Proposed Regulations on the Section 30C Alternative Fuel Vehicle Refueling Property Credit

The Section 30C Alternative Fuel Vehicle Refueling Property Credit (the “Section 30C Credit”) provides a credit against federal income tax for eligible costs of qualified alternative fuel vehicle refueling property. The Section 30C Credit was originally enacted by the Energy Policy Act of 2005 and has since been amended multiple times, most recently by the Inflation Reduction Act of 2022, which brought about the following changes to the Section 30C Credit: (i) introducing the $100,000 “single item” cap on the eligible costs of depreciable property and $1,000 cap for non-depreciable property; (ii) requiring the property to be located in an eligible census tract; and (iii) requiring certain prevailing wage and apprenticeship requirements to qualify for the increased credit amount from 6% of the eligible costs by a multiple of five.

On September 18, 2024, the U.S. Treasury Department and Internal Revenue Service released Proposed Regulations on the Section 30C Credit (the “Proposed Regulations”). The Proposed Regulations offer further guidance on critical aspects of the Section 30C Credit, including eligibility, definitions, and compliance. Key aspects of the Proposed Regulations include:

1. Eligibility criteria: The Proposed Regulations clarify what types of refueling properties qualify, including electric vehicle charging stations and hydrogen refueling facilities.
2. Definition of a “single item” of Section 30C Property: The Proposed Regulations define a “single item” of property and clarify the treatment of charging ports for purposes of the $100,000 cap. Each individual charging port, fuel dispenser, or energy storage unit is now considered a distinct item eligible subject to its own $100,000 cap.
3. Functionally Interdependent Property: The Proposed Regulations describe this as equipment essential to the operation of multiple charging ports or fuel dispensers.
4. Eligible Census Tract: The Proposed Regulations stipulate that eligible properties must be located in either low-income communities, as determined by the Community Development Financial Institutions Fund using American Community Survey five-year estimates, or non-urban areas, based on the most recent decennial census.
5. Recapture Period of Section 30C: The Proposed Regulations provide the Section 30C recapture period is three years after the property is placed in service.
6. Compliance requirements: The Proposed Regulations outline the reporting and compliance obligations for businesses seeking to claim the credit, ensuring that investments meet both environmental and operational standards.

Although the Proposed Regulations provide guidance on how businesses can qualify for and claim the credit, further guidance will likely be needed to address other implementation details and specific definitions of qualifying properties. For further analysis of the Proposed Regulations for Section 30C, please see our recent Paul Hastings client alert: Treasury Issues Proposed Regulations on the Section 30C Alternative Fuel Vehicle Refueling Property Credit.