Understanding the Expanded 30C Tax Credit for EV Charging Stations

What the Section 30C updates mean for your next EV Charging project

Oct 14, 2024

Sarmishta Mahendra

The Inflation Reduction Act introduced major updates to the Alternative Fuel Vehicle Refueling Property Credit (Section 30C), making it more valuable and flexible for businesses building EV charging infrastructure. These changes not only increase the potential savings but also open up new opportunities to monetize these credits. With transferable credits and higher limits, the updated EV charging tax credit offers significant benefits for companies looking to capitalize on the growing demand for clean energy solutions. In September, the IRS released proposed regulations that should go a long way to answering some of the questions developers and potential buyers had about the changes to the credit, thereby making these credits easier to sell.

Here's what you need to know about the latest updates to the 30C credit:

Bigger Tax Credits

The tax credit is 30% of the cost of EV charging equipment for eligible projects (as long as prevailing wage and apprenticeship requirements are met; the credit is 6% otherwise). For a project to be eligible, it must be installed in a rural or low-income census tract. These credits are also transferable, meaning they can be sold to another party.

Credit Limit Per Item

The credit limit is $100,000 for each charging port and battery connected to charging stations. However, only charging ports capable of operating simultaneously at full power count.

Shorter Recapture Period

The recapture period for this type of credit is only three years, and sale of the project won’t trigger recapture unless the seller knows that the sale will result in the property no longer being used for EV charging. The amount at risk of recapture decreases each year over the three-year recapture period, going from 100% in the first year after placement in service, to two-thirds in the second year, to one-third in the third year.

Tax-Exempt Organizations Qualify

Tax-exempt entities, like municipalities, schools, or non-profits can receive direct payments instead of tax credits, and taxpayers who install charging equipment for these organizations can use or sell the credit themselves if they notify the owner (in which case the tax-exempt entity cannot use the credit, but can presumably ask for a cheaper price on the installation instead).

Dual-Use Properties

If the property serves both eligible and non-eligible purposes (e.g., a station that fuels both clean and regular fuel), only the incremental cost related to the eligible use qualifies for the credit.

Business and Personal Use Property

If charging stations are used for both personal and business purposes, the credit can be split between the two. If over 50% of the use is for business, the station qualifies for the higher $100,000 limit.

Identifying Qualifying Census Tracts for the 30C EV Charging Credit

The IRS has also made it easier for businesses to figure out if their projects qualify by releasing an updated mapping tool. This tool helps identify whether a project falls within an eligible census tract, either by address or latitude and longitude coordinates. This ensures accurate and simple verification for businesses looking to maximize their savings.

For those unfamiliar with the previous rules, here’s a quick breakdown:

• Low-Income Census Tracts: Projects located in low-income census tracts are eligible for the credit. For installations placed in service before 2025, you can choose between census data from 2011-2015 or 2016-2020. From 2025 onward, only the 2016-2020 data will be used.
• Rural Census Tracts: Rural census tracts are defined broadly—any tract where 10% or more of the census blocks aren’t urban qualifies. This wide definition makes it easier for projects in rural areas to get the credit.

Check If Your Project Qualifies

Use our interactive IRA Map to find out if your project is located in a qualifying rural or low-income census tract. Just enter your project’s location and see if it qualifies for IRA's EV charging tax credits.

The IRS’s updated guidance has been a game-changer for businesses looking to take advantage of the 30C tax credit. The expanded definitions, particularly for separate items of property and rural census tracts, are practical and should help drive the build-out of the country’s EV charging infrastructure.

If you’re developing an EV charging project and considering selling the credits, reach out to us at team@ever.green for more details on how you can make the most of these tax credits.