Navigating the New Domestic Content Guidance on Enhanced Tax Credits for Solar Projects
The Treasury Department recently released Notice 2025-08, updating the domestic content requirements for enhanced tax credits in solar projects.* Here's what developers need to know about the changes and how SolarEdge solutions can help you meet these requirements.
Notice 2025-08 Timeline and Transition Period
The new guidance (Notice 2025-08) became effective on January 16th, with a 90-day transition period running until April 16th. During this transition period, developers can choose between:
- Notice 2024-41
- The new Notice 2025-08
- The direct cost methodology (Notice 2023-38)
After April 16th, projects starting construction can use either Notice 2025-08 or the direct cost methodology. Importantly, developers can secure Notice 2024-41 percentages through a Safe Harbor deal during the transition period (consult your tax advisor for specific requirements).
Understanding SolarEdge Changes with Notice 2025-08
Under the new Notice 2025-08, the percentage allocations for domestic content have been adjusted.* For rooftop MLPE category products:
- SolarEdge's DC-optimized inverter system now contributes 24.8 percentage points
- When combined with full domestic racking, projects can achieve 44.4 percentage points
- In comparison, string inverters with full racking reach only 30.8 percentage points
Path to Reaching 40% Domestic Content
Path to Reaching 40% Domestic Content
Meeting ITC Domestic Content Requirements
Currently, the Investment Tax Credit (ITC) requires 40% domestic content to qualify for the enhanced credit. While some tax advisors recommend targeting 45% as risk mitigation against potential future changes, the current law maintains the 40% requirement through the credit's lifetime.*
Solutions for Reaching Higher Thresholds
For projects aiming to exceed 44.4%, there are two possible pathways:
1. Module Components: Incorporating domestic content through:
-
Junction boxes (0.8 percentage points)
-
Other components like encapsulants or backsheets
2. Mixed Source Items (MSI): Blending domestic and non-domestic modules within the PV module category to achieve additional percentage points.
Path to Reaching 45% Domestic Content
Path to Reaching 45% Domestic Content
Next Steps for Developers
To stay ahead of these changes:
- Consult with your tax advisors to understand implications for your specific projects
- View the video for a detailed walkthrough
- Contact your SolarEdge sales representative for updated certification letters
SolarEdge remains committed to helping our customers navigate these requirements and achieve their domestic content goals. Our solutions, particularly when paired with domestic racking, continue to provide a clear path to meeting enhanced credit requirements.
*Manufactured by SolarEdge with the intent to be eligible for inclusion under the elective safe harbor in calculating the Domestic Cost Percentage under the “Rooftop (MLPE)” category (under IRS Notice 2025-08). Eligibility is subject to the installation of qualified USA-Manufactured inverters and power optimizers in the same project. SolarEdge does not provide tax and/or legal advice. The forward-looking statements herein are accurate as of the date herein and are subject to change. You should consult with your own legal and/or tax advisor(s) regarding the eligibility of your project for the ITC or PTC, including the 10% Domestic Content bonus, to determine how the applicable rules apply to your project. For more information, please contact your local SolarEdge sales representative.
