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Get the most bang for the buck from EV charging tax incentives

May 12, 2023

The 2022 Inflation Reduction Act (IRA) contains tax credits designed to support the widespread adoption of electric vehicles. The Alternative Fuel Vehicle Refueling Property Credit, §IRC 30C, which the IRA both expanded from its previous iteration and extended to December 31, 2032, provides incentives to individuals and businesses that install EV chargers.

In addition to the tax credit, a host of other benefits are available related to the installation of EV charging property.

As the Biden administration has set a goal that 50% of all new vehicles purchased by 2030 be electric, auto manufacturers are meeting the call by developing more EV models to span the spectrum of customer needs.

Fight ‘range anxiety’

While electric vehicles have become more popular, “range anxiety” continues to be one of the most significant barriers to adoption for consumers, and the lack of consistently available electric vehicle charging stations is a significant barrier to widespread buy-in. Businesses and property owners who install EV chargers not only demonstrate a commitment to social responsibility, but are also stewards of the cultural shift to sustainable energy. The greater prevalence of EV charger installations will help ease major concerns of those in the market for an electric vehicle.

Having chargers installed at a business, of course, benefits drivers needing a charge. And businesses ought to keep in mind that EV vehicle owners tend to be more affluent consumers. While charging times vary based on the type of charger being used, and there are continued efforts to decrease charging times, drivers can spend the “filling-up” time patronizing a business offering the charger.

By installing an EV charger, a business can be featured on any number of apps that help direct drivers to charging locations. In addition, because various EV charging networks use data and AI to target the best locations for chargers, they can help business owners develop plans for an extra income stream when they charge customers to use their EV infrastructure.

Desired amenity

For commercial and residential real estate owners, having EV chargers on the property can be a very desirable amenity to offer to tenants, and many employers find that offering EV charging stations is an attractive perk for employees. EV chargers can also increase property values, contribute toward LEED certification and may be necessary for compliance with local and state building and sustainability regulations.

Tax credit eligibility

The economic and environmental benefits of installing chargers are significant, but qualifying for a tax credit involves an understanding of the eligibility requirements.

The tax credit available for commercial purposes is up to 30% of the cost of electric vehicle equipment and installation, up to $100,000 per unit of property. The 30% limit is actually a bonus amount, up from a baseline of 6% of the cost, and is available for projects that meet certain prevailing wage and apprenticeship requirements.

To qualify for either credit amount, the charging equipment must be characterized as depreciable, must be new and must be installed in low-income or non-urban areas.

For individuals placing charging equipment in their home, the federal tax credit is for 30% of the cost of installation and equipment, up to $1,000. The credit can be claimed once, and it is nonrefundable.

It is also important for consumers to consider state and regional rebates, incentives and tax credits that may make the installation of EV charging equipment even more enticing.

How Wipfli can help

Navigating these credit rules can be a challenge. A Wipfli tax advisor can help you determine your eligibility before you undertake an EV charging project and ensure you are taking full advantage of the benefits and incentives. Learn more about how we can help.

Contact us to reach Wipfli’s experienced team members. We are staying on top of all the legislative changes and how they affect tax liability.

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Lauren Curley, CPA, MBA
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