Material assistance from a prohibited foreign entity

(A) In general The term “material assistance from a prohibited foreign entity” means— (i) with respect to any qualified facility or energy storage technology, a material assistance cost ratio which is less than the threshold percentage applicable under subparagraph (B), or (ii) with respect to any facility which produces eligible components, a material assistance cost ratio which is less than the threshold percentage applicable under subparagraph (C).

(B) Threshold percentage for qualified facilities and energy storage technology For purposes of subparagraph (A)(i), the threshold percentage shall be— (i) in the case of a qualified facility the construction of which begins— (I) during calendar year 2026, 40 percent, (II) during calendar year 2027, 45 percent, (III) during calendar year 2028, 50 percent, (IV) during calendar year 2029, 55 percent, and (V) after December 31, 2029 , 60 percent, and (ii) in the case of energy storage technology the construction of which begins— (I) during calendar year 2026, 55 percent, (II) during calendar year 2027, 60 percent, (III) during calendar year 2028, 65 percent, (IV) during calendar year 2029, 70 percent, and (V) after December 31, 2029 , 75 percent.

(C) Threshold percentage for eligible components (i) In general For purposes of subparagraph (A)(ii), the threshold percentage shall be— (I) in the case of any solar energy component (as such term is defined in section 45X(c)(3)(A)) which is sold— (aa) during calendar year 2026, 50 percent, (bb) during calendar year 2027, 60 percent, (cc) during calendar year 2028, 70 percent, (dd) during calendar year 2029, 80 percent, and (ee) after December 31, 2029 , 85 percent, (II) in the case of any wind energy component (as such term is defined in section 45X(c)(4)(A)) which is sold— (aa) during calendar year 2026, 85 percent, and (bb) during calendar year 2027, 90 percent, (III) in the case of any inverter described in subparagraphs (B) through (G) of section 45X(c)(2) which is sold— (aa) during calendar year 2026, 50 percent, (bb) during calendar year 2027, 55 percent, (cc) during calendar year 2028, 60 percent, (dd) during calendar year 2029, 65 percent, and (ee) after December 31, 2029 , 70 percent, (IV) in the case of any qualifying battery component (as such term is defined in section 45X(c)(5)(A)) which is sold— (aa) during calendar year 2026, 60 percent, (bb) during calendar year 2027, 65 percent, (cc) during calendar year 2028, 70 percent, (dd) during calendar year 2029, 80 percent, and (ee) after December 31, 2029 , 85 percent, and (V) subject to clause (ii), in the case of any applicable critical mineral (as such term is defined in section 45X(c)(6)) which is sold— (aa) after December 31, 2025 , and before January 1, 2030 , 0 percent, (bb) during calendar year 2030, 25 percent, (cc) during calendar year 2031, 30 percent, (dd) during calendar year 2032, 40 percent, and (ee) after December 31, 2032 , 50 percent. (ii) Adjusted threshold percentage for applicable critical minerals Not later than December 31, 2027 , the Secretary shall issue threshold percentages for each of the applicable critical minerals described in section 45X(c)(6)), which shall— (I) apply in lieu of the threshold percentage determined under clause (i)(V) for each calendar year, and (II) equal or exceed the threshold percentage which would otherwise apply with respect to such applicable critical mineral under such clause for such calendar year, taking into account— (aa) domestic geographic availability, (bb) supply chain constraints, (cc) domestic processing capacity needs, and (dd) national security concerns.

