What Is the IRS Depreciation Life for EV Charging Stations?

An electric vehicle (EV) charging station for business use is a capital asset, meaning its cost is recovered over time through depreciation. The Internal Revenue Service (IRS) provides specific rules for how businesses can deduct the cost of this equipment. Understanding the correct asset classification and depreciation methods is important for tax planning, as these rules dictate the time period over which the expense can be recognized.

Determining the Asset Classification

The first step is determining the asset’s class under IRS guidelines, which sets its recovery period. EV charging equipment is not considered a structural component of a building; the IRS treats it as equipment, allowing for a shorter depreciation timeline than commercial real estate.

This equipment falls under the Modified Accelerated Cost Recovery System (MACRS) and is often treated as 7-year property. For property placed in service after December 31, 2024, certain clean energy property may be classified as 5-year property.

The total cost eligible for depreciation, known as the basis, includes all costs to place the charger into service. This includes expenses for electrical wiring, installation labor, and site preparation, which are added to the charger’s purchase price to form the asset’s basis.

Calculating Depreciation Under MACRS

Once the asset class is established, the annual depreciation deduction is calculated using MACRS, the standard method for most business property. The General Depreciation System (GDS) is the most common method for EV chargers and provides faster depreciation in the early years of an asset’s life.

For 7-year property, GDS uses the 200% declining balance method, which applies a depreciation rate double the straight-line rate. The half-year convention must also be applied, which assumes the asset was placed in service in the middle of the tax year, meaning the first-year deduction is halved.

For example, an EV charging station with a $20,000 basis is classified as 7-year property. The 200% declining balance method uses a 28.57% rate. In year one, the half-year convention results in a deduction of ($20,000 28.57%) / 2 = $2,857. In year two, the deduction would be ($20,000 – $2,857) 28.57% = $4,898. Some situations may require using the Alternative Depreciation System (ADS), which uses a longer recovery period and the straight-line method.

Special Depreciation Rules and Tax Credits

Beyond standard MACRS depreciation, several incentives can accelerate cost recovery or provide direct tax savings. These options can be used together, but specific rules govern their interaction.

Bonus Depreciation

Bonus depreciation allows for the immediate deduction of a percentage of an asset’s cost in the year it is placed in service, applying to new and used EV chargers. The rate was 60% for property placed in service in 2024. It is scheduled to decrease to 40% for property placed in service in 2025 and 20% in 2026, after which it is eliminated.

Section 179 Expensing

The Section 179 election allows a business to treat the cost of qualifying equipment as an immediate expense. For 2025, businesses can expense up to $1,290,000 in qualifying asset costs. This deduction is limited to the business’s taxable income for the year and is subject to a phase-out threshold that begins when a business places more than $3,220,000 of qualifying property into service.

Alternative Fuel Vehicle Refueling Property Credit

The Section 30C tax credit is available for alternative fuel vehicle refueling property. For businesses, the credit is 6% of the charging station’s cost, but can increase to 30% if prevailing wage and apprenticeship requirements are met. The credit is capped at $100,000 per item and the property must be in a qualifying location, like a low-income community or non-urban census tract. If this credit is claimed, the asset’s depreciable basis must be reduced by the credit amount before calculating other depreciation.

Reporting Depreciation on Tax Forms

The final step is to report depreciation figures to the IRS on Form 4562, Depreciation and Amortization. This form is filed with the business’s annual income tax return, such as a Form 1120 for corporations or a Schedule C for sole proprietors. A separate Form 4562 should be filed for each distinct business activity.

The Section 179 expense deduction is reported in Part I of the form. Any bonus depreciation is reported in Part II, “Special Depreciation Allowance and Other Depreciation.” This part is also where regular MACRS depreciation for assets placed in service during the current tax year is reported.

Ongoing depreciation for assets placed in service in prior years is reported in Part III, “MACRS Depreciation.” The tax credit for alternative fuel vehicle refueling property is claimed on Form 8911.