Back in September, we published an article on the Inflation Reduction Act (IRA) of 2022 and what the new legislation could potentially mean for businesses on a broader level. If you aren’t familiar with the IRA, we recommend reading that article first to learn more about the new bill.
As a follow up piece, we’ve pulled in our own in-house electric vehicle expert — Matt Otis, Project Engineer here at PEC — for a brief 3 question Q&A to help us get some clarity around what the IRA means for EV charging station projects, specifically.
In this post, Matt will go over some of the details outlined in the IRA that will be important to know for anyone considering a new commercial EV charger installation.
So, let’s dive in!
Q: How will the Inflation Reduction Act of 2022 impact EV Charging projects?
A: The key change to note that will be most applicable to commercial EV charging is the reinstatement of the Section 30C Tax Credit — an EV Charger tax credit that had previously expired back in December of 2021. The renewal of Section 30C (technically called the “Alternative Fuel Vehicle Refueling Property Credit”) will have some significant changes for qualifying EV charging stations that are placed in service after December 31, 2022. For stations placed into service on or prior to December 31, 2022, the previous 30% federal tax credit will apply.
Q: What are the tax credits in Section 30C that are available for commercial EV charging stations?
A: Starting January 2023, new installations of EV charging stations may qualify for tax credits of up to 30% per charger (including infrastructure upgrades and installation) up to a $100,000 max through Section 30C (more detail on which projects “qualify” below). It should be noted that the previous credit was limited to $30,000 max per property. However, there are additional requirements that must be met in order to qualify for the full 30%.
For new charger installations that do not meet the qualifications needed for the 30% tax credit, there will also be base tax credit of 6% available.
Q: Who qualifies for the 30% tax credit through Section 30C?
A: As with any new legislation, there isn’t a lot of clarity at this point to definitively say which projects will or will not qualify for the full 30% tax credit. That said, there are 2 key requirements that we can look at to help you determine if your project will potentially be eligible for the maximum credit.
Requirement 1: Laborers employed in the construction of EV Charging Stations must meet the new prevailing wage and apprenticeship requirements:
- Prevailing wage requirements: this is defined as any labor required for construction of the charging station must be paid “wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such project is located, as most recently determined by the Secretary of Labor.” Essentially, the contractor must provide wages to those working on the construction of the project at least as high as the current standards for their profession based on the project location. If you would like to learn more, we recommend exploring the Department of Labor’s Prevailing Wage & Resources.
- Apprenticeship requirements: This is measured by the required apprentice-to-journey worker ratio, which is determined by either the Department of Labor or the applicable state. For projects starting in 2022, 10% of labor must be performed by qualified apprentices. This rises to 12.5% and 15% in 2023 and 2024, respectively. There are several exceptions to this requirement. If you would like to learn more, please reach out to PEC.
Requirement 2: The location of the new EV charging station must be within an “eligible census tract”
Eligible census tracts must meet one or both of the following requirements:
- The EV charging station is located in a “low-income community”
Low-income community is defined by the following:
- A census tract with a poverty rate of at least 20 percent, OR;
- The tract is not located in a metropolitan area and the median family income for such tract does not exceed 80 percent of the applicable statewide median family income; OR
- The tract is located in a metropolitan area and the median family income of the tract does not exceed 80 percent of the applicable statewide or metropolitan area median family income.
- The EV charging station is not located in an “Urban Area”
The US Census Bureau may classify a certain area as either “Urban” or “Rural”. To learn about a specific location, the Census Bureau has published their urban and rural classifications on its website here, where they’ve noted that they plan to published their 2020 Census by December 2022.
Looking forward to additional guidance
Overall, the IRS and Department of Labor are catching up with the new law, and we anticipate additional guidance being released sometime in the next few months that detail the exact requirements and reporting standards. That information will allow us to provide the needed clarity to determine exactly how best to take advantage of the new law.
If you would like to learn more on how these changes may impact your specific project, our team is happy to help!
Get started by reaching out here: Contact PEC’s EV Charging Team
About Your Expert
Matt Otis, Project Engineer at PEC
Matt received his degree in mechanical engineering from Northeastern University and spent five years developing industrial and residential power products in the fuel cell industry. He has experience leading cross-functional teams delivering innovative energy solutions to complex problems.
Matt joined PEC to help revolutionize the way we use and consume energy to promote a more sustainable future. He’s working with the sales and project management teams to provide energy-efficient HVAC & electric vehicle charging solutions to customers large and small.
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