The Inflation Reduction Act (IRA) contained tax credits for new and used electric vehicles (EVs). But you can’t run an EV without a charging station. So, the IRA also provided tax credits for EV charging stations and equipment.
But, in some cases, these credits may not offset the cost of installing commercial EV charging stations. What are these tax credits, and how do you use them?
IRA Brings Back EV Charger Credit
The IRA brought back the federal tax credit for EV chargers. It has been extended for 10 years, or until Dec. 31, 2032.This makes a taxpayer eligible for a tax credit. It amounts to 30 percent of the equipment and installation cost up to $1,000 for a home.
The EV charger credit for businesses went from $30,000 to up to $100,000 per EV charger.
It also applied the tax credit for business and home installations to other charger equipment; for example, it covers two-way chargers.
The credit may not cover all equipment and installation costs, and the EV credit isn’t refundable.
Do States Provide an EV Charger Credit?
Some states offer tax credits or direct rebates toward EV chargers. These apply to single-family homes. Others will offer these credits to multi-family dwellings. Some states that offer tax credits and incentives include:- California
- Colorado
- Connecticut
- Delaware
- Maryland
- Massachusetts
EV Charger Must Be Placed in Service
A home EV charger must be “placed in service” for the tax credit. Placed in service is when the EV charger is ready and available; it doesn’t have to be used.
A business must also have an EV charger placed in service to qualify for the tax credit.
Taxpayers Must Be in ‘Eligible Census Tracts’ to Qualify
Individuals and businesses must be in an “eligible census tract” to qualify for the EV charger tax credit.According to the Internal Revenue Service (IRS), an eligible census tract is “any population census tract that qualifies as a low-income community or that is not an urban area.”
With the cities creeping into the suburbs, many individuals living in dense developments that were always deemed rural are finding themselves now living in designated urban areas.
But the White House has touted that eligible census tracts now cover two-thirds of Americans.
How to Use EV Charger Credit
Officially called the Alternative Fuel Vehicle Refueling Property Credit, you must file Form 8911 with the IRS.The tax credit isn’t automatically applied to your taxes. You must supply income and state information to receive this benefit.
This is credit, not cash. It is applied to your tax liability. The credit is subtracted from your tax liability. It pertains to taxes filed the year after installation. Remember that you can’t receive the EV credit back as a refund if you don’t owe any taxes.
What Do Home EV Charger Stations Cost?
There are three types—levels—of charging stations.Level one and level two are appropriate for home-charging stations. Level one is often free with a car purchase. These are the least expensive because they don’t require installation.
They are plugged into a 120-volt outlet. But you might need to update older homes to accommodate an EV charger. If the plug is too far from the distribution box, you might need to update to higher-gauge wiring.
Level one chargers take up to 24 hours to charge a battery because it only adds two to five miles of driving range for every hour charged. The cost for just the charger is between $300–600. It’s higher if you have wiring issues.
Level two is the most common for EV owners. It charges much more quickly than a level one and can reach a full charge in just a few hours, four to six times faster. But, even if you have a newer home, you still may need electrical work.
A level two EV charger requires a 240-volt outlet. Without the electrical work, it costs between $1,500–5,000.
All prices depend on the region of the country where they’re located.
Commercial EV Charger Station Costs
Business-level EV chargers have a hefty price tag. Level two EV chargers’ equipment can cost $1,500–5,000. In addition, you also have the installation and construction costs. It can cost up to $10,000. And that doesn’t include ongoing maintenance costs.Level three, which is fast charging, is what most people want when they’re on the road. It keeps them driving the longest. Level threes involve complex installation.
Just the equipment for level three starts at $20,000. If multiple ports or other advanced features are included, the cost can go up to $100,000. Regardless of what type of level three you purchase, the installation will cost as much as $200,000 per charger.
Is the IRA EV Charger Credit Adequate?
If you’re a business installing charging stations for employees or clients, the cost far outweighs any tax credit. Even if you’re a homeowner, it can cost to update the wiring.And it could all be for naught if you don’t live in the right part of the country. The credit is only available for those living in specific geographic locations.
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