New Tax Guidance on Energy Credits for Using Land Alternative Fuel Charging Stations

The Internal Revenue Service and the Department of the Treasury have issued Notice 2024-20 (PDF) to provide guidance on eligible census tracts for the qualified alternative fuel vehicle refueling property credit and to announce the intent to propose regulations for the credit.

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 Dec. 31, 2022 and before Jan. 1, 2033.

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 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 for depreciable property and $1,000 for non-depreciable 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. See Appendix APDF and Appendix BPDF for eligible census tracts.

The primary purpose of the notice is to provide taxpayers with a list of eligible census tracts in advance of the 2023 filing season and to explain how taxpayers can identify the 11-digit census tract identifier for the location where the property is placed in service. The IRS intends to propose regulations including this information in the future, but taxpayers may rely on the notice until proposed regulations are published.

This notice also provides background and definitions, describes relevant census concepts, provides definitions for low-income communities and non-urban census tracts, and explains which delineation of census tract boundaries is applicable for each type of census tract determination. Further, the notice describes how updating of low-income community census tract determinations are considered for credit eligibility.

Finally, the IRS released frequently asked questions related to the alternative fuel vehicle refueling property credit.

More information about the alternative fuel vehicle refueling property credit may be found on the Inflation Reduction Act of 2022 page on IRS.gov.

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