On September 19, 2024, the U.S. Department of the Treasury and the IRS released proposed regulations under Section 30C of the Internal Revenue Code. These regulations offer essential insights into changes prompted by the Inflation Reduction Act (IRA). This post discusses the importance of the 30C credit for electrifying transportation sector, why we’re focused supporting the transfer EV charging credits, and key updates in the septembers proposed guidance

At Basis Climate, we are excited about the market impact of expanding the availability of Section 30C credits for electric vehicle (EV) charging infrastructure. EV charging stations are not just crucial for clean transportation; they represent a major bottleneck in the transition to electrified transportation. Without a comprehensive and accessible network of charging stations, the widespread adoption of EVs will be hindered.

Private investment is the fastest route to scaling charging networks, reaching underserved areas, and encouraging more consumers to choose EVs. Deploying private charging stations nationally benefits investors through long-term revenue from charging services, heavy-duty EV fleet deployment, all the while reducing national emissions and boosting energy security.

Accordingly, we are dedicated to streamlining monetization of these credits to facilitate more private investment in EV charging infrastructure, aiming to eliminate obstacles to decarbonizing transportation and advancing the clean energy economy. The 30C regulations from September only further support this effort.

To qualify for this credit, the property must meet the following criteria:

The proposed regulations, which are open for public comment for the next 60 days, clarify important provisions such as the definition of a "single item of property" and the types of storage and recharging equipment that qualify for the credit.

Historically, Section 30C credits were capped on a per-location basis. However, the new regulations shift this cap to a "per single item" basis, making it especially relevant to recharging ports and fuel dispensers. For example, if a charger has two charging ports, the $100,000 limit applies separately to each port.

Additionally, the regulations specify that the property covered by the credit must be functionally interdependent, meaning each component is essential for the overall operation of the refueling or recharging property.

The new regulations also introduce provisions for alternative fuel storage and electrical energy storage property, detailing their eligibility criteria. These types of storage must be located at the site where vehicles are recharged or refueled.

Prevailing wage and apprenticeship requirements remain critical factors in determining eligibility for the 30% credit. These considerations are essential for projects involving multiple items of property constructed on contiguous land.

One important limitation is that the alternative fuel refueling property must be situated in a qualified census tract, defined as either a low-income community or a non-urban area. The updated definitions for these census tracts were released on September 1, 2023, and taxpayers must ensure that their properties are located in these designated areas to qualify.

The IRS’ proposed guidance for Section 30C tax credits represents a significant step towards enhancing the EV charging infrastructure necessary for the transition to a decarbonized transportation system. By leveraging these credits strategically, stakeholders can surmount the current infrastructure bottlenecks and help accelerate the widespread adoption of electric vehicles. The focus on eligible census tracts and the adjustments to credit structures indicate a commitment to equitable investment in clean energy solutions. Engaging with these proposed regulations will be vital as we strive for a more sustainable future.