(D) Material assistance cost ratio (i) Qualified facilities and energy storage technology For purposes of subparagraph (A)(i), the term “material assistance cost ratio” means the amount (expressed as a percentage) equal to the quotient of— (I) an amount equal to— (aa) the total direct costs to the taxpayer attributable to all manufactured products (including components) which are incorporated into the qualified facility or energy storage technology upon completion of construction, minus (bb) the total direct costs to the taxpayer attributable to all manufactured products (including components) which are— (AA) incorporated into the qualified facility or energy storage technology upon completion of construction, and (BB) mined, produced, or manufactured by a prohibited foreign entity, divided by (II) the amount described in subclause (I)(aa). (ii) Eligible components For purposes of subparagraph (A)(ii), the term “material assistance cost ratio” means the amount (expressed as a percentage) equal to the quotient of— (I) an amount equal to— (aa) with respect to an eligible component, the total direct material costs that are paid or incurred (within the meaning of section 461 and any regulations issued under section 263A) by the taxpayer for production of such eligible component, minus (bb) with respect to an eligible component, the total direct material costs that are paid or incurred (within the meaning of section 461 and any regulations issued under section 263A) by the taxpayer for production of such eligible component that are mined, produced, or manufactured by a prohibited foreign entity, divided by (II) the amount described in subclause (I)(aa). (iii) Safe harbor tables (I) In general Not later than December 31, 2026 , the Secretary shall issue safe harbor tables (and such other guidance as deemed necessary) to— (aa) identify the percentage of total direct costs of any manufactured product which is attributable to a prohibited foreign entity, (bb) identify the percentage of total direct material costs of any eligible component which is attributable to a prohibited foreign entity, and (cc) provide all rules necessary to determine the amount of a taxpayer’s material assistance from a prohibited foreign entity within the meaning of this paragraph. (II) Safe harbors prior to issuance For purposes of this paragraph, prior to the date on which the Secretary issues the safe harbor tables described in subclause (I), and for construction of a qualified facility or energy storage technology which begins on or before the date which is 60 days after the date of issuance of such tables, a taxpayer may— (aa) use the tables included in Internal Revenue Service Notice 2025–08 to establish the percentage of the total direct costs of any listed eligible component and any manufactured product, and (bb) rely on a certification by the supplier of the manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component— (AA) of the total direct costs or the total direct material costs, as applicable, of such product or component that was not produced or manufactured by a prohibited foreign entity, or (BB) that such product or component was not produced or manufactured by a prohibited foreign entity. (III) Exception Notwithstanding subclauses (I) and (II)— (aa) if the taxpayer knows (or has reason to know) that a manufactured product or eligible component was produced or manufactured by a prohibited foreign entity, the taxpayer shall treat all direct costs with respect to such manufactured product, or all direct material costs with respect to such eligible component, as attributable to a prohibited foreign entity, and (bb) if the taxpayer knows (or has reason to know) that the certification referred to in subclause (II)(bb) pertaining to a manufactured product or eligible component is inaccurate, the taxpayer may not rely on such certification. (IV) Certification requirement In a manner consistent with Treasury Regulation section 1.45X–4(c)(4)(i) (as in effect on the date of enactment of this paragraph), the certification referred to in subclause (II)(bb) shall— (aa) include— (AA) the supplier’s employer identification number, or (BB) any such similar identification number issued by a foreign government, (bb) be signed under penalties of perjury, (cc) be retained by the supplier and the taxpayer for a period of not less than 6 years and shall be provided to the Secretary upon request, and (dd) be from the supplier from which the taxpayer purchased any manufactured product, eligible component, or constituent elements, materials, or subcomponents of an eligible component, stating— (AA) that such property was not produced or manufactured by a prohibited foreign entity and that the supplier does not know (or have reason to know) that any prior supplier in the chain of production of that property is a prohibited foreign entity, (BB) for purposes of section 45X, the total direct material costs for each component, constituent element, material, or subcomponent that were not produced or manufactured by a prohibited foreign entity, or (CC) for purposes of section 45Y or section 48E, the total direct costs attributable to all manufactured products that were not produced or manufactured by a prohibited foreign entity. (iv) Existing contract Upon the election of the taxpayer (in such form and manner as the Secretary shall designate), in the case of any manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component which is— (I) acquired by the taxpayer, or manufactured or assembled by or for the taxpayer, pursuant to a binding written contract which was entered into prior to June 16, 2025 , and (II) (aa) placed into service before January 1, 2030 (or, in the case of an applicable facility, as defined in section 45Y(d)(4)(B), before January 1, 2028 ) in a facility the construction of which began before August 1, 2025 , or (bb) in the case of a constituent element, material, or subcomponent, used in a product sold before January 1, 2030 , the cost to the taxpayer with respect to such product, component, element, material, or subcomponent shall not be included for purposes of determining the material assistance cost ratio under this subparagraph. (v) Anti-circumvention rules The Secretary shall prescribe such regulations and guidance as may be necessary or appropriate to prevent circumvention of the rules under this subparagraph, including prevention of— (I) any abuse of the exception provided under clause (iv) through the stockpiling of any manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component during any period prior to the application of the requirements under this paragraph, or (II) any evasion with respect to the requirements of this subparagraph where the facts and circumstances demonstrate that the beginning of construction of a qualified facility or energy storage technology has not in fact occurred.

(E) Other definitions For purposes of this paragraph— (i) Eligible component The term “eligible component” means— (I) any property described in section 45X(c)(1), or (II) any component which is identified by the Secretary pursuant to regulations or guidance issued under subparagraph (G). (ii) Energy storage technology The term “energy storage technology” has the same meaning given such term under section 48E(c)(2). (iii) Manufactured product The term “manufactured product” means— (I) a manufactured product which is a component of a qualified facility, as described in section 45Y(g)(11)(B) and any guidance issued thereunder, or (II) any product which is identified by the Secretary pursuant to regulations or guidance issued under subparagraph (G). (iv) Qualified facility The term “qualified facility” means— (I) a qualified facility, as defined in section 45Y(b)(1), (II) a qualified facility, as defined in section 48E(b)(3), and (III) any qualified interconnection property (as defined in section 48E(b)(4)) which is part of the qualified investment with respect to a qualified facility (as described in section 48E(b)(1)).

(F) Determination of ownership; beginning of construction Rules similar to the rules under subparagraphs (H) and (J) of paragraph (51) shall apply for purposes of this paragraph.

(G) Regulations and guidance The Secretary may prescribe such regulations and guidance as may be necessary or appropriate to carry out the provisions of this paragraph, including— (i) identification of components or products for purposes of clauses (i) and (iii) of subparagraph (E), and (ii) for purposes of subparagraph (A)(ii), rules to address facilities which produce more than one eligible component.