Understanding the Alternative Fuel Vehicle Refueling Property Credit For Businesses

If you’re exploring cost-effective strategies for installing EV chargers at your commercial property, here’s an important tax credit you need to know about. The Alternative Fuel Vehicle Refueling Property Credit (also known as the 30C credit) offers businesses significant incentives to invest in charging infrastructure, helping to offset installation costs by up to $100,000 per charger.

In this blog, we'll delve into program details, important qualification updates, and how you can capitalize on this tax credit to drive both environmental and financial benefits for your commercial operations.

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What Is the Alternative Fuel Vehicle Refueling Property Credit?

The Alternative Fuel Vehicle Refueling Property Credit began as a tax incentive originally introduced by the U.S. government in 1992 to encourage businesses and individuals to build facilities to store and dispense alternative fuels (like ethanol, natural gas, hydrogen, and biodiesel).  

In 2022, the incentive was extended and modified by the Inflation Reduction Act (IRA) to include electric vehicle charging stations as well as equipment used for bidirectional charging, like in vehicle-to-grid applications.

Under the IRA extension, the 30C credit grants eligible corporate, government, and tax-exempt entities a credit of up to $100,000 for constructing megawatt-scale charging projects at properties like bus depots and facilities with fleet vehicles. (A credit of up to $1,000 is also available for individuals who opt to install home chargers.)  

Depending on your organizational status, 30C is available as a tax credit, direct-pay benefit, or tax credit transfer.  

To qualify for the credit under the new rules set in the IRA, you must purchase and install charging equipment any time between December 31, 2022 and January 1, 2033. The government refers to this as your “placed-in-service date.”  

The law also established a very important limitation on where chargers can be set up: Charging systems must be installed in pre-defined low-income or non-urban census tracts (more on that later). Fortunately, these guidelines are quite inclusive, as two-thirds of the U.S. population lives in these areas, with only a handful of higher-income urban zones excluded.

(Related: Energy Solutions for Property Development.)

Qualifying for the Alternative Fuel Vehicle Refueling Property Credit

To take advantage of the Alternative Fuel Vehicle Refueling Property Credit for EV charging, projects must comply with certain criteria. Here’s a quick rundown of the eligibility requirements that charging systems need to meet:

• Installed and made operational after Dec. 31, 2022 and before Jan. 1, 2033
• Used first by the taxpayer for its original intended use  
• Used primarily in the U.S. and U.S. territories  
• As of January 1, 2023, must be installed on a business/investment use property or main home in eligible census tracts (either a low-income community or non-urban area)

There are other stipulations too. You cannot include the cost of any buildings when calculating the final equipment and installation cost. In addition, all the equipment must be located at the refueling site, i.e., where vehicle recharging actually happens.  

Property owners will be happy to know, however, that the updated 30C allows you to claim the credit on a per-charger basis (versus per site). This significantly increases your opportunity to benefit from the credit and the total amount claimable, especially for larger projects with multiple chargers.  

One key question still hangs overhead: Guidance is expected in the coming months on the eligibility of shared infrastructure like power conduits, switchgear, transformers, and enclosures.  

Before proceeding with any installations, it's advisable to seek guidance from a seasoned EV charging provider as well as a tax professional to ensure you maximize your credit amount and navigate any potential obstacles smoothly.  

Applying for the Alternative Fuel Vehicle Refueling Property Credit and Calculating Your Eligible Amount

For businesses with systems made operational as of January 1, 2023, the credit is the lesser of $100,000 or 6% of the installation cost for each charger. Projects that meet certain wage and apprenticeship requirements during construction may be eligible for a 30% credit, with the same $100,000 cap per charger. Businesses that wish to claim the 30C credit during their tax year should file IRS Form 8911.

Tips for Filing IRS Form 8911

Instructions for how to complete Form 8911 are available here, along with instructions for Form 8911 filers with 2023 short years (businesses with a tax year less than 12 months due to a change in accounting period).  

The IRS treats the 30C credit for business/investment use as a general business credit carried over from Form 8911 to Form 3800 — but certain tax-exempt and government entities can decide to treat the credit as an income tax payment.

For tax years 2023 and beyond, eligible taxpayers, partnerships, and S corporations can choose to transfer a portion or the entire general business credit amount to a third-party buyer in exchange for cash, a new financing mechanism called “tax-credit transferability” that allows developers to turn credits into capital.  

It’s important to note, like all federal tax credits, the Alternative Fuel Vehicle Refueling Property Credit doesn’t reduce state taxable income. Several states offer their own tax incentives for EV charging equipment.  

How to Use the Argonne National Lab’s 30C Mapping Tool

Since EV charging systems can only claim the 30C credit if they are located in census tracts designated as low-income or non-urban, it’s critical to confirm your proposed site qualifies before starting construction. To help businesses better assess site eligibility, the U.S. Department of Energy’s Argonne National Laboratory created the 30C Tax Credit Eligibility Locator Mapping Tool.

The current 2016-2020 low-income community census tracts are anticipated to remain the same through 2029, after which they will be replaced with an updated dataset.  

Non-urban census tracts could be revised if the Census Bureau releases new determinations in 2033 based on the 2030 Census. Until official guidance is released, you should continue to use the current 2020 non-urban census tracts to determine 30C credit eligibility.  

Next Steps: Install EV Charging Stations With PowerFlex

Speed is of the essence when claiming the 30C credit — you’ll want to install your EV chargers before the census tracts are reevaluated in 2029. Plus, the faster you implement your charging system, the quicker you can claim the 30C credit to positively impact your project's return on investment.

If you own or operate a qualified alternative fuel vehicle refueling property, PowerFlex’s policy experts can help you easily navigate the claims process, as well as reduce your initial capex costs as much as possible by taking advantage of other available incentive programs.  

With PowerFlex, you’ll benefit not only from installation savings but also reduced long-term operational expenses. Once your system is up and running, you can intelligently manage EV charging demand with our adaptive energy management platform, PowerFlex X™, to avoid getting hit with expensive demand charges during peak times.

Curious about how much you could save with the Alternative Fuel Vehicle Refueling Property Credit? Contact PowerFlex and one of our EV charging experts can help get you started.