Treasury rule would expand tax credits for installing electric vehicle chargers
WASHINGTON — The Biden administration wants to clarify how homeowners and businesses can get lucrative tax breaks for installing electric vehicle charging stations.
A rule proposed Wednesday by the Treasury Department would provide credits worth up to $1,000 for individuals and $100,000 for businesses for each EV charger installed. If finalized, the new rule would be especially valuable for businesses that plan to install multiple chargers and qualify for significant credits to offset the costs.
“To help more Americans go electric, we need to ensure they can charge their electric cars where they live, work and shop — from inner-city neighborhoods to rural areas,” said John Podesta, White House senior adviser for international climate policy. Inflation Reduction Act 2022 is expanding access to charging points by saving families and businesses up to 30% on the cost of installing electric vehicle charging stations, he said.
The proposal announced Wednesday follows guidance issued in January that made tax credits for installing EV chargers available in about two-thirds of the country. The guidance was a response to a Congressional directive in the climate bill to ensure that credits for EV chargers are limited to low-income or non-metropolitan areas.
Treasury adopted an expanded definition for census tracts that fall under those terms, to encompass about two-thirds of the country. The guidance issued in January did not elaborate on exactly what components of an EV charging installation qualify for the credit. The plan announced Wednesday again adopts an expanded definition — focused on individual charging ports instead of a single credit for a multi-port installation.
Proponents argue that the tax breaks could play a significant role in expanding the use of electric vehicles and reducing pollution from the transportation sector, which is the largest source of greenhouse gas emissions in the U.S.
“We appreciate the Treasury Department’s move on this important stimulus, which will ensure Americans can take advantage of the electric vehicle provisions in the 2022 climate bill,” said Katherine García, director of the Sierra Club’s Clean Transportation for All program.
Along with other electric vehicle provisions in the climate bill and the bipartisan infrastructure bill of 2021, “this charging incentive will accelerate the transition to clean vehicles, create good-paying jobs, and help our country meet our climate and clean air goals,” Garcia said.
Congress has approved $7.5 billion in the 2021 infrastructure bill to help meet President Joe Biden’s goal of a national network of 500,000 publicly available chargers by 2030. The public charging stations, along with a network of private connections, are key to the Biden-Harris administration’s efforts to encourage drivers to shift away from gasoline-powered cars and trucks that contribute to global warming.
According to the Department of Transportation, there were more than 192,000 publicly available charging stations nationwide at the end of last month, more than double the number in January 2021, when Biden took office.
The new tax break will be particularly valuable to communities living near warehouses, which are often exposed to toxic pollution from gas-powered delivery vehicles that roll through their neighborhoods every day, Garcia said. He added that the tax breaks should be particularly attractive to warehouse owners looking to install electric vehicle chargers for the thousands of commercial delivery vehicles across the U.S.
Albert Gore, executive director of the advocacy group Zero Emission Transportation Association, said the new tax plan will encourage the use of charging stations in places where people live and work.
“One of the great things about driving an electric car is that drivers can charge their car while it’s parked, instead of having to add another errand to their busy day,” said Gore, the son of former Vice President Al Gore.
The alternative fuel vehicle tax credit, known as “30C” for its location in the U.S. tax code, is intended to incentivize individuals and businesses to build charging infrastructure in homes, businesses and stores. “By issuing this proposed rule, Treasury and the IRS are beginning to provide the regulatory certainty needed to move these investments forward,” Gore said.
The proposed rule is open for public comment until mid-November, and a public hearing will be scheduled if requested. A Treasury spokesman declined to say when the rule would become final.