Important Disclaimer: ESAS and its employees are not tax professionals. The information provided here is for general guidance only and should not be taken as tax, legal, or financial advice. Before making any tax-related decisions or claims, please consult a qualified tax advisor to ensure compliance and accuracy.
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The U.S. solar industry is growing fast, and with that comes new opportunities — and new rules. One important incentive that’s gaining attention is the Domestic Content Bonus under the Inflation Reduction Act (IRA). If you’re working on commercial solar projects, understanding this bonus can help you unlock extra tax savings — and support American manufacturing at the same time.
At Energy Solutions and Supplies LLC (ESAS), we want to break down what this means for you in simple terms without missing the key details.
What Exactly Is the Domestic Content Bonus?
Simply put, the Domestic Content Bonus is an extra 10% boost to your solar tax credits. It’s added on top of two main federal credits:
- The Investment Tax Credit (ITC), which lowers your federal income taxes based on the cost of your solar system.
- The Production Tax Credit (PTC), which reduces taxes based on how much clean electricity your system produces over time.
To qualify for the bonus, your solar project needs to use a certain amount of U.S.-made materials — like steel, iron, and other solar components. Here’s the minimum percentage of U.S.-produced content required:
- 40% domestic content in 2025
- 50% in 2026
- 55% in 2027 and beyond
This encourages projects to support American manufacturing and jobs.
Who Can Claim This Bonus?
This bonus is for commercial solar projects only. That means businesses or commercial owners who install and own the solar systems.
Homeowners with residential solar systems cannot claim this domestic content bonus.
What Does This Mean for Solar Installers?
If you’re an installer, here’s what you should keep in mind:
- The bonus goes to the system owner, not the installer. So it’s the business or commercial owner who files for the credit.
- The system owner will need detailed documentation showing how much of the solar equipment meets the domestic content requirements. This means installers need to help the owner collect and organize paperwork for tax filings.
- Products that meet these domestic content rules often cost more than imported alternatives. The extra tax credit helps, but may not fully cover the price difference.
- It’s essential to work closely with your customers so they understand the benefits and costs involved with choosing domestic content products.
What Does “Domestic Content” Really Mean?
The U.S. Department of Treasury says:
- A solar product is considered domestic if all manufacturing steps happen in the U.S., and
- All the main components come from U.S. sources.
Manufacturers will provide documentation proving which products meet these rules, along with details about the percentage of domestic content by cost.
What’s the Market Situation Now?
As of August 1, 2024, there are very few solar products available with the official documentation needed to claim the Domestic Content Bonus. However, this is expected to improve in the third and fourth quarters of 2024 as more manufacturers start providing the necessary paperwork.
While it might be confusing at first, the market and documentation process will become clearer and more streamlined over time.
How ESAS Can Help
At ESAS, we stay on top of these industry changes and can help installers and commercial project owners find the right products to meet domestic content requirements.
While certified products are limited today, we expect more availability soon — and we’re ready to guide you through sourcing, documentation, and maximizing your project’s tax benefits.
Key Takeaways
- The Domestic Content Bonus gives commercial solar projects an extra 10% tax credit if they use enough U.S.-made materials.
- Only commercial project owners can claim the credit, not residential homeowners.
- System owners must keep detailed documentation of domestic content for tax filing.
- Certified domestic content products are currently limited but expected to grow in availability.
- Installers should educate and support system owners on these requirements and costs.
Final Note
This is a valuable incentive but requires careful planning and cooperation between installers and owners. For tax decisions, always consult a qualified tax professional. For solar product sourcing and project support, ESAS is here to help you every step of the way.
Do you need help with Domestic Content Related questions?
Get in Touch
For more details on this partnership and how it can benefit your next solar project, contact:
Energy Solutions and Supplies LLC
Phone: +1 480-478-1616
Email: marketing@site_e004437c-3a10-4965-98d4-bf1bded3bef9
Website: www.site_e004437c-3a10-4965-98d4-bf1bded3bef9
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