US aluminum sector eyeing possible sunset of 'critical' 45X tax credits in US budget bill

The US budget bill making its way through Congress would end a key tax credit for primary aluminum production in the country, according to industry experts.

The advanced manufacturing credit, referred to as 45X, was established by the 2022 Inflation Reduction Act, former President Joe Biden's signature climate bill. The provision created eligible tax credits equal to 10% of the production costs of US critical mineral production, including aluminum smelting, and it was slated to last indefinitely. The House-passed budget bill, passed on May 22, proposed to end the 45X program by 2032 and received pushback from business leaders. The Senate's revised version of the bill extends the timeline for phasing out 45X, but industry believes the proposal still eliminates the tax credits too early to support US aluminum production. While the bill is still in negotiation, the two chambers are close on this issue.

"The Trump administration has a stated goal of bringing more primary aluminum smelting to the United States," said Matt Meenan, vice president of external affairs at the Aluminum Association, in a June 26 statement sent to Platts, part of S&P Global Energy.

"45X is a critical tool in the toolbox toward that goal. Building a single new smelter will take 5 - 6 years and $4 - $6 billion. Current draft bill language proposes a sunset of the 45X program in 2030, which is too soon to truly incentivize the investment needed to bring back smelting to the United States."

The US Senate's version of the bill phases out the 45X credit for producing critical minerals by allowing 75% of the credit in 2031, 50% in 2032, 25% in 2033, and eliminating it in 2034.

"We are pleased to see that the 45X tax provision appears to remain part of the bill and support final bill language without a sunset provision to encourage continued manufacturing investment," Meenan said.

The four active US aluminum smelters have substantially benefited from the law's tax credits. Two of the smelters are operated by Pittsburgh-based Alcoa, while the other two are operated by Chicago-based Century Aluminum.

"The Senate version has a longer timeline [than the House], but we would be phasing out that benefit," said Molly Beerman, Alcoa's CFO, at a June 17 conference in New York. "That's important for us now. We're getting $50 to 60 million a year in support under 45X. So, it's a big item for us."

Century reported $20.7 million in cost reductions from 45X in Q1 of 2025 alone, according to the company's 10-Q. Century declined to comment to Platts about the proposed changes to 45X.

Primary aluminum production has "enormous" electricity requirements, with a single new aluminum smelter requiring roughly the same amount of electricity per year as the city of Boston, according to the Aluminum Association.

Section 45X's coverage of input costs includes electricity expenses, making it highly beneficial for US aluminum production.

The US had 23 active aluminum smelters in 2000 compared to four active smelters in 2025, according to the US Geological Survey. Rising electricity costs have been the primary driver of a significant decline in domestic aluminum production.

"I think if the credit goes away the way it's scheduled to, it's reasonable to imagine that production could continue to decline," Annie Sartor, the aluminum campaign director for Industrious Labs, a nonprofit promoting sustainability in heavy industry, told Platts. "We may see further curtailments at smelters."

The Senate is expected to vote on the bill by June 28, after which it will be sent back to the House. Congressional leadership said they aim to pass the bill by July 4.