--No credit shall be
allowed under this section if any permanent magnet, magnet metal input,
or precursor material input used in the covered product was
manufactured by a prohibited foreign entity.
``(h) Termination.--This section shall not apply to any taxable
year beginning after December 31, 2038.''.
(b) Credit Allowed as Part of General Business Credit.--Section
38(b) of such Code (as amended by section 3(b)) is amended by striking
``plus'' at the end of paragraph (41), by striking the period at the
end of paragraph (42) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(43) the domestic magnet input usage credit determined
under section 45CC(a).''.
(c) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of such Code (as amended by
section 3(d)) is amended by adding after the item relating to section
45BB the following new item:
``Sec. 45CC. Domestic magnet input usage credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2026.
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