Section 45X: US Battery, Solar and Wind Manufacturing Tax Credit (2026)
Last updated: October 22, 2026 · Last verified: October 22, 2026
Section 45X of the US tax code — the Advanced Manufacturing Production Credit — pays domestic manufacturers of solar, battery, wind and critical-mineral components a per-unit or percentage-of-cost credit for every eligible component they produce and sell in the United States. Created by the 2022 Inflation Reduction Act (IRA), it was substantially narrowed in 2025 by the One Big Beautiful Bill Act (OBBBA, P.L. 119-21), which cut the wind-component credit short by five years and moved up the phase-out for critical minerals. The credit remains one of the largest standing incentives for battery cell, solar module and inverter manufacturing anywhere in the world.
What Section 45X Pays, by Component
| Component | Credit rate | Full rate through | Phase-down | Ends |
|---|---|---|---|---|
| Battery cells | $35 per kWh of capacity | 2029 | 75% (2030), 50% (2031), 25% (2032) | 2033 |
| Solar modules | 7¢ per DC watt | 2029 | 75% (2030), 50% (2031), 25% (2032) | 2033 |
| Commercial inverters | $2 per AC watt | 2029 | 75% (2030), 50% (2031), 25% (2032) | 2033 |
| Solar-grade polysilicon | $3 per kg | not stated in CRS summary | not stated | not stated |
| Polymeric backsheets | 40¢ per m² | 2029 | same as solar schedule | 2033 |
| Torque tubes | 87¢ per kg | 2029 | same as solar schedule | 2033 |
| Wind blades | 2¢ per blade (flat) | 2027 | none — cliff cutoff | 2028 (components sold after Dec 31, 2027 disallowed) |
| Other wind components | not stated in CRS summary | 2027 | none — cliff cutoff | 2028 |
| Critical minerals (incl. electrode active materials) | 10% of production cost | 2030 | 7.5% (2031), 5% (2032), 2.5% (2033) | 2034 |
| Metallurgical coal | 2.5% of production cost | 2029 | none disclosed | ineligible if produced after Dec 31, 2029 |
| Offshore wind vessels | 10% of sales price | not stated | not stated | not stated |
Solar cells, wafers and structural fasteners are also 45X-eligible categories under the statute, but this routine could not confirm their exact per-unit rates from the sources checked; treat that gap as “not disclosed” rather than estimate it.
What Changed Under OBBBA (P.L. 119-21, signed July 2025)
- Wind cut short by five years. Under the original IRA schedule, wind components phased down starting 2030 like solar and batteries. OBBBA instead disallows the credit entirely for wind components produced and sold after December 31, 2027 — a flat cliff, not a phase-down.
- Critical minerals phase-out moved up. The IRA had treated critical minerals as a permanent 10% credit with no sunset. OBBBA added a phase-down (7.5% in 2031, 5% in 2032, 2.5% in 2033) and a hard expiration in 2034.
- New metallurgical coal category was added, capped at a 2.5% rate and a 2029 production deadline; it is the only 45X product category exempt from the domestic-production requirement.
- 65% US-material content rule for “secondary components” sold to an unrelated party: at least 65% of the component’s direct material costs must trace to US-mined, -produced or -manufactured primary components. This applies to tax years beginning after December 31, 2026.
- Foreign-entity-of-concern restrictions limiting involvement of China-, Russia-, Iran- and North Korea-linked entities and individuals in the supply chain were added; exact terms are set out in a separate CRS report (R48611) not reviewed for this page.
- Facilities that already received a Section 48C advanced-energy-project credit remain ineligible for 45X on the same production, and production must occur in the US (metallurgical coal excepted).
Who Can Claim It
45X is a production credit for manufacturers, not for project developers or buyers — a company that makes battery cells, solar modules or wind blades in a US facility and sells them claims the credit per unit sold, regardless of who ultimately buys or deploys the component. It is distinct from investment and production tax credits aimed at power generation (Sections 48E/45Y), which support the project developer rather than the equipment maker. Manufacturers can monetize 45X either by claiming it against their own tax liability, electing direct payment (for certain categories, time-limited), or transferring the credit to an unrelated taxpayer for cash under IRA Section 6418 — TDE could not confirm from the sources reviewed here whether OBBBA changed the direct-pay or transferability mechanics for 45X specifically, so verify current elective-payment eligibility against IRS guidance before relying on it.
Why It Matters for Battery and Solar Manufacturing
The battery-cell rate ($35/kWh) is large enough that it has repeatedly been cited by manufacturers and analysts as a central factor in the economics of building battery gigafactories inside the US rather than importing cells — it can offset a meaningful share of a cell’s production cost at scale. The Tesla Megapack, assembled at Tesla’s Lathrop, California megafactory, is one example of a grid-scale battery product built at a US facility of the kind this credit is designed to support. Battery-related incentive design is not unique to the US: see Poland’s home battery storage subsidy for a demand-side (household purchase) incentive by contrast with 45X’s supply-side (manufacturer production) design, and the EU’s parallel manufacturing-support mechanism in the EU Innovation Fund.
Frequently Asked Questions
What is the Section 45X tax credit?
It is a US federal production tax credit that pays manufacturers of solar, battery, wind and critical-mineral components a set dollar or percentage amount for each eligible unit produced and sold domestically.
Does Section 45X still apply to wind components?
Only through 2027. Under the One Big Beautiful Bill Act, wind components produced and sold after December 31, 2027 are no longer eligible, five years earlier than the original IRA phase-down schedule.
When does the Section 45X battery and solar credit expire?
The battery-cell, solar-module and inverter credits phase down starting 2030 (75%, then 50%, then 25%) and end for goods sold from 2033 onward, under the schedule as amended by OBBBA.
Is the Section 45X credit the same as the investment tax credit (ITC)?
No. 45X pays manufacturers for producing components; the ITC/PTC (Sections 48E/45Y) pay project developers for building and operating generation or storage facilities. A single project can involve both a 45X-eligible US-made battery and a separate 48E credit for the storage project itself.
Related The Daily Energy Pages
- United States Energy Profile
- What Is the Tesla Megapack?
- Home Battery Storage Incentives in Poland (2026)
- Solar Incentives in Turkey: YEKDEM to YEKA (2026)
- EU Innovation Fund: Clean-Tech Grants Tracker (2026)
Sources
- Congressional Research Service, In Focus IF12809, “Section 45X Advanced Manufacturing Production Credit,” updated August 13, 2026
- One Big Beautiful Bill Act, P.L. 119-21 (signed July 4, 2025)
- Cleary Gottlieb, Kirkland & Ellis and Crux Climate client summaries of enacted OBBBA clean-energy tax provisions
- IRS.gov Section 45X guidance (for current elective-payment and transferability mechanics, consult directly)
Illustrative image. Photo: Kecko from Eastern Switzerland, CC BY 2.0, via Wikimedia Commons — source
