Critical Minerals Investment Tax Modernization Act of 2026

The Critical Minerals Investment Tax Modernization Act would boost U.S. mining of critical minerals by reducing the tax burden on production of rare earths. Under current law, producers of critical minerals deduct a portion of their gross income from a mineral property through percentage depletion, which is meant to encourage continued and consistent production of critical minerals. The bill would increase the depletion percentage rate for mining of rare earths and scandium from 14% to 22%, matching the highest depletion rate for other minerals, mineral rocks, ores and metal elements in the tax code.

In capital-intensive mining projects, after-tax returns often determine whether investment proceeds at all. By improving those returns, the bill is designed to accelerate domestic production and reduce reliance on foreign supply chains. The bill would update outdated IRS rules to prioritize all U.S.-designated critical minerals, which supporters say would help boost domestic production, reduce reliance on foreign adversaries, and strengthen supply chains. If enacted, the bill would allow mining companies to deduct a larger portion of their income from rare earth and scandium operations, potentially making these domestic mining projects more financially attractive to investors.