Holland Reporter

Tax Credit News announced on X that the One Big Beautiful Bill's expanded "foreign entity of concern" (FEOC) rules limit eligibility for renewable-energy tax credits. Experts Tony Grappone and Nicolo Pinoli of Novogradac discussed compliance requirements and phase-ins on Tax Credit Tuesday.

According to the Bipartisan Policy Center, the OBBBA’s "foreign entity of concern" provisions mark one of the most significant policy changes to clean energy tax credits since the Inflation Reduction Act. The rules prohibit entities classified as "Specified Foreign Entities" or "Foreign-Influenced Entities" from claiming Section 45X and other incentives if they are owned or materially assisted by certain foreign governments or corporations. The Bipartisan Policy Center explained that these measures are intended to prevent U.S. tax credits from subsidizing adversarial nations’ supply chains, particularly China, while still allowing domestic firms a transition period to restructure ownership and sourcing.

According to a July 2025 update by Baker Tilly, the OBBBA expands FEOC disqualification rules to cover six major categories of federal clean energy credits, including the § 45X Advanced Manufacturing Production Credit and the § 48E Clean Electricity Investment Credit. The analysis notes that any company majority-owned or materially supported by a "foreign entity of concern" will lose eligibility once the rules take effect, even if manufacturing occurs entirely within the U.S. Baker Tilly adds that Treasury and the IRS are expected to release clarifying guidance in early 2026, making documentation and preemptive compliance reviews essential for developers and investors.

According to Novogradac’s Tax Credit Tuesday podcast, partners Tony Grappone and Nicolo Pinoli emphasized that the FEOC rules will significantly change due-diligence practices for renewable-energy developers and financiers. They explained that verifying ownership, financing, and component sourcing will be critical steps to maintain tax-credit eligibility as enforcement ramps up. The episode further discussed that while FEOC restrictions phase in over one to two years, developers should act immediately to map supply chains, identify foreign exposures, and adjust procurement and capital structures.

According to Novogradac & Company’s official website, Tax Credit News is a publication and podcast platform produced by the firm focused on renewable energy, community development, and housing tax credits. The outlet provides updates, expert analysis, and interviews with policy leaders to help stakeholders navigate evolving federal and state credit frameworks. Novogradac is a national accounting and consulting firm that advises clients in energy, infrastructure, and real estate sectors on tax compliance, assurance, and strategic credit monetization.