The Inflation Reduction Act (IRA) of 2022 introduced significant changes to the Alternative Fuel Vehicle Refueling Property Credit, offering substantial tax credit incentives for businesses and individuals investing in alternative fuel vehicle refueling infrastructure.
If you’re not sure where to start but want to learn more, follow along as our team at Lewis CPA guides you through maximizing these savings, explaining what the credit is, who qualifies, the steps involved in claiming it, and how proper income tax preparation ensures you receive all applicable benefits.
What Is the Alternative Fuel Vehicle Refueling Property Credit?
The Alternative Fuel Vehicle Refueling Property Credit is a federal tax credit designed to incentivize the adoption of cleaner transportation.
It offers a percentage of the cost of qualified alternative fuel vehicle refueling property placed in service between January 1, 2023, and December 31, 2023. This initiative is part of the broader energy policy act and aims to accelerate the transition to cleaner fuels by making investments in infrastructure supporting alternative fuel vehicles more financially attractive. The credit is governed by the Internal Revenue Code and administered by the Internal Revenue Service.
Who Qualifies for the Alternative Fuel Vehicle Refueling Property Credit?
Many entities can claim this alternative fuel vehicle refueling property credit, including but not limited to:
- Businesses: Companies of all sizes can utilize this tax credit to offset the cost of installing alternative fuel vehicle refueling infrastructure, such as electric vehicle charging stations or compressed natural gas dispensers. This motivates them to invest in cleaner transportation solutions.
- Individuals: Homeowners and business owners can claim the credit for installing personal or business refueling property. This promotes individual adoption of cleaner transportation options.
- Tax-exempt entities: Certain non-profits and charities may qualify although they are subject to specific IRS rules. This extends the benefits of the property credit to organizations dedicated to sustainability.
- Governmental entities: Federal, state, and local governments can utilize the credit to support public alternative fuel vehicle refueling infrastructure development to widen the adoption of clean transportation.
Keep in mind that eligibility for the alternative fuel vehicle refueling property credit is independent of elective pay structures.
Criteria for Alternative Fuel Vehicle Refueling Property Credit
To qualify for the alternative fuel vehicle refueling property credit, the property needs to meet several requirements:
Property Type
The refueling property must be directly used to refuel alternative fuel vehicles. This includes:
- Electric vehicle charging stations (level 2 and DC fast chargers).
- Hydrogen fueling stations.
- Compressed natural gas (CNG) and natural gas dispensing equipment.
- Other equipment for dispensing qualified alternative fuel sources.
The property must be new and placed in service during the tax year, and used equipment does not qualify.
Location
The location of the alternative fuel vehicle refueling equipment can have a significant impact on the credit amount. Higher incentives may be available if the property is located in a low-income community or an eligible census tract within an urban area. Careful verification of census tracts is essential.
Prevailing Wage and Apprenticeship Requirements
For depreciable property, meeting prevailing wage and apprenticeship requirements is key to receiving the maximum credit. If you fail to meet these requirements, it will result in a significantly reduced credit. This is why it’s so important to understand the specific requirements for 30c property in this regard, and our team at Lewis CPA can help.
How Much Is the Alternative Fuel Vehicle Refueling Property Credit?
There’s no one-size-fits-all answer. The amount of the alternative fuel vehicle refueling property credit depends on whether the property is depreciable or non-depreciable:
- Non-depreciable property: 30% of the cost, up to $1,000 per item.
- Depreciable property: 6% of the cost unless prevailing wage and apprenticeship requirements are met, in which case it's 30% of the cost, up to $100,000 per item.
There’s a huge difference between these two amounts, so it’s incredibly important to understand the rules surrounding fuel vehicle refueling property and maximizing the maximum credit available.
How to Claim the Alternative Fuel Vehicle Refueling Property Credit
Eligible properties can claim the credit using the appropriate IRS forms. You’ll need to keep accurate records, including the documentation of costs, dates of placement in service, location specifics (eligible census tract verification if applicable), and (if applicable) compliance with prevailing wage and apprenticeship requirements.
- Verify eligibility: Confirm your property meets IRS requirements (type, newness, location, prevailing wage/apprenticeship compliance if applicable).
- Gather documentation: Collect purchase invoices, placement-in-service dates, census tract verification (if needed), and prevailing wage/apprenticeship documentation (if applicable). Be sure to keep meticulous records.
- Complete Form 8911: Accurately fill out Form 8911 and any necessary supporting schedules, ensuring all information is correct and complete.
- File your tax return: Submit your return with Form 8911 and supporting documents by the tax deadline, and be sure to do so on time.
- Retain records: Keep all documentation for at least three years (or longer based on your tax professional’s advice). If the IRS needs further information, this protects your claim.
Lewis CPA Makes Alternative Fuel Vehicle Refueling Property Credit Clear
Claiming the Alternative Fuel Vehicle Refueling Property Credit involves a series of straightforward steps, but they shouldn’t be taken lightly. It’s incredibly important that each step is accurate and thorough, especially when it comes to filling out documentation.
If you’re not sure where to begin and you’d like a helping hand, our Lewis CPA experts can help you understand the complexities of the credit, prepare the necessary documentation, and file your tax return accurately. This can optimize your use of the vehicle refueling property incentives. Contact us today for a consultation to discuss your eligibility and how we can help you navigate this valuable tax credit.
