Magnets Value Chain Support Act of 2026

Incentivizing Domestic Production: The bill provides tax credits for the production of rare earth oxides, magnet metals, and various types of permanent magnets to encourage reshoring the supply chain (Section 3(a)).

Support for High-Performance Magnets: Taxpayers can receive higher credit amounts, up to $40 per kilogram, for producing advanced high-performance permanent magnets that meet specific domestic input thresholds (Section 3(a)(b)(1)(B)).

Encouraging Use of Domestic Materials: Manufacturers of "covered products," such as motors, generators, and defense applications, can claim a credit of up to 15 percent for using qualified domestic magnets (Section s 4(a) and 4(b)).

Strengthening National Security: The bill aims to strengthen the domestic industrial base and reduce reliance on foreign sources for essential items used in national defense systems (Section 2).

Production Capacity Burdens: To be an eligible taxpayer for the permanent magnet production credit, companies may need to maintain at least 3 percent of their annual domestic production capacity as available and unencumbered (Section 3(a)(b)(1)(C)).

Restrictions on Material Sourcing: Taxpayers are prohibited from claiming credits if the materials are sourced from or manufactured by a prohibited foreign entity (Section 3(d)(3) and Section 4(g)).

Exclusion of Certain Products: The domestic magnet input usage credit does not apply to low-power consumer appliances or disposable devices, such as toasters, blenders, or toys (Section 4(e)(1)(A)).

Credit Limitations and Restrictions: The bill includes rules to prevent the "double benefit" of claiming credits under this section and section 45X simultaneously (Section 3(d)(2)).