Resources · 45X · 45Y · 48E
Reading on FEOC
Four guides with primary-source citations, the dates the rules turn on, the news, and the framework in questions.
Guides
Timeline
Jul 4, 2025 FEOC
Ownership prohibition takes effect
No §45X, §45Y or §48E credit for a taxpayer that is itself a prohibited foreign entity, for tax years after this date. §45X material-assistance limits apply to components sold after it.
Dec 31, 2025 FEOC
Facilities beginning construction after this date
The §45Y and §48E material-assistance thresholds apply to qualified facilities and storage that begin construction after this date.
2026 FEOC
First-year thresholds
Material-assistance cost ratios start at 50% for solar components and 60% for battery components under §45X, 40% for qualified facilities and 55% for storage under §45Y and §48E, and rise every year to 2030.
Feb 12, 2026 FEOC
IRS Notice 2026-15
The first substantive guidance on how prohibited-foreign-entity restrictions work: calculation mechanics, certifications, what is still open.
Dec 31, 2026 FEOC
Safe-harbor tables due
The IRS is to publish the safe-harbor tables for the material-assistance cost ratio by this date.
Dec 23, 2027 CHIPS
Federal procurement ban on named chip makers
Under the FY23 NDAA §5949, federal procurement of semiconductors from the named manufacturers is barred from this date.
2030 FEOC
Thresholds reach their ceiling
Material-assistance cost ratios reach 85% for §45X components and keep rising for facilities, after which they hold.
In the news
Holland & Knight
Treasury Department and IRS Release Prohibited Foreign Entity Guidance
Feb 12, 2026
Utility Dive
Clean energy industry preps ahead of impending FEOC guidance
Dec 13, 2025
Power Magazine
Welcome to the Jungle: We Got FEOC (and Games)
Nov 2025
K&L Gates
Understanding the New Prohibited Foreign Entity Rules
Sep 18, 2025
PV Magazine
The 'onion' of FEOC, Safe Harbor, and tax credits
Aug 27, 2025
Norton Rose Fulbright
Working Through The FEOC Maze
Jul 8, 2025
The framework, in questions
What are the FEOC requirements for clean energy tax credits?
(A) Ownership: No credit under 45X, 45Y, or 48E if the taxpayer itself is classified as a PFE, effective for tax years after July 4, 2025.
(B) Material Assistance (MACR): Credits are denied if a project or component receives material assistance from a PFE above applicable thresholds. Effective dates differ: 45X applies to eligible components sold in tax years after July 4, 2025; 45Y/48E applies to facilities beginning construction after December 31, 2025.
45X component thresholds: Battery: 60% in 2026 → 85% by 2030+. Solar: 50% in 2026 → 85% by 2030+.
45Y/48E facility thresholds: Qualified facilities: 40% in 2026 (escalating annually). Energy storage: 55% in 2026 (escalating annually).
(C) Effective Control: No credit for projects or components produced under effective control by an SFE. §48E adds a 10-year, 100% recapture provision for post-placement violations.
What is the Material Assistance Cost Ratio (MACR)?
Qualified Facilities (45Y/48E):
(Total Direct Costs − PFE Costs) ÷ Total Direct CostsEligible Components (45X):
(Total Direct Material Costs − PFE Material Costs) ÷ Total Direct Material CostsExample: 2026 battery threshold is 60%. If total costs = $1M and PFE costs = $350K, MACR = 65%, which is compliant. IRS safe-harbor tables are due by December 31, 2026.
How do the new PFE rules differ from the old FEOC rules?
PFE has two categories: SFE (direct tie to covered nations) and FIE (indirect tie through ownership, debt, governance, or payments).
Scope expanded dramatically: IRA 2022 applied FEOC rules only to EV battery supply chains. OBBBA 2025 expanded PFE rules to virtually all clean energy credits.
How do I determine if a supplier is a Foreign Entity of Concern?
Step 1: Is it an SFE? Specified Foreign Entity triggers: government of China, Russia, North Korea, or Iran; incorporated in or controlled by a covered nation; >50% owned by a covered government; designated as a Chinese Military Company; or listed on OFAC SDN, Commerce Entity List, or UFLPA.
Step 2: Is it an FIE? Foreign-Influenced Entity is triggered by any one of: SFE can appoint board members; single SFE ≥25% ownership; multiple SFEs ≥40% collectively; SFEs hold ≥15% of outstanding debt; or >10% of non-goods payments to a single SFE.
What does §6695B change about my personal liability?
Every Tier 1 supplier must provide specific, legally binding attestations, signed under penalties of perjury, including the supplier's EIN, retained by both parties for at least 6 years.
If you know or have reason to know a certification is inaccurate, you cannot rely on it: all costs convert to PFE costs. The preparer penalty attaches to the individual, not just the entity.
What are the FEOC requirements for clean energy tax credits?
(A) Ownership: No credit under 45X, 45Y, or 48E if the taxpayer itself is classified as a PFE, effective for tax years after July 4, 2025.
(B) Material Assistance (MACR): Credits are denied if a project or component receives material assistance from a PFE above applicable thresholds. Effective dates differ: 45X applies to eligible components sold in tax years after July 4, 2025; 45Y/48E applies to facilities beginning construction after December 31, 2025.
45X component thresholds: Battery: 60% in 2026 → 85% by 2030+. Solar: 50% in 2026 → 85% by 2030+.
45Y/48E facility thresholds: Qualified facilities: 40% in 2026 (escalating annually). Energy storage: 55% in 2026 (escalating annually).
(C) Effective Control: No credit for projects or components produced under effective control by an SFE. §48E adds a 10-year, 100% recapture provision for post-placement violations.
How do I determine if a supplier is a Foreign Entity of Concern?
Step 1: Is it an SFE? Specified Foreign Entity triggers: government of China, Russia, North Korea, or Iran; incorporated in or controlled by a covered nation; >50% owned by a covered government; designated as a Chinese Military Company; or listed on OFAC SDN, Commerce Entity List, or UFLPA.
Step 2: Is it an FIE? Foreign-Influenced Entity is triggered by any one of: SFE can appoint board members; single SFE ≥25% ownership; multiple SFEs ≥40% collectively; SFEs hold ≥15% of outstanding debt; or >10% of non-goods payments to a single SFE.
What is the Material Assistance Cost Ratio (MACR)?
Qualified Facilities (45Y/48E):
(Total Direct Costs − PFE Costs) ÷ Total Direct CostsEligible Components (45X):
(Total Direct Material Costs − PFE Material Costs) ÷ Total Direct Material CostsExample: 2026 battery threshold is 60%. If total costs = $1M and PFE costs = $350K, MACR = 65%, which is compliant. IRS safe-harbor tables are due by December 31, 2026.
What does §6695B change about my personal liability?
Every Tier 1 supplier must provide specific, legally binding attestations, signed under penalties of perjury, including the supplier's EIN, retained by both parties for at least 6 years.
If you know or have reason to know a certification is inaccurate, you cannot rely on it: all costs convert to PFE costs. The preparer penalty attaches to the individual, not just the entity.
How do the new PFE rules differ from the old FEOC rules?
PFE has two categories: SFE (direct tie to covered nations) and FIE (indirect tie through ownership, debt, governance, or payments).
Scope expanded dramatically: IRA 2022 applied FEOC rules only to EV battery supply chains. OBBBA 2025 expanded PFE rules to virtually all clean energy credits.
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