The Inflation Reduction Act of 2022 (the “IRA”) created a marketplace for energy credits. Since then, the Internal Revenue Service (the “IRS”) has begun to promulgate regulations and other announcements concerning the implementation of and conditions for the market and credits. On May 15, 2024, the IRS released new guidance on the Domestic Content Bonus Credit for qualifying energy projects. This guidance recognizes the generally unworkable framework previously enunciated and provides a new, more taxpayer-friendly alternative for calculating the domestic cost percentage of energy projects to address the most significant challenge faced by developers in monetizing the Domestic Content Bonus Credit.


The Domestic Content Bonus Credit was created by the IRA and provides an additional 10% bonus credit on top of the Investment Tax Credit (“ITC”) for the costs of qualifying energy projects that meet certain domestic content requirements. This bonus credit can be monetized and sold by qualifying developers alongside the ITC. The “adjusted percentage” rule, which requires at least 40% of an energy project’s manufactured products (and 100% of structural components) to be domestically produced or manufactured in the United States, has emerged as the primary hurdle for taxpayers’ qualification for the bonus credit.

What’s New

Notice 2024-41 provides the new taxpayer-friendly alternative in the form of an updated “safe harbor” that expands upon the one originally published in Notice 2023-38. The new safe harbor must be elected and provides energy project developers with an option to use classifications of components and cost percentages published by the IRS and Department of Energy to determine if the “adjusted percentage” rule described in Notice 2023-38 is met. The applicable cost percentages are provided in Table 1 of Notice 2024-41 for common project components. Developers will add these applicable cost percentages for each of their project’s domestic components or manufactured products for purposes of satisfying the “adjusted percentage” rule. If the sum of the applicable cost percentages equals or exceeds the 40% threshold, the project will satisfy the requirement.

How Does this Help?

The new safe harbor is a welcome departure from the IRS’ prior guidance which effectively required taxpayers to gather proprietary cost information from their suppliers, who were often hesitant (at best) to provide this information to their own customers. The IRS acknowledged the concerns expressed about its prior guidance stating in the notice that “[t]he Treasury Department and the IRS are aware that obtaining a manufacturer’s direct costs of manufacturing may require the taxpayer to gather cost data from multiple suppliers and manufacturers, including foreign manufacturers, and may present challenges for substantiation and verification.”

The new safe harbor resolves the practical issue of obtaining a manufacturer’s direct costs and will likely become the preferred choice of developers pursuing the Domestic Content Bonus Credit. Unfortunately, however, the new safe harbor is not applicable to all types of energy projects. The IRS has only published the new safe harbor cost data for solar photovoltaic (i.e., solar panel), land-based wind (i.e., wind turbines), and battery electric storage system (i.e., battery) projects. Biogas projects are a notable exclusion — but the IRS has specifically requested comments on the other types of technologies that future updates to the safe harbor should address.

Gunster’s Tax and Energy lawyers are continuing to review this notice and other promulgations and will continue to provide additional insights on the Domestic Content Bonus Credit Requirements and other Inflation Reduction Act energy tax credits relevant to our clients as additional guidance is released.


This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.

About Gunster 
Gunster, Florida’s law firm for business, provides full-service legal counsel to leading organizations and individuals from its 13 offices statewide. Established in 1925, the firm has expanded, diversified and evolved, but always with a singular focus: Florida and its clients’ stake in it. A magnet for business-savvy attorneys who embrace collaboration for the greatest advantage of clients, Gunster’s growth has not been at the expense of personalized service but because of it. The firm serves clients from its offices in Boca Raton, Fort Lauderdale, Jacksonville, Miami, Naples, Orlando, Palm Beach, Stuart, Tallahassee, Tampa Bayshore, Tampa Downtown, Vero Beach, and its headquarters in West Palm Beach. With more than 280 attorneys and consultants, and over 290 committed support staff, Gunster is ranked among the National Law Journal’s list of the 500 largest law firms and has been recognized as one of the Top 100 Diverse Law Firms by Law360. More information about its practice areas, offices and insider’s view newsletters is available at


Find a Professional

by Name

by Practice/Office