Tax Incentives for Installation of EV Charging Stations

In an effort to promote the adoption of electric vehicles, reduce greenhouse gas emissions, and improve air quality, the U.S. government and New York State are offering tax incentives for the installation of EV charging stations. By providing financial incentives, they aim to encourage businesses and property owners to invest in charging infrastructure, which can help alleviate the financial burden for EV users and support the transition to cleaner transportation. The initiatives also align with environmental and energy goals, helping to reduce the dependence on fossil fuels.

NY EV Make-Ready Program

A rebate program known as “NY EV Make-Ready Program” is available for both Level 2 and DCFC charging stations across the state of New York. According to the US Department of Transportation a Level 2 charger has capacity up to 240 volts for residential applications and up to 208 volts for commercial vehicle applications. The term “DCFC” refers to Direct Current Fast Charging, characterized by charging a vehicle from zero to 80% charged in twenty minutes to one hour.

Taxpayers must apply for eligibility for the benefits offered for this program, which includes reimbursement of 50%, 90% or even 100% of certain equipment and installation costs to prepare a site for the installation of charging equipment. For EV charging stations that are installed within disadvantaged communities up to 100% of eligible costs may be eligible for reimbursement.

Eligible costs under this program include conduits, conductors, trenching/boring, foundation of the charging station, electric panel, pad-mounted transformer, and landscaping to return the site to its prior condition. However, the following costs are identified as expressly ineligible for reimbursement: the charging station itself and its pedestal and installation, telecom and network equipment and service, signs, maintenance, lighting, civil design, permits, warranty, association fees, bollard, striping/paining, landscaping beyond restoring the site to original condition, and sales tax.

The differences between the 50% category and 90% relate to whether the installation is for private use (50%) or public use (90%), and how many different types of vehicles may be serviced by the equipment.

New York Alternative Fuels and Electric Vehicle Recharging Property Credit

New York State also offers an income tax credit for investments in alternative automotive fuels and electric vehicle recharging. Electric vehicle recharging property is defined to include all the equipment needed to convey electric power from the electric grid or another power source to an onboard vehicle energy storage system. This tax credit is nonrefundable meaning any amount of tax credit in excess of New York tax liability cannot be claimed for a refund; however, it can be carried forward indefinitely to reduce income tax liability in future tax years. The credit is currently set to terminate at the end of 2025, therefore any charging stations would need to be placed in service on or before December 31, 2025, to be eligible for this tax credit.

New York State also requires that the qualifying property must be:

• Located in within the State;
• Used for 50% or more of the taxable year in a trade or business carried on in New York State;
• Within the definitions of “alternative fuels vehicle refueling property” or “electric vehicle refueling property”; and
• Not paid for from the proceeds of grants awarded before January 1, 2015.

For each installation of qualifying property, the credit is equal to the lesser of: (A) $5,000; or (B) 50% of the cost of the qualifying property less any costs paid from the proceeds of grants.

The statute provides for credit recapture if the qualifying property ceases to meet all of the elements described above before the end of its recovery period (useful life), or if the owner sells the property and knows or has reason to know that the property will be used in a manner that no longer qualifies under the requirements for the tax credit.

Charge Ready New York 2.0

This program, administered by NYSERDA has a $12 million dollar budget, which currently has

a remaining amount of approximately $8.7 million. The funds can be tracked on NYSERDA's website. Under this program, NYSERDA offers grants of $4,000 per charging port installed for public facilities located within a disadvantaged community. Public facilities include, but are not limited to, municipal parking lots, on-street parking on public roads, government buildings, public libraries, municipal parks, state parks, and municipal recreation centers. 

The program also offers grants of $2,000 per charging station for ports installed at a workplace (minimum of 20 parking spaces with at least 20 employees working at the site) or multi-unit dwelling location (requires a parking facility with at least 20 parking spaces that primarily serves a multi-unit dwelling with 10 or more connected housing units).  An additional incentive of $500 per port may be awarded for eligible charging equipment installed at a workplace or multi-unit dwelling location if located within a disadvantaged community.

EV Charging Station Credit – Federal (IRC Section 30C)

The federal alternative fuel refueling station credit has been extended through 2032. The credit is available for both individual and commercial uses and is calculated as a percentage of the cost of purchasing and installing electric vehicle charging stations, among other qualifying types of property. For this credit to apply, the qualifying property must be located in an eligible census tract, a standard which can be met in one of two ways: the census tract must either (A) not be on the U.S. Census Bureau's list of urban areas; or (B) meet the eligibility standards for the federal New Markets Tax Credit under Section 45S of the Internal Revenue Code. The property must also be located in a low-income community or non-urban area.

Beginning January 1, 2023, the benefits offered for this tax credit include:

• For individual/residential uses, the tax credit covers 30% (up to $1,000 per unit) of the cost of qualifying equipment;
• For commercial uses, the tax credit covers 6% (up to $100,000 per unit) of the cost of qualifying equipment (may be increased to 30% if prevailing wage and apprenticeship requirements are met).

Qualifying equipment includes fueling equipment for natural gas, propane, hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel. Additionally, bidirectional charging equipment, two-wheeled vehicle equipment, and three-wheeled vehicle equipment are all also eligible for this tax credit.

The statute provides that the taxpayer must reduce the basis of any property for which a credit is allowable by the amount of such credit allowed with respect to the property. This tax credit does provide for recapture pursuant to proposed regulations from the IRS, if within three years of the property being placed in service:

1. The taxpayer claiming the section credit modifies the equipment such that it no longer qualifies as Section 30C property;
2. The depreciable property ceases to be used predominantly in a trade or business;
3. The property completely ceases to be used in a trade or business, but continues to be used for personal use; or
4. The taxpayer sells or disposes of the 30C property and the taxpayer knows or has reason to know that the property will cease to qualify as Section 30C property. Generally, unless one of the aforementioned recapture events occurs, a sale or other disposition of Section 30C property is not a recapture event.

If you have any questions about the tax incentives available for electric vehicle charging stations or need assistance with the calculating anticipated tax benefits, contact Kevin Sayles at Bousquet Holstein PLLC.