Electric Vehicle Charger Tax Credit Extended and Expanded by the Inflation Reduction Act

President Biden’s August 16^th signing of the Inflation Reduction Act (IRA), a $739 billion tax, climate, healthcare, and energy law, is changing the landscape for the auto industry and upping the ante for an electrified and “cleaner” future. 

In addition to the sweeping changes in the electric vehicle tax credit, the IRA revives and expands the credit for electric vehicle (EV) charging equipment that had initially expired on December 31, 2021. The Alternative Fuel Refueling Property tax credit is extended through December 31, 2032; however, the rules have slightly changed.

Commercial EV Charger Installations

Businesses that install EV chargers and station equipment at their property can qualify for a tax credit of up to 30% of the cost.  With the passage of the IRA, the maximum amount of the tax credit increased from $30,000 to $100,000 for projects completed after December 31, 2022. Projects completed before December 31, 2022 will still be subject to the $30,000 cap.

The credit extension came with a few changes for installations completed between January 1, 2023 and December 31, 2032. The credit will now require that projects pay the prevailing wage for labor and meet certain apprenticeship requirements.

The updated credit also limits the eligibility to installations completed along approved “census tracts”, which are typically low-income communities or non-urban areas.  If the additional requirements are not met, the credit may be reduced to 6% of the total installation cost.

Residential EV Charger Installations

Homeowners who install EV chargers on their property also qualify for a tax credit which will cover hardware and installation costs. The credit remains the same under the new bill; 30% of the project costs up to $1,000 cap. Like the commercial installation requirements, home installation projects must pay the prevailing wage for labor of qualifying equipment and bi-directional charging equipment is also eligible.

It's important to remember that the federal tax credit is just one of the incentives available for customers installing electric vehicle charging equipment. On top of that credit, customers may be eligible for rebates from their state, utility, county, regional organization, or municipality.

This is a nice win for taxpayers, as the cost of this equipment is extremely expensive, and the timeline to complete the project can be long. For more information about the Alternative Fuel Refueling Property tax credit or to assist you in maximizing your electric charging station credit, please reach out to myself or any Schneider Downs Auto Advisor at [email protected].

About Schneider Downs Automotive Industry Group

The Schneider Downs Automotive industry group serves dealers of all sizes, from single-point locations to mega-dealerships. Our members cross departments and meet regularly to ensure efficiencies in the services provided to our clients and discuss issues, regulations and trends affecting the automotive industry. 

To learn more, visit our Automotive Industry Group page.