Tax Credits Kick in Jan. 1 for Alternative Fuel Infrastructure, Commercial EVs, Related Items

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New tax credits for installing alternative fuel infrastructure or buying new commercial electric and fuel cell vehicles are available from the Internal Revenue Service starting Jan. 1.

Businesses purchasing new EVs and fuel cell vehicles can receive IRS tax credits, with different credits available for various alternative fuel vehicle types and weights.

To qualify, vehicles with a gross vehicle weight rating below 14,000 pounds must have a battery capacity of at least seven kilowatt-hours (kWh), while those weighing more are required to have a battery capacity of at least 15 kWh.

The tax credit amount is equal to the lesser of the following amounts:

  • Fifteen percent of the vehicle purchase price for plug-in hybrid EVs.
  • Thirty percent of the vehicle purchase price for EVs and fuel cell EVs.
  • The incremental cost of the vehicle compared to an equivalent internal combustion engine vehicle.

Maximum tax credits may not exceed $7,500 for vehicles under 14,000 pounds and $40,000 for vehicles above 14,000 pounds.

The IRS will not allow businesses to combine this tax credit with the Clean Vehicle Tax credit, which is for EVs and fuel cell vehicles up to 14,000 pounds.


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Also kicking in Jan. 1 is an IRS tax credit for installing fueling equipment for hydrogen, electricity, E85, diesel fuel blends containing a minimum of 20% biodiesel, natural gas or propane.

A tax credit of 30% of the cost or 6% for property (subject to depreciation and not to exceed $100,000) will be available. Permitting and inspection fees are not allowable expenses for the credit.

Eligible fueling equipment must be installed in locations where (according to the census tract) the poverty rate is at least 20%, or the median family income is less than 80% of the state medium family income level.

Projects must also meet apprenticeships and prevailing wage requirements. Consumers who purchase qualified residential fueling equipment next year between Jan. 1 and Dec. 31 may receive a tax credit up to $1,000.

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