Critical mineral tax credits: What tax buyers need to know (updated 2026)

Critical minerals tax credits are transferable §45X advanced manufacturing production tax credit (PTC) generated by companies that extract or process eligible critical minerals in the United States. For tax credit buyers, these credits can offer attractive pricing and large transaction volumes compared to some other transferable tax credit opportunities.

Congress made critical minerals eligible for the §45X PTC to encourage domestic production of critical minerals that are essential to energy technologies, advanced manufacturing, and national security. Because the United States remains heavily dependent on foreign supply chains for many critical minerals, the credit is designed to incentivize domestic extraction, processing, and refining capacity.

This guide covers how §45X  critical mineral tax credits are generated, how they are priced, the risks buyers should evaluate, and current market trends.

Key takeaways:

• The §45X eligible-mineral list is established in statute and covers 60 minerals, including lithium, cobalt, graphite, nickel, manganese, aluminum, and rare earths, among others. Metallurgical coal also qualifies following passage of the One Big Beautiful Bill (OBBB).
• The credit equals 10% of production cost for most minerals (2.5% for metallurgical coal), with no per-unit cap. The October 2024 final regulations allow inclusion of certain material and extraction costs, plus §263A indirect costs.
• Minerals must meet specific purity thresholds — typically 99% by mass, with aluminum required at 99.9%.
• Under the OBBB, the critical minerals tax credit phases down — 75% of value in 2031, 50% in 2032, 25% in 2033 — and is eliminated for credits produced in 2034 and later.
• Section 45X is a production tax credit with no recapture risk, which contributes to its strong pricing in the transferable tax credit market.

What are critical minerals?

The Energy Act of 2020 directed the US Geological Service (USGS) to produce and update a list of critical minerals based on three criteria:

• The mineral must be essential to US economic or national security.
• The mineral’s supply chain must be vulnerable to disruption.
• The mineral must be essential to the production of energy, technology, or systems used for national defense.

The USGS updated its list of critical minerals in 2022 and released a revised version in November 2025. This 2025 list covers 60 minerals, including many that are foundational in clean energy components.

Select critical minerals and their use in energy

Critical minerals play a central role in clean energy manufacturing and in the production of many high-tech goods. In a report published in January 2025, the USGS noted that the US is 100% reliant on imports for 12 critical minerals, especially from China. For rare earths, a subset of critical minerals that are specifically valuable for their conductive and magnetic properties, China controls 60% of global production and 90% of refining and processing capacity.

Reshoring supply chains and increasing domestic production of critical minerals is a core focus of the §45X tax credit. The §45X advanced manufacturing PTC incentivizes domestic extraction, processing, and manufacturing of critical minerals in the US. The §45X credits are transferable, which allows smaller companies spearheading new mineral extraction and refining technologies to unlock needed capital for innovation and expansion by selling the credits to third parties.

Listen: The US–China rivalry runs through energy and minerals — Graham Allison on the Critical Capital podcast

To qualify for §45X tax credits, eligible materials must meet Internal Revenue Service (IRS)-defined purity thresholds. Most qualifying minerals must reach at least 99% purity by mass. Some minerals require higher thresholds. For example, aluminum must be at least 99.9% pure by mass.

Taxpayers claiming the credit must maintain certificates of analysis documenting mineral purity.

How is the value of the §45X tax credit for critical minerals calculated?

The §45X critical minerals PTC is calculated as 10.0% (or 2.5% in the case of metallurgical coal) of the production cost of a domestically produced or processed critical mineral sold to a third party in the US. In addition to the direct costs of production, there are several important rules regarding how companies can assess the value of their tax credits.

Acquisition costs

In draft guidance published in November 2023, the IRS prohibited including mineral acquisition costs from §45X critical minerals tax credit calculations. The final IRS guidance released in October 2024 allows certain material and extraction costs to be included for eligible critical minerals and electrode active materials.

