Federal Tax Credits
Electric Vehicles
- Tax Credit: $2,500 to $7,500 per new or used EV purchased for use in the U.S.
- To find out specific tax credit amounts for individual vehicles, visit FuelEconomy.gov’s Tax Credits for Electric Vehicles and Tax Credits for Plug-in Hybrids pages or read about it on our website here.
- Refueling Infrastructure Tax Credit: The Inflation Reduction Act of 2022 (IRA) extended and amended the 30C Alternative Fuel Vehicle Refueling Property Credit (30C credit), which provides an income tax credit for qualified alternative fuel vehicle refueling property.
- Consumers who purchase and install qualified alternative fuel vehicle refueling property for their principal residence, including electric vehicle charging equipment, between December 31, 2022, and January 1, 2033, may receive a tax credit for each item of property that is generally the lesser of 30% of the property’s cost or $1,000.
- For businesses as well as applicable entities, including state, local, tribal and other qualifying tax-exempt organizations, the credit for each item of property is generally the lesser of 6% (or 30% if certain prevailing wage and apprenticeship requirements are met) of the property’s cost or $100,000. The credit is available for property placed in service between December 31, 2022, and January 1, 2033.
- Learn more here.
- Additional Resources:
- To claim the credit, fill out IRS Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit.
- For vehicles acquired for personal use, report the credit from Form 8936 on the appropriate line of your Form 1040, U.S. Individual Income Tax Return.
- For vehicles purchased in 2010 or later, this credit can be used toward the alternative minimum tax (AMT).
- To learn more about the law, visit the IRS’s Plug-in Electric Drive Vehicle Credit webpage
Natural Gas / Biofuels / Propane
- Tax Credit: $0.50 per gallon | Applies to alternative fuel sold for use or used as a fuel to operate a motor vehicle
- Propane/natural gas sold after 2015: tax credit based on gasoline gallon equivalent (GGE) or diesel gallon equivalent (DGE).
- For taxation purposes, one GGE is equal to 5.75 pounds (lbs.) of propane and 5.66 lbs. of compressed natural gas. One DGE is equal to 6.06 lbs. of liquefied natural gas.
- Eligible entity must be liable for reporting and paying the federal excise tax on the sale or use of the fuel in a motor vehicle
- Tax-exempt entities such as state and local governments that dispense qualified fuel from an on-site fueling station for use in vehicles qualify for the incentive.
- Eligible entities must be registered with the Internal Revenue Service (IRS). The incentive must first be taken as a credit against the entity's alternative fuel tax liability; any excess over this fuel tax liability may be claimed as a direct payment from the IRS.
- The tax credit is not allowed if an incentive for the same alternative fuel is also determined under the rules for the ethanol or biodiesel tax credits.
- For more information about claiming the credit, see IRS Form 4136, which is available on the IRS Forms and Publications website. (Reference Public Law 116-94, Public Law 115-123, Public Law 114-113, and 26 U.S. Code 6426)
Additional Information:
- To learn more about how the tax credit extension affects propane, see the National Propane Gas Association Fact Sheet.
- Fuels: natural gas, liquefied hydrogen, propane, P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, and compressed or liquefied gas derived from biomass
- Tax Credit: $1.00 per gallon | Applies to biodiesel and biodiesel mixtures
- Tax Credit: $0.10 per gallon | Applies to small agri-biodiesel producers
Alternative Fuel Infrastructure Tax Credit:
Fueling equipment for natural gas, propane, liquefied hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel installed through December 31, 2022, is eligible for a tax credit of 30% of the cost, not to exceed $30,000. Permitting and inspection fees are not included in covered expenses. Fueling station owners who install qualified equipment at multiple sites are allowed to use the credit towards each location. Unused credits that qualify as general business tax credits, as defined by the Internal Revenue Service (IRS), may be carried backward one year and carried forward 20 years. For more information about claiming the credit, see IRS Form 8911, which is available on the IRS Forms and Publications website.
Beginning January 1, 2023, fueling equipment for natural gas, propane, hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel, is eligible for a tax credit of 30% of the cost or 6% in the case of property subject to depreciation, not to exceed $100,000. Eligible projects that meet prevailing wage and apprenticeship requirements may be eligible to receive the full 30% tax credit, regardless of depreciation status. Permitting and inspection fees are not included in covered expenses.
Read more here.
