Domestic Content Bonus Credit Solutions
Unlock significant tax savings and enhance project value with domestic content bonus credits.
Domestic Content Bonus Credit Solutions
The Inflation Reduction Act (IRA) introduces significant tax incentives for businesses investing in clean energy projects. A key component of these incentives is the domestic content bonus credit, which is a 10% investment tax credit for utilizing domestically manufactured components within a project. To qualify for enhanced tax credits, a certain percentage of these components must be produced in the U.S. This requirement aims to stimulate domestic manufacturing, create jobs and strengthen U.S. supply chains.
Baker Tilly helps businesses understand these intricate requirements and design projects to ensure they maximize available tax credits while remaining compliant.
What is the IRA domestic content requirement?
IRA 2022 guidance on the amount of project material which must be sourced and/or manufactured domestically has been set. The percentage of material that must be domestic is dependent on the year the project began construction (see below). However, when it comes to steel or iron components that are construction materials and structural in nature, 100% of the steel and iron must be U.S. sourced if the project began construction in 2023 and onward.
40%
2023 and 2024
45%
2025
50%
2026
55%
2027 and onward
Domestic content bonus credit compliance solution
Baker Tilly's team of manufacturing, tax and energy experts provides comprehensive solutions to help businesses navigate the IRA's domestic content requirements.
Compliance program objectives include:
- Assess domestic content compliance achievability
- Educate project and supply chain partners about roles and responsibilities
- Document domestic content compliance
Our services to ensure compliance and credit optimization include:
Risk analysis
After understanding the product status, our specialists will assess how the tax credit will be utilized, dig into the risk of recapture and review supply chain constraints.
Compliance assessments
Rely on our specialists to assess your project(s) to determine compliance with domestic content guidance and other IRA-related compliance needs.
Safe harbor and waiver guidance
Need to determine if your project qualifies for safe harbor? Or is your organization navigating the waiver process? We’re with you every step of the way.
Tax credit optimization
The domestic content bonus credit is just one piece of the puzzle. We’ll work with you to identify and maximize available tax credits and eligible bonus credits.
Supply chain assessment
Our industry specialists will evaluate a project’s supply chain to identify opportunities for ensuring domestic content bonus credit eligibility.
Documentation and reporting
Strong documentation will be required to substantiate the credit. We’ll work with your organization to create the necessary reporting to ensure compliance.
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