The Alternative Fuel Vehicle Refueling Property Credit Will Lower Costs for Clean Vehicle Infrastructure and Transportation
WASHINGTON – Today the U.S. Department of the Treasury and Internal Revenue Service (IRS) issued a Notice of Proposed Rulemaking and additional guidance on the Alternative Fuel Vehicle Refueling Property Credit as expanded by the Biden-Harris Administration’s Inflation Reduction Act.
The guidance released today will provide clarity on alternative fuel vehicle refueling property investments for battery-powered electric vehicle charging and other clean fuel infrastructure such as hydrogen refueling. Today’s guidance will lower transportation costs and increase energy security by making clean vehicles like electric and plug-in hybrids more affordable for Americans.
The Alternative Fuel Vehicle Refueling Property Credit (section 30C) works in concert with the New and Previously Owned Clean Vehicle Credits and Advanced Manufacturing Production Credit to create good-paying jobs, lower consumer costs and strengthen America’s battery, critical mineral, and clean vehicle supply chains. The section 30C provision provides a tax credit for up to 30% 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 in an eligible census tract. The credit may also be claimed by tax-exempt and governmental entities using elective pay or, alternatively, by the sellers of eligible property to such entities. An eligible census tract is any population census tract that is a low-income community or that is not an urban area. Approximately two-thirds of Americans live in eligible census tracts. Business and tax-exempt governmental entities claiming the Alternative Fuel Vehicle Refueling Property Credit can receive an enhanced credit if they are paying workers prevailing wages and using registered apprentices to install the equipment.
“The steps we are taking today will help lower transportation costs for Americans and strengthen our energy security,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “The Biden-Harris administration is committed to saving Americans money as we grow a clean energy economy, and today’s announcement marks important progress.”
“Building out America’s charging infrastructure will make transportation more affordable, the air around our roads more breathable, and U.S. emissions trajectory more sustainable – all while creating good-paying jobs across America,” said Ali Zaidi, National Climate Advisor to the President. “Today’s important guidance will accelerate capital formation and project investment into this critical infrastructure sector and position the U.S. to lead the global clean energy economy.”
“In order to help more Americans go electric, we need to make sure they can charge their EVs where they live, work, and shop – from inner city neighborhoods to rural areas,” said John Podesta, Senior Advisor to the President for International Climate Policy. “The Inflation Reduction Act is expanding charging access by saving families and businesses up to 30 percent off the cost of installing EV chargers.”
“Today’s announcement is a key step forward in our efforts to reduce transportation costs for Americans and build out the U.S. domestic clean vehicle supply chain with good paying jobs,” said U.S. Deputy Energy Secretary David M. Turk. “Under the Biden-Harris Administration, over $120 billion in private investment has been so far announced for battery manufacturing, the majority of which is headed to vehicles, as well as over $40 billion in other electric vehicle component manufacturing. This new tax credit will further help consumers and businesses across the country make the affordable choice of clean vehicles.”
Treasury’s Office of Economic Policy estimates that, 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.
The Notice of Proposed Rulemaking (NPRM) Treasury and IRS issued today proposes rules to implement the 30C credit, including by:
- Defining credit-eligible 30C property: The NPRM 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 located at the same or immediately adjacent physical address as the fuel delivery point.
- Defining a single item of property: The NPRM 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 NPRM 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 NPRM supplements the final PWA regulations to provide further clarity on how 30C projects are defined for purposes of meeting PWA requirements. Specifically, the NPRM proposes that multiple 30C properties are treated as a single 30C project if the items of property are:
- Constructed and operated on a contiguous piece of land;
- Owned by a single taxpayer;
- Placed in service in a single taxable year; and
- Satisfy one or more factors that help indicate they are part of one broader project.
The following materials offer additional information on the rulemaking, including how to calculate the amount of total credit projects are eligible for:
Alongside today’s NPRM, Treasury and IRS are also releasing a notice that provides updated mapping tools taxpayers can use to determine their eligible census tracts, provides a transition rule, and provides that taxpayers may continue to follow Notice 2024-20 for rules describing eligible census tracts.
The NPRM will be open for public comment for 60 days and a public hearing will be scheduled if requested. Treasury and IRS look forward to receiving further input and benefitting from additional stakeholder perspectives as implementation of the Inflation Reduction Act continues.
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