Domestic Content is a hot topic in the solar industry. The Inflation Reduction Act (IRA) of 2022, in addition to extending the 30% Investment Tax Credit (ITC) through 2032, introduced a variety of other mechanisms to incentivize the installation of solar energy systems.
One of these mechanisms was an additional 10% bonus tax credit to the 30% ITC for utilizing materials manufactured in the United States. Since being signed into law, the rule making bodies, led by the Departments of Energy and Treasury, have gone through a process of defining and codifying the mechanism to achieve compliance.
On January 16th, 2025, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued updated guidance to the Inflation Reduction Act’s domestic content bonus for Clean Electricity Production and Investment Tax Credits.
The guidance updates and builds upon the domestic content safe harbor table that Treasury and the IRS published in May of 2024 that provides clean energy developers the option to rely on default cost percentages provided by Department of Energy (in lieu of obtaining direct cost information from suppliers) to determine eligibility for the domestic content bonus.
The U.S. Treasury issued a press release to announce this update. Included in this release is Notice 2025-08, Domestic Content Bonus Credit Amounts under the Inflation Reduction Act of 2022: First Updated Elective Safe Harbor modifying Notice 2024-41.
The Safe Harbor Table includes substantive changes to the previous Safe Harbor table. These changes significantly impact manufacturers of modules, inverters and racking systems and changes the calculus developers will use to build their systems. This notice takes effect as of the date it was published, January 16th, 2025, and will remain usable guidance that date forward.
Should future updated guidance or rulings from Treasury be published, this guidance will be valid for 90 days from the issuance of that updated guidance. Similarly, the Safe Harbor Table provided in May of 2024 (Notice 2024-01) is still available for use for projects that have already commenced construction or will commence construction on or before April 16th, 2025.
A third option remains viable, as well. The “Direct Cost Method” as outlined in Notice 2023-38 is available for use and will remain so until further notice is provided by the Treasury.
What We Know:
- Projects must use a combination of modules, MLPE and racking with a minimum aggregate Domestic Content of 40%.*
- 40%* can be achieved with considered selection of modules, microinverters and IronRidge racking.
- IronRidge has domestic content capabilities to support commercial asset owners and financiers of third-party-owned residential systems (financed by leases or PPAs).
- Taxpayers must choose under which Treasury guidance they will operate to capture the bonus credit. Consultation with tax and legal counsel is encouraged.
What You Need to Know:
- Homeowners and Contractors are not eligible to capture the 10% domestic content adder.
- Commercial Taxpayers, for example financiers of third-party-owned residential systems (financed through leases or PPAs) can capture the adder and will require domestic content to qualify.
- Under recently release Notice 2025-08, IronRidge rail contributes 15 percentage points toward reaching the 40%* domestic content minimum. Modules and inverters provide a variety of avenues to supplement the rest of the needed percentage. IronRidge is working with both module and inverter manufacturers to offer you the best mix of components.
- The BX system is currently manufactured in the US and can contribute meaningfully to reaching the 40% Domestic Content minimum for C&I projects. Projects using our BX solution can qualify for the ITC Domestic Content bonus credit through the IRS guidance that was issued in May, 2023. Each project must qualify on its own merits; we encourage an informed and counseled taxpayer and advise that they speak to their own tax and legal counsel on this matter. Additionally, IronRidge works with Novogradac, a renewables focused, professional services consulting firm, to provide 3rd party support to those seeking to capture the Domestic Content Bonus Credit. Introductions can be made upon request.
Domestic Content Products
What’s Next?
Experts with SEIA, Enstall and other interested parties continue to sort through this evolving and often-confusing space.There’s still lots of misinformation, as well as disinformation, out there. Additionally, there’s still need for interpretation within the guidance, necessitating counsel with tax and legal professionals.
IronRidge sources material through a global, diversified supply chain. As part of our sourcing strategy, we have domestically sourced material for use by commercial taxpayers like commercial PV asset owners and third-party-owned least providers. A path to 40%* is not achievable solely on the back of the strongest racking system in America. You need coordination and access to additional domestically-sourced content to meet the domestic content threshold. IronRidge XR Rail, paired with select domestic module and inverter offerings, is the preferred choice to meet this target.
What is the Inflation Reduction Act (IRA)?
The Inflation Reduction Act (IRA) is legislation passed by the U.S. Congress and signed into law by President Joe Biden on August 16, 2022. This act has provisions aimed at addressing climate change. The IRA includes substantial funding to support renewable energy projects, such as wind, solar, and battery storage. This is intended to accelerate the transition to a cleaner energy grid.
What is the Investment Tax Credit (ITC)?
The (ITC) is a federal tax credit that incentivizes the installation of solar energy systems, and is set at 30% for residential and some commercial systems installed between 2022 and 2032. It decreases to 26% for systems installed in 2033 and 22% for systems installed in 2034. After 2034, the credit is set to expire unless renewed by Congress.
Are there additional Tax Incentives for solar in the IRA?
The IRA contains provision for additional tax incentives for projects located in areas affected by the closure of coal mines, coal-fired power plants, or that have significant employment related to the fossil fuel industry, that occur and service low-income communities, and/or that satisfy prevailing wage and apprenticeship requirements, may be eligible for additional credits. These credits are additive. For more information on the ITC please reference this informative article from the Solar Energy Industries Association: Solar Investment Tax Credit (ITC) | SEIA
Be sure to consult a tax professional. IronRidge’s statements, and the decisions IronRidge makes on this matter, are based on federal documentation and information available in the Federal Register.
