# What This Bill Does: Tax Breaks for Mining Critical Minerals in America

This bill gives major tax incentives to companies that mine, recycle, or recover certain valuable minerals and metals from U.S. soil. The goal is to reduce America's dependence on other countries for materials we need for everything from smartphones and electric car batteries to military equipment and medical devices. Right now, the U.S. imports most of these materials from places like China, which the bill's supporters see as a national security and economic problem.

The bill creates several tax advantages for companies doing this work. First, it allows businesses to immediately write off 100 percent of the cost of equipment and buildings used for mining these specific minerals—things like lithium, cobalt, rare earth elements, and graphite. Normally, companies have to spread these costs over many years, but this bill lets them deduct the full amount right away, which reduces their taxes significantly. Second, it gives companies a 200 percent deduction when they buy domestically-mined critical minerals—meaning if they spend $100 on American-mined materials, they can deduct $200 from their taxes. Third, it increases the "depletion allowance," which is an existing tax break that lets mining companies deduct a percentage of their profits as the mineral deposits get used up.

Beyond tax breaks, the bill also creates a $50 million grant program run by the Department of Interior to help fund pilot projects for developing these minerals domestically. Individual grants can't exceed $10 million, and at least 30 percent of the money must go toward recycling and recovering minerals from old products and mining waste rather than new mining operations. The bill is essentially betting that if you make it financially attractive enough for companies to mine these materials here instead of importing them, it will build up American manufacturing capacity and reduce our reliance on foreign suppliers for materials critical to our economy and defense.

To amend the Internal Revenue Code of 1986 to permanently allow a tax deduction for the mining, reclaiming, or recycling of critical minerals and metals from the United States, and to support the development of domestic supply chains for rare earth elements and other critical materials essential to United States technology, manufacturing, energy, healthcare and advanced medical devices, broadband infrastructure, transportation, and national defense.

Gooden, Lance

This bill allows permanent expensing of property used in the mining, reclaiming, or recycling of certain critical minerals and metals within the United States and of nonresidential real property used in mining such minerals and metals. Expensing is the treatment of expenditures as operating costs deductible in full in the current taxable year. The bill allows a new tax deduction for 200% of the cost of purchasing or acquiring such critical minerals and metals extracted from deposits in the United States and a 22% rate of percentage depletion for such critical minerals and metals. The bill requires the Department of the Interior to establish a pilot project grant program for the development of critical minerals and metals in the United States. A grant awarded under such program may not exceed $10 million. In awarding grants, Interior must give priority to projects determined to be economically viable over the long term and must allot not less than 30% of grants funds to the secondary recovery of critical minerals and metals.