Domestic Content Bonus Credit (Sections 45Y, 48, and 48E)

Key metadata

Document number

irs-domestic-content-bonus-credit-page

Type

Guidance Page

Publication date

2026-01-23

Agencies

Treasury Department, Internal Revenue Service

CFR references

26 CFR part 1

Original source

IRS guidance page

IRS Domestic Content Bonus Credit: January 29, 2023 Threshold and Elective Pay Impact

The IRS has provided detailed guidance on the Domestic Content Bonus Credit, a critical incentive for clean energy projects, including battery storage. This credit significantly enhances the Production Tax Credit (PTC) by 10% and the Investment Tax Credit (ITC) by either 10 or 2 percentage points for projects that meet specific domestic content requirements for steel, iron, and manufactured products. For battery storage and other energy projects, meeting these domestic content rules can boost the ITC by 10 percentage points if the project has a maximum net output of less than 1 megawatt, began construction before January 29, 2023, or satisfies prevailing wage and apprenticeship requirements. If none of these conditions are met, a 2-percentage point increase applies. To claim the credit, a domestic content certification statement must be attached to the relevant tax forms (Form 8835 for PTC, Form 3468 for ITC) and filed with the taxpayer’s annual return for the first taxable year the credit is claimed. For PTC, this statement must be re-attached annually. Crucially, entities utilizing the Elective Pay (Direct Pay) option for these credits face potential credit reductions (phaseouts) if domestic content requirements are not met, unless specific statutory exceptions apply. These exceptions include situations where domestic content increases overall construction costs by more than 25% or relevant products are not produced in the United States. This guidance is vital for project developers, manufacturers, and investors in battery storage, grid infrastructure, and advanced manufacturing, as it directly impacts project economics and incentivizes U.S.-based supply chains. The January 29, 2023 date is a key threshold for maximizing the ITC bonus.