One Big Beautiful Bill Act

The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, significantly changed the federal tax-credit requirements applicable to new solar projects, including requirements related to Domestic Content and Prohibited Foreign Entity (PFE) involvement. The law strengthens incentives for U.S.-manufactured equipment while imposing additional restrictions on projects that receive material assistance from PFEs. For solar projects seeking the federal Clean Electricity Investment Tax Credit under Section 48E or Production Tax Credit under Section 45Y, these requirements make the origin and content of major equipment increasingly important.

• IRS Notice 2025-42, issued in August 2025, established revised rules for determining when construction has begun on certain solar facilities for purposes of the federal clean electricity tax credits under Sections 45Y and 48E. The guidance significantly limits the circumstances under which the Five Percent Safe Harbor may be used and places greater emphasis on demonstrating actual physical work on a project. These requirements are important for projects seeking to preserve eligibility for federal clean-energy tax credits under the One Big Beautiful Bill Act.
• IRS Notice 2026-15, issued in February 2026, provides guidance concerning the Prohibited Foreign Entity (PFE) restrictions established the One Big Beautiful Bill Act. The notice establishes interim safe harbors and methods for determining whether a renewable-energy project contains prohibited levels of material assistance from a PFE. These requirements are intended to ensure that qualifying renewable energy projects do not rely on prohibited foreign sources to an extent that would affect eligibility for federal tax credits.