Phase-Out and Restrictions on Advanced Manufacturing Production Credit
Section 70514 · Sec. 70514 ·
What this chapter is about
This part winds down a making credit for critical minerals from 2031. It ends the credit for wind parts after 2027. It adds coal used in steel to the mineral list at a lower rate. It also shuts firms tied to certain foreign governments out.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70514 in the PDF
What the document says
“Subparagraph (A) shall only apply with respect to a secondary component for which not less than 65 percent of the total direct material costs which are paid or incurred”
The section rewrites paragraph (4) of section 45X(d) of the Internal Revenue Code of 1986 so that a person counts as having sold an eligible component to an unrelated person where the primary component is built into a secondary component made in the same facility and that secondary component is sold to an unrelated person, but only where at least 65 percent of the total direct material costs of the secondary component are attributable to primary components mined, produced or manufactured in the United States.
What the document actually says
“Subparagraph (A) shall only apply with respect to a secondary component for which not less than 65 percent of the total direct material costs which are paid or incurred”
That sentence, in plain words
The rule applies only where a test is met. At least 65 percent of the direct material cost must qualify.
What this is about
That cost must trace to parts made in the United States. Both parts must be made in the same plant. The finished part must go to an outside buyer.
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The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70514 in the PDF
What the document says
“in the case of any applicable critical mineral produced during calendar year 2031, 75 percent,”
The section rewrites subparagraph (C) of section 45X(b)(3) of the Internal Revenue Code of 1986 so that for an applicable critical mineral other than metallurgical coal produced after December 31, 2030 the amount is the ordinary amount multiplied by a phase out percentage of 75 percent for 2031, 50 percent for 2032, 25 percent for 2033 and zero after December 31, 2033.
What the document actually says
“in the case of any applicable critical mineral produced during calendar year 2031, 75 percent,”
That sentence, in plain words
A mineral made in 2031 gets 75 percent of the credit.
What this is about
In 2032 it drops to half. In 2033 it drops to a quarter. After 2033 nothing is left.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall not”Who acts: Secretary of the TreasuryHow: statuteSec. 70514 in the PDF
What the document says
“This section shall not apply to any wind energy component produced and sold after December 31, 2027.”
The section adds new subparagraphs (D) and (E) to section 45X(b)(3) of the Internal Revenue Code of 1986 so that the section does not apply to a wind energy component produced and sold after December 31, 2027, or to metallurgical coal produced after December 31, 2029.
What the document actually says
“This section shall not apply to any wind energy component produced and sold after December 31, 2027.”
That sentence, in plain words
The credit does not reach a wind part made and sold after December 31, 2027.
What this is about
A second rule ends it for coal used in steel. That end date is December 31, 2029. Both are fixed in the law.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall not”Who acts: Secretary of the TreasuryHow: statuteSec. 70514 in the PDF
What the document says
“the term `eligible component' shall not include any property which includes any material assistance from a prohibited foreign entity”
The section adds a new subparagraph (C) to section 45X(c)(1) of the Internal Revenue Code of 1986 so that from a taxable year beginning after enactment an eligible component does not include property involving material assistance from a prohibited foreign entity, with one date in that definition read as January 1, 2027 in place of January 1, 2030. It also adds a new paragraph (4) to section 45X(d) barring the credit where the taxpayer is a specified foreign entity or a foreign-influenced entity, or where the effective control test applies and relates to an eligible component.
What the document actually says
“the term `eligible component' shall not include any property which includes any material assistance from a prohibited foreign entity”
That sentence, in plain words
A part does not count as eligible if it drew help from a barred foreign body.
What this is about
The help must be of a kind the law calls material. A second bar covers the taxpayer itself. Both terms come from the tax code.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
“which is comprised of all other essential equipment needed for battery functionality, such as current collector assemblies and voltage sense harnesses, or any other essential energy collection equipment.”
The section adds a new subclause (III) to section 45X(c)(5)(B)(iii) of the Internal Revenue Code of 1986 bringing within the definition all other essential equipment needed for battery functionality, such as current collector assemblies and voltage sense harnesses, or any other essential energy collection equipment.
What the document actually says
“which is comprised of all other essential equipment needed for battery functionality, such as current collector assemblies and voltage sense harnesses, or any other essential energy collection equipment.”
That sentence, in plain words
The term now covers other gear a battery needs to work. Two examples are given. Other essential collection gear counts too.
What this is about
One example is a current collector assembly. The other is a voltage sense harness. The list is open, not closed.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
“Metallurgical coal which is suitable for use in the production of steel (within the meaning of the notice published by the Department of Energy entitled `Critical Material List; Addition of Metallurgical Coal Used for Steelmaking'”
The section adds a new subparagraph (R) to section 45X(c)(6) of the Internal Revenue Code of 1986 covering metallurgical coal suitable for making steel within the meaning of a Department of Energy notice at 90 Fed. Reg. 22711, whether the steelmaking happens inside or outside the United States, and renumbers the subparagraphs that follow. It also amends section 45X(b)(1)(M) so that the rate for metallurgical coal is 2.5 percent rather than 10 percent.
What the document actually says
“Metallurgical coal which is suitable for use in the production of steel (within the meaning of the notice published by the Department of Energy entitled `Critical Material List; Addition of Metallurgical Coal Used for Steelmaking'”
That sentence, in plain words
Coal fit for making steel is added to the list. An energy agency notice says what that means.
What this is about
The steel may be made here or abroad. The rate for this coal is 2.5 percent. Other minerals on the list draw 10 percent.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall apply”Who acts: Secretary of the TreasuryHow: statuteSec. 70514 in the PDF
What the document says
“Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.”
The section applies its amendments to taxable years beginning after enactment, except that the change to the integrated component rule applies to components sold during taxable years beginning after December 31, 2026.
What the document actually says
“Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.”
That sentence, in plain words
The changes start with tax years that begin after this law passed. One part is treated apart.
What this is about
That part is the rule on built-in parts. It starts with tax years after 2026. Both dates are fixed in the law.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
Each distinct thing the section does: rewrite the integrated component rule with its 65 percent domestic test, phase the credit out for critical minerals other than metallurgical coal, end it for wind energy components and for metallurgical coal, bar the credit for components with material assistance from a prohibited foreign entity and for such an entity itself, widen the definition of a battery module, add metallurgical coal to the critical mineral list at a 2.5 percent rate, and fix the effective dates.
The redesignations of subparagraphs in the critical mineral list and the punctuation edits that go with the new battery module subclause.
The section works by amending section 45X of the Internal Revenue Code of 1986 and points to section 7701(a) of that Code and to a Department of Energy notice, none of which is indexed here.
