After having expired at the end of 2021, the Internal Revenue Code Section 30C tax credit for electric vehicle charging stations is back. Technically referred to as the "Alternative Fuel Vehicle Refueling Property Credit", the Section 30C tax credit will come back into force for charging stations placed in service after December 31, 2022. While the credit will look similar to the credit that expired on December 31, 2021, there will be some key distinctions to pay attention to.
The headline numbers for the new Section 30C tax credit are as follows: up to a 30 percent of the cost of a "qualified alternative fuel vehicle refueling" station, subject to a limit of $100,000 per station. (IRC 30C(a)-(b)). With those headline numbers come some caveats, however.
Similar to some of the limitations we have written about for the ITC and PTC, the Section 30C credit is subject to a 6 percent baseline, with the full 30 percent credit only available if certain prevailing wage and apprenticeship requirements are met. In addition to these labor limitations, the IRA put geographic limitations on the Section 30C tax credit.
Specifically, the EV charging station must be located in an "eligible census tract", which definition creates two paths for eligibility: (1) charging stations located in a "low-income community" as defined in Section 45D(e) of the IRC (which limitation should be familiar to those working with New Markets Tax Credits under Section 45D); or (2) a census tract that is "not an urban area".
A "low-income community" is a census tract where (a) the poverty rate is at least 20 percent or (b) (i) if the tract is not located in a metropolitan area, the median family income for such tract does not exceed 80 percent of the applicable statewide median family income or (ii) if the tract is located in a metropolitan area, the median family income for such tract does not exceed 80 percent of the applicable statewide or metropolitan area median family income.
Section 30C defines an urban area as a census tract which, according to the most recent decennial census, has been designated as an urban area by the Secretary of Commerce. The Census Bureau publishes the urban and rural classifications on its website, and is scheduled to release its final urban area designations in December 2022 for the 2020 decennial census.
While there are certainly some additional hoops to jump through to qualify your EV charging station for the Section 30C tax credit, the IRA provided some clarifications on eligibility as well that should hopefully expand the applicability of the credit. Among them, Section 30C is clearly applicable to bidirectional charging infrastructure that will enable EVs that are plugged in to not only draw energy from the grid, but to supply energy to the grid. Furthermore, the renewal of Section 30C preserved the eligibility for EV charging infrastructure installed for (and owned by) a tax-exempt entity. In this case, the company that sold the EV charging infrastructure to the applicable tax-exempt entity will be treated as the taxpayer eligible for the 30C credit so long as such person clearly disclosed to the nonprofit entity the amount of the credit allowable.
Overall, it will be good to have the Section 30C credit back for developers, installers and users of EV charging stations. This credit, coupled with the other federal investment being deployed for the nation's EV charging station buildout, should further incentivize investment in EV charging infrastructure. Importantly, the extension of the Section 30C credit has the potential to make tax equity investment in EV charging infrastructure more available.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.