The domestic content bonus credit is available to taxpayers that certify their qualified facility, energy project or energy storage technology was built with certain percentages of steel, iron or manufactured products that were mined, produced or manufactured in the United States. The domestic content bonus credit provision increases the available production tax credit (for producing and selling electricity generated from certain renewable sources) by 10 percent if the domestic content requirement is satisfied. The domestic content bonus credit provision increases the available investment tax credit (for investing in certain property used to produce electricity from renewable sources) by increasing the energy percentage or applicable percentage by either 10-percentage or 2-percentage points if the domestic content requirement is satisfied: 10-percentage points: energy projects that meet the domestic content requirement receive a 10-percentage point increase to the applicable “energy percentage” if any one of the following requirements are met: the project has a maximum net output of less than 1 megawatt of electrical or thermal energy; construction of the project began before January 29, 2023; or the project satisfies the prevailing wage and apprenticeship requirements. 2-percentage points: energy projects that meet the domestic content requirement receive a 2-percentage point increase to the applicable “energy percentage” if none of the three requirements listed above are met. How to claim the credit A domestic content certification statement must be attached to Form 8835, Renewable Electricity Production Credit PDF or Form 3468, Investment Credit PDF and filed with the taxpayer’s annual return submitted to the IRS for the first taxable year in which the taxpayer reports a domestic content bonus credit amount. For the production tax credit claimed on Form 8835, a copy of the certification statement that was initially submitted must be attached for each taxable year in the credit period in which the credit is claimed. Elective pay election and statutory exceptions to credit phaseouts Applicable entities making an elective pay election with respect to a production tax credit or investment tax credit may be subject to a reduced credit amount (“phaseouts”) if the qualified facility or energy project does not satisfy the domestic content requirement or does not have maximum net output of less than 1 megawatt. Applicable entities may be excepted from the phaseouts if: the inclusion of steel, iron or manufactured products that are produced in the United States increases the overall costs of construction of qualified facilities by more than 25 percent, or relevant steel, iron or manufactured products are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality. Notice 2024-84 PDF extends the transition process for claiming a statutory exception to the elective payment phaseouts. Therefore, if an Applicable Entity provides an attestation and follows the record keeping requirements for an Applicable Credit Property which construction begins before the later of January 1, 2027, or the issuance of further guidance, the Treasury Department and the IRS will treat the attestation as establishing that a Domestic Content Exception is met. News releases IR-2024-147, Treasury, IRS release corrected version of Notice 2024-41 May 24, 2024 IR-2024-140, IRS provides guidance for the Domestic Content Bonus Credit May, 16, 2024 IR-2023-252, Treasury, IRS provide guidance for certain clean energy producers related to domestic content; request additional comments for upcoming regulations Dec. 28, 2023 IR-2023-102, IRS provides initial guidance for the domestic content bonus credit May 12, 2023 Guidance Notice 2024-84 PDF, Extension of Transition Process for Claiming the Statutory Exceptions to the Elective Payment Phaseouts Notice 2024-41, Domestic Content Bonus Credit Amounts under the Inflation Reduction Act of 2022: Expansion of Applicable Projects for Safe Harbor in Notice 2023-38 and New Elective Safe Harbor to Determine Cost Percentages for Adjusted Percentage Rule Notice 2024-9, Statutory Exceptions to Phaseout Reducing Elective Payment Amounts for Applicable Entities if Domestic Content Requirements are Not Satisfied Notice 2023-38, Domestic Content Bonus Credit Guidance under Sections 45, 45Y, 48, and 48E Notice 2022-51 Request for comments on prevailing wage, apprenticeship, domestic content, and energy communities requirements
