Electric vehicle charging stations impacted by section 30C alternative fuel refueling tax credit

IRS Notice 2024-20 provides guidance regarding the section 30C alternative fuel refueling tax credit. The definitions provided greatly expand the physical locations within the U.S. where alternative fuel refueling property can be credit-eligible. 

On Aug. 16, 2022, the Inflation Reduction Act of 2022 modified IRC section 30C qualified alternative fuel vehicle refueling property requirements for property placed in service through Dec. 31, 2023. This credit primarily impacts electric vehicle (EV) charging stations. The major changes are:

• Equipment must be located in an eligible census tract that is either a New Markets Tax Credit zone (section 45D(e)) or within a “non-urban” area. 
• 30% credit for individual taxpayers up to $1,000 (not subject to depreciation). 
• 6% credit for property subject to depreciation and up to a 30% credit where the installation labor is subject to prevailing wage and apprenticeship rules. Maximum credit up to $100,000 per charging station (single item of qualified alternative fuel refueling property). 

On Jan. 19, 2024, the IRS issued Notice 2024-20. The most notable clarification comes from section 4.04 which specifies the scope of “non-urban. ” Non-urban is defined in relation to the 2020 census as “non-urban census tract” consisting of at least 10% of “census blocks” not designated in an urban area. 

This definition greatly expands the physical locations within the United States that are eligible for the section 30C credit. The process for verifying eligible locations is as follows: 

• Use the IRS webpage for section 30C federal tax credit mapping tool “map of eligible locations,” use the direct link to the map or use the Baker Tilly New Markets Tax Credit (NMTC) mapping tool.
• The mapping is color-coded for eligible locations.  Eligible locations are:

1. Teal green as “non-urban” tracts (eligible through 2030). 
2. Beige orange current NMTC tracts (eligible through 2029). 
3. Light gray older NMTC (eligible through 2024).

Audiences primarily impacted and deserving review when recognizing EV chargers have been installed include:

• Auto dealerships 
• Multifamily residential real estate 
• Commercial real estate 
• Hotels 
• Individuals 
• Depreciable property basis is reduced by the tax credit amount 
• Generally, the EV charger will be a 5-year asset, but this depends on the taxpayer’s business activity asset class 

The tax credit is reported on Form 8911.

Key takeaways: 

• The section 30C alternative fuel refueling tax credit primarily impacts electric vehicle charging stations. 
• Equipment must be located in an eligible census tract that is either a New Markets Tax Credit zone (section 45D(e)) or within a “non-urban” area. 
• The definitions provided in Notice 2024-20 greatly expand the physical locations within the U.S. that can be considered “non-urban” and thus where alternative fuel refueling property can be credit-eligible.