IRS Guidance Details Domestic Content Bonus Under Inflation Reduction Act of 2022
The Internal Revenue Service (IRS) today released Notice 2023-38, which details information on the domestic content bonus under the Inflation Reduction Act (IRA) of 2022 for clean energy projects and facilities that meeting American manufacturing and sourcing requirements. The bonus applies to domestically built facilities built using steel, iron and manufactured products. All steel and iron manufacturing processes must take place in the United States to receive the bonus. Developers can receive up to a 10% bonus on the production tax credit (PTC) and an additional 10 percentage points on top of the investment tax credit (ITC).
The IRS is providing a safe harbor to assist taxpayers in determining the applicable standards for steel, iron and manufactured products.
The standards will be a topic of discussion next week at the Novogradac 2023 Spring Renewable Energy and Environmental Tax Credits Conference May 18-19 in San Diego.
Updated 5/15/23: Removes language about which facilities and clean energy projects qualify.