Treasury provides guidance on EV charging tax credit rule

The U.S. Department of the Treasury and Internal Revenue Service (IRS) issued guidance on a new proposed rule that seeks to provide clarity on alternative fuel vehicle refueling property investments for electric vehicle charging.

The Alternative Fuel Vehicle Refueling Property Credit provides a tax credit for up to 30 percent of the cost of installing qualified alternative fuel vehicle refueling property, such as chargers and hydrogen refueling property.

The credit may be claimed by individuals up to $1,000 and by businesses up to $100,000 for each single item of property placed in service. Further, it may be claimed by tax-exempt and governmental entities using elective pay or, alternatively, by the sellers of eligible property to such entities.

When discounting expected annual savings over the 15-year lifespan of a vehicle, owners of electric vehicles will save $18,000 to $24,000 more than if they had purchased a comparable gasoline vehicle instead, and fuel is the largest contributor to these savings, according to the Treasury.

“The steps we are taking today will help lower transportation costs for Americans and strengthen our energy security,” U.S. Deputy Secretary of the Treasury Wally Adeyemo said. “The Biden-Harris administration is committed to saving Americans money as we grow a clean energy economy, and today’s announcement marks important progress.”

The rules to implement the 30C credit include:

• Defining credit-eligible 30C property: The proposed rule would describe that 30C property includes all functionally interdependent components of recharging or refueling property, as well as property integral to the recharging or refueling property that is placed in service by the taxpayer.
• Defining a single item of property: The proposed rule would define a single item of 30C property as each charging port or fuel dispenser, as well as each energy storage property. Property that is functionally interdependent or integral to more than a single item is apportioned per item.
• Defining energy storage property: The proposed rule defines the types of energy storage property that qualify as a single item of 30C property, including electrical energy storage property. The proposed definition includes rechargeable electrochemical batteries of all types used to smooth costs and minimize the impact on the grid by storing cheaper, non-peak hour energy for use during higher-cost peak hours.
• Updating the Prevailing Wage and Apprenticeship (PWA) requirements: The rule provides clarity on how 30C projects are defined for purposes of meeting PWA requirements.

The nonprofit group Plug In America said the tax credit will make EVs more affordable and accessible.

“Plug In America’s 2024 EV Driver Survey found that public charging access has persisted as a concern among EV drivers and intenders,” Ingrid Malmgren, senior policy director at Plug In America, said. “We commend the Biden-Harris administration for their thoughtful approach in developing this guidance that supports comprehensive and resilient charging infrastructure buildout nationwide. This guidance will help America accelerate toward widespread, equitable access to EV charging and encourages confidence in driving electric.”

The proposal will be open to public comment for 60 days.

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