Additional Guidance Issued on Alternative Fuel Vehicle Refueling Property Credit

On September 18, the Treasury Department and IRS issued a notice of proposed rulemaking and other guidance on the Alternative Fuel Vehicle Refueling Property Credit to clarify property investments for battery-powered electric vehicle charging and other refueling methods like those using hydrogen in the hopes of lowering transportation and energy costs. (NPRM REG-118269-23; IR 2024-240, 9/18/2024)

The Code Sec. 30 credit as amended by the Inflation Reduction Act (P.L. 117-169) is up to 30% of installation costs and is available to businesses and individuals that place qualified refueling property into service during the tax year. For individuals who install qualified vehicle refueling and recharging property at their home, including equipment to charge electric vehicles, the maximum credit is $1,000 for each item of property, while businesses can claim up to $100,000.

Property must be placed in an eligible census tract, typically a non-urban area or a low-income area. According to Treasury, two-thirds of Americans live in an eligible census tract. Additional credits are awarded to businesses and government entities that employ registered apprentices and pay workers prevailing wages.

Wednesday’s proposed regs provide definitions for credit-eligible Section 30 property, a single item of property, and energy storage property. Further, the regs detail how to calculate the credit, including how to incorporate “additional costs” of an item, and the treatment of duel-use property.

The regs also add rules for reducing basis, recapturing, and apportioning the credit between business- and personal-use property. They also explain how an eligible census tract is determined and update prevailing wage and apprenticeship requirements.

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

A 60-day comment period and window for requesting a public hearing is set to begin September 19 when the regs are scheduled to be published in the Federal Register.

The IRS on Wednesday also issued Notice 2024-64, which updates the Alternative Fuel Vehicle Refueling Property Credit census tract mapping tools first published in February in Notice 2024-20. According to the notice, some users experienced technical issues with the original mapping tools provided in the first notice. New links to 2015 and 2020 census tract boundaries taxpayers can use to determine their 11-digit geographic identifier, or GEOID, are embedded in the notice.

Taxpayers may use the mapping tools in Notice 2024-20 or the new tools for returns with Section 30 claims filed on or before November 15, 2024.

Senior Advisor to the President for International Climate Policy John Podesta told reporters Tuesday that electric vehicle credits in the Inflation Reduction Act have saved 250,000 taxpayers a total of $1.5 billion, with “the majority of those savings” occurring at the point of sale. Treasury said the Section 30 credit is supposed to work “in concert” with other credits for new and used clean vehicles and manufacturing production.

“We believe that every American should find it easy to charge their [electric vehicle], whether they live in an inner city neighborhood or a rural community, whether they have their own garage where they can plug in at night or live in a multi-family apartment building, [or] whether they commute for a few minutes or a few hours every day,” said Podesta.

For more on the Alternative Fuel Vehicle Refueling Property Credit, see Checkpoint’s Federal Tax Coordinator ¶ L-18045.