BREAKING: Extension of Electric Car Charging Station Incentives Snuck Into Tax Cut Extension Bill

By · December 14, 2010

Eaton level 2 and DC fast chargers

Unless Congress votes to extend the electric vehicle charging station tax credit past December 31, 2010, most of the tens of thousands of new EV owners set to buy cars next year and businesses wanting to install charge stations will have to pay full price for stations like these built by EATON.

Last week we brought you news of the impending December 31, 2010, expiration of lucrative federal incentives towards the purchase and installation of electric car charging stations. The incentives in question allow for 50% of the cost of installing a charging station on commercial or private property (up to $2,000 private, $50,000 commercial) to be refunded as a tax credit. If they expire on December 31, as current law allows, it would mean only a tiny fraction of the oncoming slew of tens of thousands of electric vehicle owners would be able to take advantage of it—not to mention the businesses that want to install them on their property.

It now appears, based on information I've obtained from Senator Jeff Merkley's office, that the most current language in the controversial tax cut extension bill—which the Senate has just voted to move forward on an 83-15 vote—includes language inserted at the last minute to extend the tax credit for one more year, through December 31, 2011. If you want to really dig into it yourself, check on the 12/13 revision here and read page 51, sec 711, "Alternative Fuel Vehicle Refueling Property," where it talks about revising Section 30C of the Internal Revenue Code.

Technically known as the "Alternative Fuel Infrastructure Tax Credit," it applies to everything from natural gas stations to hydrogen stations to EV charging stations. Up until the end of 2009, the tax credit was only good for 30% of the cost of purchase and installation. For 2010, the credit was increased to 50%. It is unclear if the proposed one year extension would drop those levels back down to 30% or keep them at the 50% level. Let's hope for an extension of the 50% credit, but at this point even a 30% credit would be more than most electric vehicle advocates were expecting given the dysfunctionality of our lame duck, pre-holiday congress.

Comments

· · 3 years ago

That's one of the more worthy elements of that bill. I just wonder when our government will be able to stop borrowing money from China!

And, wow, that "EV Quick Charger" reminds me of a gas pump!

· · 3 years ago

Abasile, on a completely personal note (not reflecting the views of PluginCars.com) I think we should have just let all the tax cuts expire. We've been borrowing money on future debt for far too long. I do think the EV tax credit is one of the only parts of the bill that is great, and I'm glad they got off their duffs and decided to extend it. Hopefully that part will stay included as the bill moves through to final passage.

· · 3 years ago

If they are going to leave the tax credits in for the ultra rich, then they also should leave the charge stations tax credit in...after all, the charge stations are for us little people whose finding it more and more difficult to fill our tanks up with petro in an ever more petro polluted world.

· · 3 years ago

@Nick: We definitely agree that promotion of EVs is very good public policy and will save money in the long run! I am in favor of tax credits for businesses that install EV chargers available to the public. For individuals, I'd rather see a larger tax credit for the purchase of an EV.

Personally, I'm in favor of keeping some but not all of the tax cuts, while aggressively cutting spending in multiple areas. The size of our government needs to be cut way down, and we need a balanced budget sooner rather than later!

· Richard Kelly (not verified) · 3 years ago

Anybody know who inserted the extension at the last minute? Who do we have to thank?

· · 3 years ago

Richard,

Not sure, but I can see if I can figure it out (no promises, the folks on the hill are busy right now).

· Leafinterest (not verified) · 3 years ago

Is this credit still limited by the Alternative Minimum Tax?

· · 3 years ago

@Leafinterest -- Excellent question. In fact, I don't even know what the AMT is, but I know it could affect tax credits for EVs, EV charging stations, etc.

I've been contemplating doing a piece on SolarChargedDriving.Com that explains in plain English the specific things people need to do to set themselves up to take advantage of Federal and state EV tax credits as effectively as possible. Have a feeling I won't have the time to get around to doing this though.

(Any other takers on this story, Nick :-)

Seems like most of the stuff I've seen in the media simply assumes people will hire a tax consultant, which might be true. But it sure would be nice to see something that explains, in detail the whole tax credit thing, which is complex.

1. For instance, it's my understanding that the Alternative Fuel Infrastructure Tax Credit and the general EV tax credit (not sure what it's actually called) must be taken in a single year.
2. That means that one must plan ahead and know exactly how many allowances to take on one's W-4 in order to owe enough to the Feds to take maximum advantage of the various EV tax credits. If you don't do the W-4 right in the year you buy the EV, do the charging station, seems to me, there's a big risk you'll lose out on the tax credits, perhaps in a big way. In fact, it seems questionable how many folks will actually: a) have the right income to get the maximum $7,500 credit for buying a LEAF, etc.; b) have the foresight/know-how to set themselves up to do this.

Yet, with the exception of a cars.com (http://blogs.cars.com/kickingtires/2010/12/considering-nissan-leaf-or-ch...) piece I saw about a week ago, I've seen essentially nothing written about this. It just seems to be assumed that EV buyers will do OK by the tax credit. Not sure this is actually true. In fact, I have a strong feeling it isn't true...

· · 3 years ago

@Christof Demont... I've also had a lot of doubts about the $7500 tax credit for buying an EV from an eligible manufacturer. My first look at it seemed to suggest that the tax credit 1) isn't refundable, and 2) can't be carried over to future years if one doesn't have taxes to offset it in the year one claims it. [By contrast, the solar panel tax credit can be carried over to future tax years.] That seems to be confirmed by the article you linked to.

That estimated gross income of $54,680 for a single person using the the standard deduction, to fully use the $7500 deduction, is very high by my standards. Couples, those with kids, and those with high Schedule A deductions would need considerably higher incomes.

Why the tax credit wasn't made refundable, I don't understand. For me, because I live entirely off of savings and have a tiny income, I would have to artificially boost my income by converting a large chunk of a regular IRA to a Roth IRA. I could do that, but it would be something of a waste compared to slowly withdrawing from my IRA as I have been doing for many years. But better that than lose some of the tax credit.

Of course, if one doesn't get one of the first 200,000 EVs by a particular manufacturer—as I understand it—the tax credit issue becomes moot.

I wonder if automakers will lower the prices of their EVs when they no longer qualify for the credit? Did that happen with hybrids?

· Arthur (not verified) · 3 years ago

@dgpcolorado You can lease the car, and then the $7500 will be deducted by the dealer to produce the lease cost. You could turn around a month later and buy out the lease if you want. This way you don't have to claim the $7500 on your own tax return, or be eligible to do so.

· · 3 years ago

Arthur, That's an interesting strategy, although I assume that there will be some extra costs rolled into a lease that would have to be absorbed and would lower the benefit, versus just buying the car outright.

The problem for me is that I likely wouldn't qualify for a lease even with my 800+ credit score because my income is too tiny. The concept of living off of savings is completely foreign to most lenders.

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