Alternative Refueling Property Credit
Is up to $100,000
Current Conditions In the United States
As a result of escalating gas prices, larger incentives coupled with growing environmental concerns, consumers are increasingly transitioning to alternative fuels instead of gasoline (otherwise know as ICE vehicles or Internal Combustion Engine Vehicles). In 1992, the U.S. government introduced a tax incentive to promote the adoption of facilities for storing and dispensing alternative fuels. This incentive has now expanded to include a tax credit for equipment used to recharge electric cars. If you have made your home or business ready for alternative fuel vehicles, you might be eligible to use Form 8911: Alternative Fuel Vehicle Refueling Property Credit to lower your federal tax liability.
18% of All light duty vehicles sold in the United States in Q3 2023 was either an EV, Hybrid (or alternate fuel) vehicle.
Key Terms
The Department of Energy established the definition of alternative fuels through the Energy Policy Act of 1992. Moreover, the Internal Revenue Service deems electricity and fuels containing at least 85 percent natural gas, liquefied or compressed natural gas, propane, hydrogen, or ethanol as alternative fuels. This also includes blends of biodiesel, diesel, and kerosene with a minimum of 20 percent volume derived from biodiesel fuel. Storage tanks, dispensing equipment, and electric vehicle charging supply equipment, also known as EVCSE, are considered refueling property by the IRS.Energized individual returns
EnergyOne predicts that a substantial number of pure electric vehicles (EVs) will be introduced to the market by the conclusion of 2024. If you purchase an electric car and install a new Electric Vehicle Charging Station Equipment (EVCSE) at your primary residence to recharge its batteries, you may have the opportunity to reduce your tax liability through the Alternative Fuel Vehicle Refueling Property Credit. The maximum credit is either $1,000 or 30 percent of the installation cost, whichever amount is less.Taking advantage of the business incentive
By 2023, the U.S. boasted more than 138,100 EV charging stations, with the number steadily rising to accommodate the surging demand driven by the increase in EV sales. If you are a business owner who offers or distributes fuel for alternative fuel vehicles as defined by the IRS, such as electricity, you may be eligible for the Alternative Fuel Vehicle Refueling Property Credit when you initially install new storage tanks or dispensing equipment to cater to your customers. The cost of any buildings cannot be included, and the property or equipment must be physically present at the location where you dispense the alternative fuel into vehicle tanks. The maximum credit per location is capped at $100,000 or 30 percent of the cost, whichever is lower. From the IRSQualified Refueling Property
To qualify for the credit, refueling property must be used to store or dispense clean-burning fuel. In addition, the following requirements must be met to qualify for the credit:- The refueling property is placed in service during the tax year.
- The original use of the property began with the taxpayer.
- The property is used primarily inside the United States.
- If the property is not business or investment use property, it must be installed on property used as a main home.
- Charging stations for 2- and 3-wheeled vehicles (for use on public roads)
- Bidirectional charging equipment (vehicle-to-grid or V2G)