For many solar teams, the 2026 domestic content question starts with procurement: if the inverter and racking are made in the United States, is that enough? Under the IRS table method, the answer is no. The broader electrical balance of system package is not listed as a separate component, and the percentages assigned to inverter and racking or tracker components do not reach the threshold by themselves.
For qualified investments under Section 48E, the domestic manufactured products threshold is 50% for projects that begin construction during calendar year 2026. That is an increase from 45% for projects beginning construction from June 16 through December 31, 2025. Qualified offshore wind facilities follow a separate schedule.
The percentage is only one part of the test. Applicable structural components must also satisfy the steel or iron requirement. The manufactured products calculation then compares eligible domestic cost with the total cost of the manufactured products included in the project.
What the table method includes
IRS Notice 2025-08 provides assigned cost percentages for common project configurations, including fixed tilt and tracker ground mounts and rooftop systems using string inverters or module-level power electronics. The tables assign percentages to listed components within the modules, inverters and racking or tracker assemblies. They do not provide a separate line item for the broader electrical balance of system package.
For the representative configurations in the notice, making all listed inverter and racking or tracker components domestic still does not produce a 50% domestic cost percentage. Module content has to make up the difference. In practice, that generally means procuring modules with qualifying domestic content, with U.S.-made solar cells and wafers carrying the largest assigned percentages.
The alternative requires manufacturer cost data
A project that cannot reach the threshold through the table method may instead use the actual direct cost calculation under Notice 2023-38. That calculation uses the manufacturer's direct material and direct labor costs, not the price paid by the installer or developer.
This creates a practical access problem. Most installers and developers do not have those cost records and may not have enough leverage to obtain them from every manufacturer involved. The route exists, but it is difficult to rely on unless manufacturers are prepared to provide defensible project-level support.
What needs to be in the file
A taxpayer claiming the bonus must attach a domestic content certification statement to Form 3468 for each applicable project. The statement identifies the taxpayer and facility, includes any applicable IRS registration number, confirms the required domestic production, identifies reliance on an elective safe harbor when used, and includes a declaration signed under penalties of perjury.
The certification is the filing step. The substantiation file supports it. In practice, that file should be assembled during procurement and construction, not reconstructed at tax-return time. It may include:
- The final bill of materials and equipment schedule;
- Supplier and manufacturer representations regarding production location;
- Invoices, purchase orders and product-specific supporting records;
- The steel, iron and manufactured product classifications used for the project;
- The assigned cost table and calculation workbook, when elected; and
- The placed-in-service record and signed certification statement.
A separate sourcing test also applies
The domestic content bonus and the prohibited foreign entity restrictions are separate tests. A project may have enough domestic content for the bonus and still need additional diligence under the sourcing restrictions added to Sections 45Y and 48E. Projects beginning construction after December 31, 2025 should treat both analyses as procurement requirements.
For owners and developers, the practical takeaway is to start the analysis before equipment is ordered. A sourcing strategy that looks domestic at a glance can still miss the threshold or leave the taxpayer without the records needed to support the claim.