Critical Minerals Investment Tax Modernization Act of 2025

The Critical Minerals Investment Tax Modernization Act of 2025 would amend the Internal Revenue Code to increase the percentage depletion deduction (the part of tax law that allows a taxpayer to deduct a portion of the income from extraction of natural resources) to 22% for rare earths and scandium. Specifically, it adds rare earths (defined as the 15 lanthanide elements) and scandium to the list of minerals eligible for the 22% depletion rate, placing them before tantalum in the code’s enumeration. The new 22% rate would apply to taxable years beginning after the act’s enactment. The bill is sponsored by Mr. Smith of Nebraska (along with Mr. Panetta and Mr. Reschenthaler) and was introduced in the House and referred to the Ways and Means Committee. In short, the bill creates a targeted tax incentive to encourage investment in domestic rare earth and scandium mining by making these minerals more tax-advantaged to producers and investors.