On May 12, 2023, the U.S. Department of the Treasury and Internal Revenue Service (IRS) released guidance that provides detailed information about the domestic content bonus under the Inflation Reduction Act for clean energy projects and facilities that meet American manufacturing and sourcing requirements. Under the Production Tax Credit (PTC), facilities that meet domestic content requirements receive a 10 percent bonus. Under the Investment Tax Credit (ITC), projects that meet the domestic content requirement receive up to a 10-percentage point bonus.
The domestic content bonus applies to facilities built using the required amounts of domestically produced steel, iron, and manufactured products. To receive the bonus, all steel and iron manufacturing processes must take place in the United States. The Steel or Iron Requirement applies to components that are structural in function. A statutorily required minimum percentage of the costs of the manufactured products and components of manufactured products that comprise a facility must come from materials, products and components that were mined, produced, or manufactured in the United States.