The EV Charger Federal Tax Credit is Back

The Inflation Reduction Act revives the EV charger federal tax credit for EV charging stations and equipment that had expired in 2021, with a few key changes to know.

Electric vehicle charging station
(Image credit: Getty Images)

You may have heard that President Biden signed the Inflation Reduction Act into law on August 16. The massive climate, energy, tax, and healthcare package contains numerous clean energy incentives including tax credits for the purchase of new and used electric vehicles. But you may not have heard that the Inflation Reduction Act also revives the EV charger federal tax credit for electric vehicle charging stations and EV charging equipment that had expired in 2021. 

And there are some changes to the prior EV charger tax credit that you will want to be aware of, so that you can potentially take advantage of the tax break.

EV Charger Tax Credit 2023: What is the Tax Write Off for EV Chargers?

The federal tax credit for electric vehicle chargers originally expired on December 31, 2021. However, the Inflation Reduction Act’s Alternative Fuel Refueling Property tax credit extends the EV charger tax incentive for ten years—through December 31, 2032.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%
https://cdn.mos.cms.futurecdn.net/flexiimages/xrd7fjmf8g1657008683.png

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

So, what does that mean for you? Essentially, if you install a home EV charging station, the tax credit under the Inflation Reduction Act is 30% of the cost of hardware and installation, up to $1,000. Also, beginning in 2023, the EV charger tax credit for business and home installations, will apply to other EV charger equipment like bidirectional (i.e., two-way) chargers.

Businesses that that install new EV chargers or EV charger equipment can also benefit from a tax incentive of up to 30% of the total cost of equipment and installation. But they will have to meet certain labor and construction requirements to be eligible to claim the full incentive.

Before the Inflation Reduction Act, the limit on the amount of the EV charger tax credit for businesses was $30,000 (which still applies to projects completed before the end of 2022). However, under the new law, if you complete the business installation project after 2022, the tax credit per property item, is up to $100,000 per EV charger.

All of this means that while electric vehicle chargers are not entirely tax deductible, you might benefit, to some degree, from the tax incentives in the Inflation Reduction Act that apply for refueling property.

Biden’s EV Charger Station Investment Plan

The EV charger federal tax credit is revived as President Biden announced in September a $900 billion EV charging station investment plan. The plan, which also comes as the Inflation Reduction Act provides tax incentives for new and used electric vehicles, is to build 100 million EV charging stations in thirty-five states. The Biden administration has indicated that the approved investment will span 53,000 miles of national highway.

The massive investment in EV charging stations stems from the Bipartisan Infrastructure Law (signed last year) that the White House says, “invests $7.5 billion to build a national EV charger network so that charging EVs is predictable, reliable, and accessible.”

Can Solar Panels Be Used for EV Charging?

In a related addition to the EV charger tax credit, the Inflation Reduction Act provides incentives for installation of home solar panels with the Residential Clean Energy tax credit. For home and residential solar product installations, the Inflation Reduction Act allows a nonrefundable tax credit of up to 30% of the total cost.

That 30% tax credit is based on eligible expenses like solar panels, power cells, labor, permitting and developer fees, other necessary related solar equipment, batteries, and inspection costs.

In its current form, the solar energy tax credit in the Inflation Reduction Act applies for the next ten years—through December 2032. And the tax credit is available for the year in which you complete the solar installation.

The home solar panel tax credit can be beneficial on its own, of course. But it also has potential positive implications for people interested in using solar panels to charge their electric vehicles. That’s because if you’re eligible for both home and residential solar tax breaks and the tax credit for EV chargers and equipment, you could reap the benefits of two significant clean energy tax incentives in the new law.

And if you’re even luckier, you could be one of the consumers who is eligible next year to claim the Inflation Reduction Act’s EV tax credit for new and used electric vehicles.

EV Charger Rebates and Incentives

In addition to the federal tax credit for EV chargers and EV charging equipment, there are numerous state and regional incentives that you may be able to benefit from if you have a home EV charging station.

For example, some utility providers in California offer both residential and commercial EV charger rebates. These California EV charger rebate amounts can be as high as $1,000 in some districts. New York offers an EV tax credit rebate that can also help offset the purchase and installation costs of an EV charging station. The up to $5,000 New York EV tax rebate is funded through the end of this year.

These are just a couple of examples of state EV charger incentives, but keep in mind that because the availability, amount, terms, and conditions surrounding state EV charger incentive programs vary considerably. So, it’s important to check your state to understand how the incentives work in your area.

Additionally, the U.S. Department of Energy has a searchable database on its website that can help you find state tax credits and rebates that might help offset or lower the cost of your EV charger and EV charging equipment.

More on Tax Credits and the Inflation Reduction Act

Get a free issue of The Kiplinger Tax Letter (opens in new tab), with timely tax advice and guidance to help  protect your hard-earned wealth as the tax laws change. No information is required from you to get your free copy.

Kelley R. Taylor
Tax Editor, Kiplinger.com

With more than 20 years' experience as an in-house legal counsel and business journalist, Kelley R. Taylor has contributed to numerous national print and digital magazines on key issues spanning education, law, health, finance, and tax. Kelley particularly enjoys translating complex information in ways that help empower people in their daily lives and work.