Domestic Content: How to Earn a 40% Credit and Win the Deal

The +10% domestic content bonus can lift your project's tax credit from 30% to 40%, which can be the deciding factor against a non-compliant competitor.

Featuring Caleb Quaid, President, Clean Energy Help. Adapted from the SunSmart Engineering × Clean Energy Help × FlaSEIA panel, Commercial Solar in 2026. Watch the clip: "09 - Domestic Content, A 40 Percent Competitive Edge.mp4".

The base Clean Electricity Investment Tax Credit (the 48E ITC) is generally 30% of eligible project cost. There's a documented way to push it higher. Use domestically produced panels and equipment, and a project can stack a 10% domestic content bonus on top of the base, taking the credit from 30% to 40%. In 2026, with margins tight and competition fierce, those 10 points can be the difference between winning and losing a deal.

FEOC comes first

Before you chase the domestic content adder, you have to clear a more basic hurdle. Under the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, projects have to satisfy Foreign Entity of Concern (FEOC) restrictions. These rules limit how much of a project's content can come from prohibited foreign sources (statutorily China, Russia, North Korea, and Iran; for solar, China is the one that matters). FEOC compliance is measured through a Material Assistance Cost Ratio (MACR), and 2026 solar projects have to hit a 40% non-FEOC threshold.

Caleb is emphatic that these are two separate tests, and that passing one does not get you the other:

"You could technically meet domestic content requirements and not meet FEOC requirements under the way the laws are written, it's very ambiguous. So FEOC is first and foremost; you've got to meet that on every project going for the credit. Then the domestic content bonus credit is a 10% adder, you can go from 30% to 40% if your panels or equipment meet the thresholds."

So FEOC is the entry ticket for any project claiming the credit at all. Domestic content is the optional upgrade you pursue once you've cleared that gate. Don't assume buying "American" automatically solves FEOC, or the other way around. The statute treats them as distinct, and the guidance was still evolving as of the webinar.

A higher threshold, and the table that makes it manageable

The domestic content bonus is harder to earn than FEOC compliance because the required percentage is higher. As Caleb put it, "It is a higher threshold: it's 50% for projects that begin this year, 55% for projects that begin next year, for both battery and panels." A project beginning construction in 2026 generally needs to clear roughly a 50% domestic content level, and the bar rises for projects that begin in later years.

How do you measure that without tracing every bolt and wafer back to its origin? The same way you handle FEOC: a published IRS safe-harbor table. Caleb's advice is to lean on it.

"For the most part you rely on that same Notice 2025-08 safe-harbor table; look at the type of project you have, and make sure you're getting over that 50% threshold."

The table (referenced in the webinar as Notice 2025-08) assigns cost percentages to system components like cell/module, inverter, and racking, so you don't have to build a bottom-up cost trace by hand. You identify your project type, add up the assigned percentages for the domestically sourced components, and confirm you're over the threshold. It's the same tool the industry uses for FEOC, pointed at a different and higher target number.

One practical note. Suppliers who play in the domestic content space tend to be very good at the paperwork. As Caleb observed, "Often the folks playing in domestic content are also really good at documenting this stuff, so it's easier to get good-quality domestic content and FEOC documentation from those suppliers." That documentation quality matters, because both credits live or die on substantiation.

The 40% delta in a competitive bid

Here's where the technical requirement becomes a business advantage. Picture a competitive bid. You're proposing FEOC-compliant, domestic-content-qualifying equipment that earns the full 40% credit. Your competitor is proposing a cheaper Chinese product that won't even clear FEOC, which means their project may not qualify for the credit at all.

Caleb frames the swing plainly:

"If you're in a sales situation working against a competitor that doesn't have the answers, or is proposing a Chinese product that won't meet FEOC, you can get a 40% delta on the value to that taxpayer, a significant factor."

That's the whole pitch. A taxpayer who picks your fully qualified system captures a 40% credit. A taxpayer who picks the non-compliant alternative may capture nothing. On a commercial project, that gap can dwarf any upfront equipment savings the competitor is dangling. For contractors who do the homework on FEOC and domestic content, the credit stops being a back-office detail and becomes the strongest line in the proposal.

Don't forget the certification

Earning the bonus on paper isn't the finish line. The taxpayer still has to claim it correctly at tax time. As Caleb reminds, "Keep in mind the taxpayer will need to submit a domestic content certification statement when filing taxes." That certification is a required filing, not an optional attachment, and it's part of substantiating the higher credit. Build it into your project documentation handoff so your customer, or their tax preparer, isn't scrambling for it later.

The bottom line

• Clear FEOC first. Meeting domestic content does not automatically satisfy FEOC. They're separate tests, and FEOC is required on every project claiming the credit.
• Domestic content is a +10% adder, taking a typical commercial project from a 30% base 48E credit to 40%.
• The threshold is higher than FEOC, roughly 50% for projects beginning in 2026 (panels and batteries) and 55% for 2027.
• Use the safe-harbor table (Notice 2025-08) to confirm you're over the threshold without tracing every component by hand.
• Against a non-compliant or Chinese-product bid, the difference in credit value to the taxpayer can approach a 40% delta.
• The taxpayer has to file a domestic content certification statement to claim the bonus, so plan the documentation in advance.

How SunSmart Engineering can help

SunSmart Engineering provides full-service engineering for solar and storage projects nationwide, and we design plan sets with the credit strategy in mind. We can help you structure systems around qualifying equipment, line up the component documentation your customers will need for FEOC and domestic content, and make the 40% credit a clean, defensible part of your proposal. Visit sunsmartengineering.com or call 866-786-8655.

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Educational information only, not tax, legal, or engineering advice. Rules referenced (credits, FEOC, safe-harbor litigation, and the July 4, 2026 / December 31, 2027 dates) were current as of the June 2026 webinar and continue to change. Confirm current requirements with a qualified professional before acting.