Treasury, IRS publish proposed regulations under Section 30C

The U.S. Department of the Treasury and the IRS published proposed regulations under section 30C of the U.S. Internal Revenue Code on September 18, 2024, relating to the alternative fuel vehicle credit. The proposed regulations clarify a number of issues and are open for public comment for 60 days.

Section 30C was originally enacted by the Energy Policy Act of 2005 to provide a credit for the cost of qualifying property to refuel alternative fuel vehicles. Section 30C has been amended several times since its enactment, including by the Inflation Reduction Act (IRA), which extended the credit to property placed in service after December 31, 2021, and modified the credit for property placed in service after December 31, 2022, and on or before December 31, 2032.

Specifically, with respect to business activities, the changes made by the IRA to section 30C include the following:

Traditionally, the Section 30C credit amount was limited for each location, but with the introduction of the IRA, the $100,000 limit applies to any individual location.
The credit is now subject to applicable minimum wage and apprenticeship requirements. (See previous Holland & Knight alert, “A Look at IRA Prevailing Wage and Apprenticeship Requirements Final Regulations Highlights,” July 8, 2024.) If applicable minimum wage and apprenticeship requirements are not met, the credit is reduced from 30 percent to 6 percent.
Finally, the credit also requires that the refueling property be located in a qualifying census tract. This definition was discussed in previous IRS Notice 2024-20 and related Appendix A and B. (See previous Holland & Knight Alert, “Treasury, IRS Release Section 30C Alternative Fuel Vehicle Refueling Property Guidance,” January 24, 2024.) On September 18, 2024, the IRS also issued Notice 2040-64, which provided updated information on a mapping tool for determining whether a census tract qualifies under Section 30C.

The regulations issued on September 18, 2024 propose:

A single 30C property is defined as each charging port that is used for recharging; a charging port is defined as a system in a charger that charges a single motor vehicle.
Related assets – assets that are functionally interdependent and, where applicable, form an integral part of the refuelling or loading assets – are included for the purposes of calculating the credit.
The recovery period for Section 30C loan is limited to three years from the date of possession of the property and occurs only in limited cases.

The Holland & Knight Energy Tax team is reviewing the proposed legislation and will provide additional analysis. To ensure you receive this upcoming analysis, sign up for our alerts.