Tax Credit Rules Seen as Boost to EV Charging Infrastructure

New rules on a tax credit tied to electric vehicles could beef up investments in charging stations, a much-needed component for widespread adoption of EVs.

The IRS and Treasury Department proposed rules Wednesday for the alternative fuel vehicle refueling property tax credit, detailing eligibility requirements for EV charging stations and other clean fuel infrastructure.

The credit, extended and modified in the Democrats’ 2022 tax-and-climate law, provides tax savings of up to 30% on the cost of installing qualified property for individuals and businesses who have been able to claim the expanded credit since the beginning of 2023. With clearer rules, more taxpayers are sure to become interested, said Ingrid Malmgren, senior policy director at Plug In America, a nonprofit that aims to accelerate EV adoption.

“These will definitely support the buildout of infrastructure and make charging more accessible,” Malmgren said of the new rules.

Charging Infrastructure Lags

Treasury officials said there are 192,000 public chargers available nationwide. That number is double what was available in 2021.

But charging infrastructure isn’t keeping up with EV sales. An estimated 1.6 million public chargers are needed by 2030 to keep up with demand for EVs, according to Bloomberg’s 2024 Electric Vehicle Outlook. That’s more than triple the 500,000 Biden administration target for that year. The National Renewable Energy Laboratory estimated the US is on track to install 1.2 million public chargers by 2030.

Car buyers consistently say in Plug in America surveys that access to chargers is the biggest barrier for buying an EV, Malmgren said.

Details Come Into Focus

The American Public Transportation Association members, which include transit agencies and associated businesses, have been slow to claim new clean energy credits because they’re still trying to understand all the requirements, said Ward McCarragher, vice president of government affairs and advocacy.

“As these rules come into place, we’ll see members who are taking advantage of this exponentially increase,” McCarragher said of the EV charger credit.

The proposed rules help answer major questions surrounding which properties qualify for the credit. The rules say that credit-eligible properties include interdependent or integral components of the refueling or recharging property as well as related energy storage property. Individuals and businesses can claim a credit on each individual charging port or fuel dispenser.

That means if a business needed to make certain improvements before installing an EV charger, that could also qualify for this credit, Malmgren said.

“They may need to upgrade panels, put in conduit, if they need extra wiring—understanding that and what’s folded into the costs that are eligible is huge,” Malmgren said.