What Are the FEOC Rules and How Do They Impact Clean Energy Tax
Credit Eligibility?
The One Big Beautiful Bill Act (OBBBA) of 2025 introduced
comprehensive foreign entity of concern (FEOC) rules that prohibit
taxpayers considered “prohibited foreign entities” from
claiming clean energy tax credits.
The FEOC rules apply to the following clean energy tax
credits:
- Section 45Q: Carbon oxide sequestration
credit
- Section 45U: Zero-emission nuclear power
production credit
- Section 45X: Advanced manufacturing production
credit
- Section 45Y: Clean electricity production
credit
- Section 45Z: Clean fuel production credit
- Section 48E: Clean electricity investment
credit
The FEOC rules are designed to prevent entities subject to
certain foreign ownership, control, or influence – primarily
from China, Russia, Iran, or North Korea – from benefiting
from these tax credits. The rules also include restrictions based
on material assistance from such entities
