Today, the U.S. Department of the Treasury and the Internal Revenue Service released new guidance on the Inflation Reduction Act’s domestic content bonus for Clean Electricity Production and Investment Tax Credits. This initiative is designed to boost American manufacturing of components used in clean energy projects such as solar and wind farms.
The Biden-Harris Administration has seen over $196 billion invested in clean power and $92 billion in clean energy manufacturing. “Ensuring American workers are building the growing clean energy economy is a top priority for the Biden-Harris Administration,” stated U.S. Deputy Secretary of the Treasury Wally Adeyemo. “Today’s guidance will help fuel America’s clean energy investment and manufacturing boom and create good-paying jobs.”
The domestic content bonus is part of several tax incentives supporting U.S. manufacturing, alongside other credits like the advanced manufacturing production credit (45X), qualifying advanced energy project credit (48C), and CHIPS advanced manufacturing investment credit (48D).
The updated guidance builds upon a previously established domestic content safe harbor published in May 2024, which allows developers to use default cost percentages from the Department of Energy instead of direct supplier costs to determine eligibility for bonuses. The latest updates reflect improved values that align more closely with current market characteristics.
New optional alternative cost percentages have been introduced for solar projects using domestically-produced wafers, enhancing incentives for onshoring wafer manufacturing. Updates also include clarifications for various project types such as solar, land-based wind, battery electric storage systems, retrofits, elective pay projects, carport, and floating solar projects.
Taxpayers can use these updated safe harbor tables for projects starting construction within 90 days after further guidance is issued.
