The IRS recently issued initial guidance on geographic eligibility for the Section 30C Alternative Fuel Tax Credit, which companies have historically utilized for all EV charging station investment and deployment.
The only federal tax credit for charging infrastructure, “30C” was enhanced in the Inflation Reduction Act. Previously, a business could only claim the 30% credit once per site and up to a maximum of $30,000. Now, the credit can be claimed unlimited times per site, up to a maximum of $100k per item, albeit with new restrictions that were the subject of the recent guidance. As a result, pending this guidance, the value of the tax credit is orders of magnitude greater than before the IRA was enacted. The credit applies to installations between Jan. 1, 2023, and December 31, 2032.
To be fully eligible now, the new 30C credit requires property to be deployed in eligible “census tracts” and includes prevailing wage and apprenticeship requirements for commercial taxpayers to receive the full credit value. In the recent guidance, IRS reiterates the credit value and defines “eligible census tracts,” but did not provide full clarity on the new “per charger” provision.
The credit amount for depreciable property is 30% of the cost of the qualified property provided the prevailing wage and apprenticeship requirements are met. The maximum credit value is $100,000 “per item” of depreciable eligible property.
The IRA defined an “eligible census tract” as either a “non-urban area” or a “low income community” tract. The guidance establishes that if 10 percent or more blocks that make up a census tract are “rural,” the tract is an eligible census tract under 30C. Treasury and IRS created a tool for determining geographic eligibility based off census tract requirements. Treasury also issued materials including lists of eligible census tracts (Appendix A, Appendix B) and FAQs.
Treasury gave additional flexibility regarding which maps can be used to determine eligibility. More specifically, until 2025, there is wider geographic eligibility, increasing the likelihood of receiving the credit on infrastructure deployed from Jan. 1, 2023, until Jan. 5, 2025.
Treasury has indicated that additional guidance clarifying the “per item” definition is forthcoming. One key unknown is whether the “per item” restriction is equivalent to per charger (as most expect) or if it will be applied more granularly on a component basis.
The guidance was well-received by EV charging industry advocates, who view it as expansive as they could have hoped for given the statutory restrictions. Along with federal grant programs, such as the National Electric Vehicle Infrastructure (“NEVI”) grant program, the 30C credit is the most meaningful federal incentive for installing EV charging stations.
Grant programs and 30C both generally assist with up-front capital expenditures but are not focused on creating any ongoing incentive to better enable commercial operators to make money selling electricity to EV drivers. This “pathway to profitability” is challenging to identify in many markets where electricity companies and policies have been slow to update historical practices to enable this nascent market to flourish.
EPA recently considered creating an “e-RIN” program that could have allowed charging station owners to generate a RIN during charging events – similar to how the program works for liquid biofuels such as ethanol and biodiesel – but ultimately decided not to finalize that concept.
If NATSO members are interested in more information on the 30C tax credit or if their locations are eligible to claim the credit, please reach out to LeeAnn Goheen at firstname.lastname@example.org
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