Proposed regs issued on Alternative Refueling Property Credit

The Treasury and the Internal Revenue Service have issued proposed guidance for the Alternative Fuel Vehicle Refueling Property Credit. 

The Inflation Reduction Act amended the credit for qualified alternative fuel vehicle refueling property, and the recent proposals apply to qualified alternative fuel vehicle refueling property placed in service from Dec. 31, 2022, to Jan. 1, 2033.

Among key points of the credit:

• Property not subject to depreciation has a credit of 30% of the cost of the qualified property placed in service during the tax year.
• Depreciable property has a credit of 6% of the cost of the qualified property placed in service during the tax year. (This may jump to 30% of the cost if wage and apprenticeship requirements are met.)
• The credit is limited to $1,000 per item of non-depreciable property and $100,000 per item of depreciable property. 
• Property must be placed in service in an eligible census tract to qualify. An "eligible census tract" is any population census tract that's a low-income community or any population census tract that is not an urban area. 

Justin Sullivan/Photographer: Justin Sullivan/Ge

The proposed regs help determine whether a population census tract is an eligible census tract and provide guidance on how to calculate the credit, including what constitutes an "item" of qualified alternative fuel vehicle refueling property, the additional costs considered in determining the cost of the item and how to treat dual-use property. 

The guidance also provides definitions, general rules and special rules, including basis reduction, recapture, and apportionment of the credit between business-use and personal-use property. 

The Treasury and the IRS also issued Notice 2024-64, which modifies guidance on eligible census tracts that was published in February.