The domestic content bonus credit did not die with the residential solar credit. It is still in the code, it is still worth real money, and residential-scale systems qualify for its largest version automatically. Whether any of that reaches a homeowner depends entirely on one structural question about how the system is owned.
What the Bonus Is Worth
The domestic content bonus increases the value of the investment and production tax credits when enough of a project’s steel, iron, and manufactured products are made in the United States. The increase comes in two sizes, and the difference between them is large.
A project gets the full 10 percentage points if it meets any one of three conditions:
- Maximum net output is less than 1 megawatt, or
- Construction began before January 29, 2023, or
- The project satisfies prevailing wage and apprenticeship requirements.
If none of the three apply, the bonus drops to 2 percentage points.
That first condition is the one that matters here. Every residential rooftop array in the country is under 1 MW — by two or three orders of magnitude. A residential-scale project therefore clears the threshold for the full 10-point bonus without any prevailing wage or apprenticeship compliance at all. The wage and apprenticeship machinery that dominates commercial and utility-scale project finance is simply not a factor at residential scale.
So the bonus is available, at its maximum value, on systems the size of yours.
The Credit It Attaches To Is Not Yours
The bonus is not a standalone credit. It is an adder that increases an underlying credit — specifically the production tax credit under §45/§45Y or the investment tax credit under §48/§48E. All of those are business credits.
Section 25D, the residential clean energy credit, never had a domestic content bonus. It was a flat 30% regardless of where the equipment was manufactured. And 25D no longer exists for property installed after December 31, 2025.
The arithmetic is therefore short. A homeowner buying a system with cash or a loan in 2026 gets nothing from the domestic content bonus, because they have no underlying federal credit for it to increase. There is no version of a 2026 cash purchase where domestic manufacturing content changes the federal tax outcome. If a quote implies otherwise — a line item suggesting American-made panels earn you a larger credit — that is a sales claim without a statute behind it.
The single channel through which the bonus reaches a residential customer is third-party ownership. Under a lease, PPA, or prepaid agreement, the finance company owns the equipment and claims §48E. That claimant can add 10 points to its credit by hitting the domestic content threshold, taking an effective rate from 30% to 40% of eligible basis. Whether any of that shows up in your monthly payment is a commercial decision by the provider, not a legal requirement.
The Threshold Went Up in 2026
The share of cost that must be domestic is not fixed. It escalates by the year construction begins:
| Construction begins | Adjusted percentage |
|---|---|
| Before 2025 | 40% |
| 2025 | 45% |
| 2026 | 50% |
| After 2026 | 55% |
(Offshore wind runs on its own schedule.)
A project starting construction in 2026 has to hit 50%, up from 45% a year earlier. That is a real tightening at a moment when supply chains are also absorbing the foreign-entity restrictions, and it is the reason some providers that advertised domestic content in 2025 have gone quiet about it in 2026.
For calculating whether a project clears the bar, Notice 2025-08 — issued January 16, 2025, updating the elective safe harbor originally set out in Notice 2024-41 — provides default classifications and cost percentages that taxpayers may elect to use instead of collecting actual manufacturer cost data. Its solar tables were revised to align more closely with real component costs, and it added optional alternative cost percentages for projects using domestic solar cells manufactured with domestic wafers, which rewards deeper domestic supply chains rather than final assembly alone.
Domestic Content and FEOC Are Two Different Tests
These get conflated constantly, including by people selling systems, and the confusion is worth clearing up because a module can pass one and fail the other.
Domestic content asks: what share of this project’s cost is made in the United States? Clearing it earns a bonus — extra credit on top of the base.
The material assistance cost ratio, the FEOC test introduced by OBBBA, asks: what share of this project’s cost is not attributable to a prohibited foreign entity? Failing it does not reduce the credit — it disqualifies the project from the credit entirely.
One is upside; the other is a gate. A module manufactured in a third country with no prohibited-entity ownership can satisfy FEOC while contributing nothing to domestic content. A module assembled domestically by an entity with prohibited ownership ties can do the reverse.
The two regimes do share plumbing. Notice 2026-15, the February 2026 FEOC guidance, permits taxpayers to use the adjusted cost percentages from the Notice 2025-08 domestic content tables when computing the material assistance cost ratio. Same tables, different questions, different consequences. Our FEOC compliance walkthrough covers the gate side in detail.
The Timing Constraint Behind All of It
One more fact bounds this whole discussion. OBBBA set a beginning-of-construction safe harbor for §48E with a deadline of July 4, 2026. Projects that began construction by that date keep the standard continuity window and have years to reach service. Projects that did not must be placed in service by December 31, 2027.
That date has passed. Any residential TPO arrangement being quoted now is operating under the 2027 placed-in-service rule, and the domestic content bonus is only worth discussing if the underlying credit survives that timing test first.
What to Actually Do With This
If you are buying outright: ignore domestic content entirely as a tax matter. Buy on module quality, warranty, inverter reliability, and installer durability. American-made equipment may still be worth choosing for supply-chain, warranty-service, or personal reasons — just not for a federal credit that no longer applies to you.
If you are evaluating a lease or PPA: ask the provider directly whether their tax model assumes the domestic content bonus, whether they are relying on the Notice 2025-08 safe harbor tables or actual cost data, and whether the 10 points are reflected in your quoted rate. A provider claiming the bonus should be able to say so plainly. If the answer is that the bonus is assumed but the pricing is unchanged either way, you have learned that the benefit stops at their balance sheet — which is a legitimate business model, and also a useful thing to know before signing twenty years of payments.
