In Brief
- Modifications in Notice 2025-08
- Clarifications and Reclassifications
- Preservation of Previous Modifications
The IRS has issued Notice 2025-08 on February 18th, 2025, which introduces significant updates to the elective safe harbor for the Domestic Content Bonus Credit. This notice modifies the previous guidance provided in Notice 2024-41 and Notice 2023-38.
Modifications in Notice 2025-08
Notice 2025-08 updates the tables in sections 4.04(1)-(3) of Notice 2024-41, providing new associated cost percentages for manufactured product components. These updates reflect improved default values that align more closely with the characteristics and costs of applicable project components in the marketplace, as analyzed by the Department of Energy.
Clarifications and Reclassifications
The new notice clarifies the rules and defined terms related to the Domestic Content Bonus Credit. It also reclassifies manufactured products and manufactured product components, ensuring that taxpayers have a clearer understanding of how to classify and calculate the domestic cost percentage for their projects.
Preservation of Previous Modifications
Notice 2025-08 preserves the modifications made in section 3 of Notice 2024-41 to Table 2 in Notice 2023-38. This ensures continuity and consistency in the application of the Domestic Content Bonus Credit, allowing taxpayers to rely on the established safe harbor tables for projects beginning construction up to 90 days after the release of further guidance.
These updates are part of the IRS’s ongoing efforts to provide clear and practical guidance for taxpayers seeking to claim the Domestic Content Bonus Credit for their qualified facilities, energy projects, or energy storage technologies.
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