This change expanded the range of production costs eligible for §45X credits.

Indirect costs

The final IRS guidance permits companies to include indirect costs according to §263A in the calculation of the §45X credit value. Indirect business costs are company expenses not directly related to the extraction or processing of critical minerals. They include employee benefits and payroll costs, depreciation or amortization of equipment, and taxes and insurance related to production activities.

Direct pay eligibility 

Section 45X credits may qualify for elective pay, also known as direct pay, which allows eligible taxpayers to receive cash payments directly from the IRS instead of transferring credits to a third-party buyer.

However, many manufacturers and mining companies choose to sell transferable tax credits because transfer transactions can generate cash proceeds faster than IRS refund processing timelines.

When does the §45X critical mineral tax credit expire?

The Inflation Reduction Act initially provided a permanent §45X tax credit for eligible critical minerals. However, the OBBB introduced a phaseout schedule for critical minerals beginning in 2031. For eligible critical minerals (excluding metallurgical coal), the credit is reduced to:

• 75% of the full credit value for minerals produced in 2031.
• 50% of the full credit value for minerals produced in 2032.
• 25% of the full credit value for minerals produced in 2033.

The credit is scheduled to be eliminated for critical minerals produced in 2034 and later.

The OBBB also added metallurgical coal as an eligible critical mineral, but only through 2029 and at a reduced credit rate.

How are §45X credits transacting in the market?

According to Crux’s State of Clean Energy Finance: 2025 Market Intelligence Report, advanced manufacturing PTCs, including critical minerals tax credits, sustained robust demand in 2025. Approximately $9.0 billion in §45X credits transacted over the full year, accounting for 25.5% of total transferable tax credit market volume. Advanced manufacturing was the second-largest tax credit category by market share.

This proportion decreased slightly from 30.9% in 2024, likely due to heightened uncertainty around new prohibited foreign entity requirements for §45X credits passed in the OBBB, which caused some buyers and developers to pause and recalibrate. Crux estimates that an additional $3–5 billion of eligible §45X credits did not transact in 2025 and may shift into the 2026 market.

Market composition by technology, spot transactions, 2024–2025

How are critical minerals tax credits pricing?

Per Crux’s 1Q2026 Market Update, pricing for §45X credits has remained strong in 2026, supported by sustained federal focus on domestic manufacturing and critical minerals — including a $500 million US Department of Energy funding program for critical materials processing. In 1Q2026, manufacturing PTC pricing held steady from Q4 2025 and was among the categories pushed modestly upward by buyer demand.

Advanced manufacturing PTC pricing by deal size tranche, year over year

Insurance and parent company indemnification

Insurance and parent guarantees remain important credit-enhancement tools in §45X transferable tax credit transactions.

According to Crux’s market data, about half of advanced manufacturing deals included either insurance or a parent guarantee. That figure has declined since 2023 as the credit has become more established. Average coverage level was 120% (ranging from 80% to 125%).

The benefits of critical minerals credits to buyers

 Section 45X credits offer several benefits for tax credit buyers and investors:

• No recapture risk: Unlike investment tax credits (ITCs),  §45X PTCs are not subject to recapture, or the risk that some part of the tax credit may be reclaimed.
• Large volume of tax credits: §45X credits  transactions often  involve  large volumes of transferable tax credits, creating opportunities for buyers seeking sizable tax offsets.
• Strong market demand: Crux expects demand for all §45X credits, including critical minerals credits, to remain high in 2026. Tax credit buyers who act earlier in the year could take advantage of less competition and possible pricing discounts.

Further reading

For a broader overview of advanced manufacturing credits, see our essential guide to advanced manufacturing tax credits.

To learn more about the market for advanced manufacturing tax credits in 2025 and understand Crux’s predictions for 2026, download our 2025 market intelligence report.

To understand how prohibited foreign entity guidance impacts §45X tax credits, see our breakdown of initial Treasury guidance on prohibited foreign entity rules.