How to Claim the EV Charger Tax Credit Extension

The Inflation Reduction Act of 2022 extended and modified a tax incentive for installing electric vehicle chargers. This legislation renewed the credit, officially named the Alternative Fuel Vehicle Refueling Property Credit, and introduced new rules for property placed in service after 2022. The changes altered who can claim the credit, where the equipment must be located, and how the final credit amount is calculated. The credit is now available through the end of 2032.

Eligibility Requirements for the Credit

To qualify for the credit, conditions related to the taxpayer, property, and location must be met. Both individuals and businesses are eligible to claim the credit. For individuals, the charging equipment must be installed at their principal residence, while businesses can claim the credit for property they install for commercial use.

The equipment must be “qualified alternative fuel vehicle refueling property,” meaning its original use must begin with the taxpayer. An update in the law is the inclusion of bidirectional charging equipment, which allows electricity to flow both to the vehicle and from the vehicle back to the grid or a home.

A new requirement is that the property must be located within an “eligible census tract.” This is defined as either a low-income community or a non-urban census tract. The Internal Revenue Service (IRS) provides specific definitions for these geographic limitations. This requirement aims to incentivize the development of charging infrastructure in underserved areas.

Calculating the Credit Amount

The calculation method differs for individuals and businesses. For an individual, the credit is 30% of the total cost of the property, but the credit cannot exceed $1,000 per item. The cost used for this calculation, known as the cost basis, includes the purchase price of the charger and any associated installation fees.

For businesses, the calculation involves a two-tiered system. The base credit is 6% of the property’s cost, but it can increase to 30% if the business meets prevailing wage and apprenticeship requirements. These labor standards apply to projects where construction began on or after January 30, 2023. The maximum credit for businesses is higher, capped at $100,000 for each item of property.

Information Needed to Claim the Credit

Before filing, taxpayers must gather specific information. This includes the total cost basis (the charger’s price and all installation expenses), the date the property was “placed in service,” and the full address where the equipment was installed. The “placed in service” date is when it was ready and available for use.

This information is reported on IRS Form 8911, Alternative Fuel Vehicle Refueling Property Credit. A key step is confirming the property’s location is within an eligible census tract. The Department of Energy’s Argonne National Laboratory provides a mapping tool to help determine if a property is in a qualifying area, but taxpayers are responsible for ensuring they meet all location requirements.

How to Claim the Credit

Once Form 8911 is completed, the final step is to file it with your annual income tax return. You do not file Form 8911 by itself; it must be included as part of your larger tax filing.

For individual taxpayers, the credit amount from Form 8911 is transferred to Schedule 3 (Form 1040), titled “Additional Credits and Payments.” This schedule is used to report various tax credits that reduce your tax liability. Businesses will report the credit on their respective income tax returns, such as Form 1120 for corporations or Form 1065 for partnerships.