Clean Energy Tax Credits Clarified with New Rules and Tools

New IRS Direct Pay guidance, resources, and assistance will make applying for and using the EV charging infrastructure tax credit easier.

Dory Larsen | January 25, 2024 | Clean Transportation

In my previous blog (published August 2023), What Local Decision Makers Should Know about IRA Tax Credits for Electric Vehicles, I outlined how local governments and other tax-exempt entities can now access Clean Energy Tax Credits using Direct Pay (aka Elective Pay). The new and revised tax credits, which are part of the Inflation Reduction Act (IRA), include several to support EVs (electric vehicles) and EV charging infrastructure investments.

One important distinction is that the infrastructure tax credit is only accessible in census tracts that meet the federal designation of “low-income” or “non-urban.” As I explained in my previous post, “To qualify, a property must be within non-urban census tracts or low-income communities (the poverty rate is at least 20 percent, or the median family income does not exceed 80 percent of statewide median family income).”

Since that blog was published, the federal government has issued updates to clarify how to take advantage of the tax credits and, most importantly, understand which census tracts qualify for the charging infrastructure credits.

New Forms To Pre-Register For Using Tax Credits

In December 2023, the Treasury Department released the new Pre-Filing Registration Tool for accessing Direct Pay tax credits. This is the registration and documentation that eligible non-tax paying entities such as state, local, and tribal governments, rural energy coops, and other eligible nonprofits, will need to do prior to using tax credits for EVs or EV charging infrastructure. 

New Rule Makes Charging Infrastructure More Widely Accessible

The IRA created an EV charging infrastructure tax credit that covers upwards of 30% of infrastructure costs up to $100,000 per charging station. Initially, there was confusion about the Section 30C tax credit (Charging Infrastructure Credit) because it defined qualifying census tracts as either low-income or “non-urban.” However, the U.S. Census Bureau only identifies census blocks rather than tracts as “non-urban.” On January 19, 2024, the Treasury Department issued guidance that clarifies which census tract/blocks qualify for the credit. The new definitions give broad eligibility to low-income and non-urban areas meaning about ⅔ of the U.S. population now qualify for the credits.  

New Map Helps Visualize what Census Tracts Qualify 

The Department of Energy (DOE) then followed up with the 30C Tax Credit Eligibility Locator, a mapping tool that allows users to see what tracts qualify. The mapping tool will allow both tax-paying entities, such as consumers and businesses, and eligible non-tax paying entities to identify where in their communities charging infrastructure can be cited to qualify for the EV charging infrastructure tax credits.

Upcoming Office Hours for Elective Pay Applicants

The Internal Revenue Service (IRS) is hosting upcoming office hours that are available for all Direct (Elective) Pay applicable entities. This is to assist with the IRS Energy Credits Online pre-filing registration process. Upcoming office hours and links to register are below:

January 26, 2024             1-2 PM EST              Register Here

January 30, 2024             1-2 PM EST              Register Here

February 2, 2024             1-2 PM EST               Register Here

February 6, 2024             1-2 PM EST               Register Here

February 9, 2024             1-2 PM EST               Register Here 

 

To receive any future announcements on IRS office hours and for updates on Direct Pay generally, sign up at IRS.gov/newsroom/e-news-subscriptions by scrolling down to the “Tax exempt & government entities” category. 

Resources from IRS

Additionally, the IRS has detailed resources to help users navigate the pre-filing registration process from start to finish, including this how-to video and this comprehensive user guide.

The IRS website on Direct Pay has a series of educational one-pagers for each direct pay applicable entity, a list of applicable tax credits, and an extensive list of FAQs

Doing More in 2024

The additional IRS Direct Pay guidance, resources, and assistance will make applying for and using the EV charging infrastructure tax credit easier. The tax credit is designed to support the growth of publicly available chargers in low-income communities and non-urban areas, making it more affordable to install EV charging infrastructure and increasing access to EV charging in underserved communities.

The Southern Alliance for Clean Energy’s Electrify the South program leverages research, advocacy, and outreach to accelerate the equitable transition to electric transportation across the Southeast. Visit ElectrifytheSouth.org to learn more and connect with us.

Dory Larsen
Dory joined the Southern Alliance for Clean Energy in 2017 and was named Senior Electric Transportation Program Manager in 2023. She is working to accelerate the transition to electric vehicles…
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