Buy American
The Investment Tax Credit and Domestic Content Bonus Adder for Renewable Energy Projects
The Inflation Reduction Act
The Inflation Reduction Act (IRA) was introduced into U.S. legislation in 2022 to address supply chain shortages, bolster American economic growth and champion domestic renewable energy projects. A cornerstone of the IRA focuses on stimulating domestic manufacturing and job creation, while simultaneously reducing America’s reliance on foreign products and supply chains. Under the IRA, homeowners and business owners alike can claim a 30% Investment Tax Credit (ITC) for eligible expenses related to solar installations.
Since 2025, the ITC has undergone several changes. Most notably, the residential solar tax credit expired at the end of 2025. Homeowners may continue to benefit from the ITC through third-party ownership (TPO) structures. In a TPO arrangement, a third-party owner claims the ITC, while the homeowner receives solar energy through a lease, power purchase agreement or similar financing structure designed to provide mutual economic benefits.
Domestic Content Bonus Credit and FEOC
The ITC also includes the Domestic Content Bonus Credit, which provides additional tax credits to renewable energy projects that meet domestic manufacturing requirements by using American-made products and product components in their construction.
The Domestic Content Bonus Credit offers businesses an additional 10% tax credit if at least 40% of the project’s cost comes from domestic sources. The eligibility requirements for the Domestic Content Bonus Credit will increase annually, so be sure to consult your tax advisor for the most current rules and regulations.
Foreign Entity of Concern (FEOC) rules impose additional eligibility requirements for certain clean energy tax credits by restricting participation by foreign entities of concern or prohibited foreign entities. These rules are intended to ensure that qualifying projects and supply chains do not rely on prohibited foreign ownership, control, licensing or material assistance. Project owners should review current Treasury and IRS guidance to confirm compliance before claiming the ITC or related credits.
New Elective Safe Harbor
The New Elective Safe Harbor guidelines for the ITC provide clear categorization for determining whether a project meets domestic content requirements to qualify for the Domestic Content Bonus Credit. Please note that project size limitations apply. For the most current guidance, please visit the IRS website and consult your tax advisor.
Businesses can rely on American manufacturers to verify the origins of its source materials, products and product components.
How Does S-5! Figure Into the Equation?
Made in the USA, S-5! manufactures its products in its own facility in Iowa Park, Texas. S-5! products are designed to comply with FEOC rules and may support eligibility for the Domestic Content Bonus Tax Credit. Our domestically manufactured products and components can help meet the federal domestic content requirements needed to qualify for the 10% bonus adder.
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