The Treasury Department has issued interim guidelines for clean energy tax credits to curtail Chinese influence in the sector, providing manufacturers and developers with formulas to determine project eligibility as the administration seeks to reduce reliance on foreign supply chains.
The US Treasury Department released interim guidelines on 12 February 2026 addressing how companies can qualify for clean energy tax credits while restricting reliance on Chinese-made equipment under President Donald Trump’s tax legislation.
The guidance implements provisions from Trump’s One Big Beautiful Bill Act, passed in July 2025, which affects tax credits for both clean energy manufacturing facilities and power generation projects. The law introduced stringent requirements designed to reduce American dependence on supply chains from “prohibited foreign entities,” namely China, Russia, Iran, and North Korea.
These restrictions prevent Chinese-owned or Chinese-influenced companies from accessing federal subsidies and limit the use of components or labour from Chinese firms. Previously, such limitations only applied to electric vehicle tax credits.
Despite significant recent growth in domestic solar panel and battery production, American manufacturers remain heavily dependent on overseas inputs, particularly from China, the world’s dominant producer of solar components.
The US Internal Revenue Service (IRS) outlined specific formulas to determine whether projects receive “material assistance” from prohibited entities. Companies can use IRS-assigned cost percentages for components or rely on supplier certifications to prove eligibility.
The interim rules take effect immediately and remain valid until formal regulations are proposed.
The Treasury is accepting public feedback for 45 days to shape future guidance.
