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Deep Dive into the Alternative Fuel Infrastructure Tax Credit in 2022 and 2023

Posted 03/01/2023

The Section 30C Alternative Fuel Vehicle Refueling Property Infrastructure tax credit expired at the end of 2021; however, with the passage of the Inflation Reduction Act of 2022, the program was renewed for another 10 years with a few caveats.  

The Inflation Reduction Act (IRA) of 2022 was signed into law by President Biden on August 16, 2022. The act includes several clean energy programs and tax credit updates including a revision to the electric vehicle (EV) tax credit and the EV charging station tax credit for businesses. Here's how the new EV charging tax credit for businesses works. Learn more about the EV tax credit. 

Alternative Fuel Refueling Infrastructure Tax Credit for Businesses

The IRA significantly revised the Alternative Refueling Infrastructure tax credit, also known as the EV charging tax credit for businesses. This program provides a tax credit for eligible alternative fueling infrastructure, such as compressed natural gas (CNG), hydrogen, and EV charging stations. The original text, which was signed into law in 2005, provided a tax credit, with a maximum value of $30,000 or 30% of the project cost, whichever is less, to property owners. This program helped offset a good portion of the project costs. The credit was revised in 2015 to include EV charging stations as eligible project types, then expired December 31, 2021. In 2022, the Inflation Reduction Act renewed and extended this tax credit to include 2022 installations. Did you install EV charging stations at your business in 2022? Use Form 8911 to claim your credit.

Beginning on January 1, 2023, a new version (which runs until December 31, 2032) adds a few additional stipulations to the EV charging tax credit. These include: a revision of the maximum credit from $30,000 per property to $100,000 per station, a base credit of 6% of project costs with a maximum of 30% if prevailing wages and apprenticeship requirements are met, and exclusion of projects outside rural or low-income areas.   

Per the Alternative Fuels Data Center, “Eligible fueling equipment must be installed in locations that meet the following census tract requirements: 1) a population census tract where the poverty rate is at least 20%; or 2) a metropolitan and non-metropolitan area census tract where the median family income is less than 80% of the state medium family income level.” The US Treasury also will provide additional guidance for implementing the tax credit in the near future.  For reference, check out this GIS map to find census tracts with poverty rates 20% or higher.  

Bi-directional Charging Projects 

Lastly, bi-directional charging (where energy from an EV’s battery can be directed back towards the grid, a home, or another load) projects are particularly notable as an eligible project for the tax credit. This is a big win for the EV industry: bi-directional charging is becoming a major factor as electric utility companies prepare for an all-electric future. With EVs plugged into the grid, bi-directional charging can modulate stress on the grid to ensure it is not overloaded during peak demand.   Furthermore, renewables such as solar photovoltaic (PV) and wind produce the most energy during the day. With bi-directional charging, the grid can temporarily store this unused energy in EV batteries. Then, when electricity demand peaks in the evening, the bi-directional charger can return power to the grid as needed.  

Example: One Project Under Both Versions of the Tax Credit 

For example, take a 2022 EV charging project for two DC Fast Chargers. One analysis from the International Council on Clean Transportation estimated that a business installing two 350kW DCFC stations could pay $140,000 per station and $52,541 for installation for a total project cost of $332,541.

Under the original 2005-2022 Alternative Refueling Infrastructure tax credit, the property owner would be eligible for a maximum EV charging tax credit of $30,000. This would effectively reduce the project cost down to $301,541. While a business can claim credit for installing charging stations at two locations, the tax credit at each site is capped at $30,000 (or 24%).  

Beginning on January 1, 2023, that same EV charging project may qualify for more money if the business meets certain criteria. In the updated 6% credit, which now calculates savings based on stations rather than locations, this business may receive between $16,800 and $19,952, depending on whether the US Treasury includes installation costs. This is less money than in 2022, and only certain businesses qualify. However, if the business is located in an eligible census tract, pays prevailing wages, and meets certain apprenticeship requirements, this project can qualify for a full 30% (up to $100,000) tax credit and receive more money than in 2022. In this case, our hypothetical business owner could receive between $84,000 and $100,000, depending on whether installation costs are included in the tax credit.

In sum, both versions of the federal tax credit are beneficial to property owners looking to invest in EV charging infrastructure. For businesses located outside an eligible census tract, 2022 was the last year to receive $30,000 in tax credits for installing EV charging stations. But for businesses located within an eligible tract, the new 2023 federal tax credit is an enormous opportunity to save even more money on EV charging.  

Other EV Charging Incentive Programs 

The Alternative Refueling Infrastructure tax credit program may be stacked with other federal, state, or utility rebate programs. There are billions of dollars available to charging networks and property owners to install EV chargers across the country. Many of these rebates or grant programs cover around 50% to 80% of project costs.  

Furthermore, the Infrastructure Investment and Jobs Act, signed into law in 2021, will fund a national EV infrastructure (NEVI) network with a budget of $7.5 billion. The federal government has approved each state’s NEVI plan, and individual state Departments of Transportation will begin to accept applications in the coming months with installations to follow over the next 5 years of the program. 

Between the federal incentives for EV charging and the many state and utility programs, there has never been a better time to invest in EV charging infrastructure. To learn more about tax incentives in your state, please visit Blink’s Residential EV Charging Infrastructure Incentives page or Blink’s Commercial EV Charging Infrastructure Incentives page. 

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