The EV charger tax credit is making a comeback. All thanks to the Inflation Reduction Act (IRA), a comprehensive legislation passed last year addressing climate, energy, tax, and healthcare concerns. Amidst its billions of dollars in tax incentives, the IRA reintroduced the federal tax credit for electric vehicle charging stations and equipment, which had lapsed two years prior.
Now, before you start dreaming of reduced price tags on your EVs – there’s more to these tax credits than meets the eye. They extend beyond merely reducing the cost of electric vehicles, encompassing substantial savings for both the purchase and installation of EV charger equipment. However, navigating the intricacies of the rules can be challenging, leading many taxpayers to question how to go about claiming the electric vehicle charger tax credit.
Understanding The EV Charger Tax Credit
The EV charger tax credit, formally known as the Alternative Fuel Vehicle Refueling Property Credit, is a prime avenue for reducing costs associated with EV charging installations. Originally in existence for some time, this credit underwent expansion and modification in 2022.
Applicable to both residents and businesses, in 2023, the federal tax credit EV charger comes into play when qualifying electric vehicle supply equipment (EVSE) is installed on their property. The credit allows for a 30% tax credit, covering the equipment and installation expenses. But, with a cap of $1,000 for residents and $30,000 for businesses. It’s essential to note that the specifics of the credit depend on the EV charger design and timing of the equipment installation.
For EVSE Installations Completed Before Jan. 1, 2023
The equipment should be installed within the U.S., put into service during the tax year, and initially used by the taxpayer applying for the credit. Additionally, residents need to install the equipment at their primary residence.
From Jan. 1, 2023, Onward
Qualifying EVSE now includes bidirectional charging devices and charging stations for two- and three-wheeled vehicles. However, the credit is exclusive to EVSE installations in low-income or non-urban areas, as defined by U.S. Census criteria, for the years 2023 and beyond.
It’s important to highlight that this credit operates independently and concurrently with the existing tax credit for EV purchases. That was also extended and expanded under the Inflation Reduction Act. In practical terms, this means that if you acquire a qualifying EV and install a qualifying EVSE in the same tax year, you can apply for both credits. Importantly, neither credit is refundable, ensuring that the amount you receive back does not exceed your federal tax liability for the year of the purchases.
Get Your EV Charger Tax Credit 2023
The credit does not kick in automatically upon the purchase or installation of EVSE at your home or business. Instead, the process involves filing your taxes for the year in which you bought and installed the equipment. Here’s a step-by-step guide on how to navigate the claiming process:
Purchase and Install EV Charging Equipment
Any EV charging station that aligns with the specified criteria is eligible for the credit. To claim the credit, you must purchase a charger, install it, and activate it within the designated tax year. It is crucial to retain your equipment receipts and invoices from the installer, as these will be required when submitting your tax return.
Prepare Your Tax Return and Fill Out Form 8911 or 3800
The application for the credit occurs during the tax period. Typically in April of the year following the EVSE purchase and installation (unless an extension is filed). For the tax year 2022, residents, partnerships, and S corporations should complete IRS form 8911 with their annual tax return. Other businesses can utilize IRS form 3800 to claim the EV charger tax credit.
File Your Taxes and Claim Your Credit
The final step involves the formal claiming of the credit by filing your taxes. Submit your personal or business tax return along with the pertinent forms, receipts, and any remaining taxes owed to the IRS by the tax deadline.
The credit operates by reducing your taxable income up to the qualifying amount. If you are entitled to a refund due to overpayment, you will receive it via mail or direct deposit, depending on your chosen method. Importantly, the refund will not exceed the amount you owe in taxes before claiming the credit. Following this straightforward process ensures that you maximize the benefits of the EV charger tax credit in a timely and efficient manner.
There Is More – State Rebates And Incentives
Beyond the federal tax credit EV chargers and charging equipment, there exists a range of state and regional incentives designed to further enhance the benefits of having a home EV charging station.
In California, various utility providers extend both residential and commercial EV charger rebates. Notably, these rebates can reach substantial amounts, going up to $1,000 in certain districts. Meanwhile, New York introduced an EV tax credit rebate, contributing to mitigating the overall expenses associated with purchasing and installing an EV charging station. The Empire State has been known to offer rebates of up to $5,000.
Heading to Arizona, Tucson Electric Power customers stand to gain up to $500 in rebates when acquiring a Level 2 EV Charger. Moreover, certain states permit rebates for multiple chargers within a single household. For instance, Alaska’s Chugach Electric Association runs a rebate program, providing $200 bill credits for up to two Level 2 chargers in a single household.
The availability, amounts, and terms of state EV charger incentive programs can vary significantly. Consequently, it’s advisable to check the specifics of your state’s program to comprehend how the incentives operate in your locality.
Home Solar and EV Charger Installation
In a complementary extension of the EV charger tax credit, the Inflation Reduction Act introduces additional incentives for the installation of home solar panels. It’s facilitated by the Residential Clean Energy tax credit. This credit, applicable to home and residential solar product installations, allows for a nonrefundable tax credit equivalent to 30% of the total cost.
The 30% tax credit is calculated based on eligible expenses. It includes solar panels, power cells, labor, permitting, and developer fees, as well as other essential solar equipment, batteries, and inspection costs.
While the home solar panel tax credit holds inherent advantages, it also presents potential positive aspects for individuals keen on utilizing solar panels to charge their electric vehicles. This arises from the possibility of being eligible for both home and residential solar tax breaks and the tax credit designed for EV chargers and equipment. Such a scenario allows individuals to capitalize on two substantial clean energy tax incentives outlined in the new law.
Ending Notes
You need an EV Charger Installation to begin with. And Clean Calcs can help you with our professional team that knows what it’s doing. We make it hassle-free for you. Call or reach out now to book a consultation.