As reported via IR-2024-240 on 9/18/2024

The Department of Treasury and Internal Revenue Service issued proposed regulations to provide guidance for the Alternative Fuel Vehicle Refueling Property Credit (the tax credit related to the installation of EV chargers).

The Inflation Reduction Act amended the credit for qualified alternative fuel vehicle refueling property. The changes apply to qualified alternative fuel vehicle refueling property placed in service after 12/31/2022, and before 01/01/2033.

Business vs Non-Business Property

Property Subject to Depreciation

The credit amount for property not subject to depreciation is 30% of the cost of the qualified property placed in service during the tax year.  The credit is limited to $1,000 per item of non-depreciable property

Property Not Subject to Depreciation

The credit amount for depreciable property is 6% of the cost of the qualified property placed in service during the tax year but may be increased to 30% of the cost of the qualified property if the prevailing wage and apprenticeship requirements are met. The credit is limited to $100,000 per item of depreciable property.

Geographic Location of Property

Property must be placed in service in an eligible census tract to qualify for the credit. An eligible census tract is any population census tract that is a low-income community or any population census tract that is not an urban area. The proposed regulations provide guidance for determining whether a population census tract is an eligible census tract.

Today, the Treasury Department and the IRS also issued Notice 2024-64 that modifies Notice 2024-20, that was published on 02/12/2024 that provided guidance on eligible census tracts.

Notice 2024-20 refers taxpayers to Appendix A and Appendix B that contain eligible census tracts using a unique identifier called an 11-digit census tract GEOID.

Mapping Tools

Today’s notice modifies Notice 2024-20 by updating the mapping tools that taxpayers can use to identify the 11-digit census tract GEOID for a location where a property is placed in service. Notice 2024-64 also extends the time period to which Notice 2024-20 applies.

Taxpayers can determine the 11-digit census tract GEOID of a location as follows:

Using 2015 Census Tract Boundaries

https://www.census.gov/data/data-tools/2015-census-tract.html

Using 2020 Census Tract Boundaries

https://www.census.gov/data/data-tools/2020-census-tract.html

Other Information Provided

The proposed regulations also provide guidance on how to calculate the credit, including what constitutes an “item” of qualified alternative fuel vehicle refueling property, the additional costs considered in determining the cost of the item, and how to treat dual-use property.

Additionally, the new guidance provides definitions, general rules, and special rules, including basis reduction, recapture, and apportionment of the credit between business-use and personal-use property.

Resources

• IRS FAQs related to the alternative fuel vehicle refueling property credit.
• More information about the alternative fuel vehicle refueling property credit.
• Information about the Inflation Reduction Act of 2022.
• Blog #1517 which provided predecessor addressed- and latitude/longitude-based mapping tools to determine 11-digit GEOID of a location under the 2020 census tract boundaries.

This is Blog Post #1644)