IRS Notice 2024-20: Your Guide to 30C Alternative Fuel Vehicle Refueling Credit Eligibility in 2024

SECTION 1. UNLOCKING THE 30C CREDIT: WHAT YOU NEED TO KNOW FOR 2024 AND BEYOND

The Department of the Treasury and the Internal Revenue Service (IRS) have issued Notice 2024-20 to clarify the evolving landscape of the alternative fuel vehicle refueling property credit, also known as the § 30C credit. This notice serves as crucial guidance for taxpayers aiming to claim this credit, particularly in light of amendments introduced by the Inflation Reduction Act (IRA). Understanding the eligibility requirements, especially concerning the location of refueling property within specific population census tracts, is paramount for accessing these valuable tax benefits.

This comprehensive guide breaks down IRS Notice 2024-20, focusing on the key aspects that impact your eligibility for the § 30C credit. We will delve into the background of this credit, define essential terms, and, most importantly, clarify the geographic requirements that your qualified alternative fuel vehicle refueling property must meet to be eligible for the credit in 2024 and subsequent years. This analysis is essential for automotive businesses, fuel providers, and individual taxpayers looking to invest in and benefit from alternative fuel infrastructure. Until proposed regulations are officially released, taxpayers can confidently rely on the guidelines provided in this notice and the clarifications detailed below. Appendices A and B, referenced within the notice and available on the IRS website, offer lists of eligible census tracts, further simplifying the verification process.

SECTION 2. BACKGROUND OF THE 30C CREDIT: EVOLUTION AND ENHANCEMENTS

2.01 ORIGINS OF THE CREDIT

The § 30C credit was originally established in 2005 through the Energy Policy Act, aiming to incentivize the adoption of alternative fuels by providing financial relief for the installation of qualified refueling property. Since its inception, the credit has undergone several amendments, reflecting the evolving priorities in energy policy and technological advancements in the automotive sector.

2.02 INFLATION REDUCTION ACT AMENDMENTS: A NEW CHAPTER FOR THE 30C CREDIT

The most recent and significant changes to the § 30C credit were introduced by the Inflation Reduction Act of 2022 (IRA). These amendments not only extended the credit for property placed in service after December 31, 2021, but also fundamentally reshaped its structure and scope for property placed in service after December 31, 2022, and before January 1, 2033. These changes are critical for anyone considering investing in alternative fuel vehicle refueling infrastructure in 2024 and the coming years.

2.03 PERSONAL AND BUSINESS CREDIT CLASSIFICATIONS

The § 30C credit can function as either a personal credit or a general business credit, depending on the nature of the property. Generally, it is considered a nonrefundable personal credit. However, for depreciable property, the portion of the credit attributable to depreciation is treated as a current year business credit under § 38(b). Understanding this distinction is important for correctly claiming the credit and integrating it into your overall tax strategy.

2.04 KEY MODIFICATIONS INTRODUCED BY THE IRA

The IRA brought forth several key modifications to § 30C, significantly impacting its application and benefits:

Credit Limitation Restructuring: The IRA shifted the credit limitation from a per-location basis to a per-item basis for qualified alternative fuel vehicle refueling property. Furthermore, it increased the credit limits for depreciable property to a maximum of $100,000 per item and $1,000 for all other cases. This change provides greater incentive for investment in individual refueling units.
Eligible Census Tract Requirement: A pivotal change introduced by the IRA is the requirement that qualified alternative fuel vehicle refueling property must be placed in service within an eligible census tract. These tracts are defined as either low-income communities or areas not classified as urban. This geographic targeting aims to direct the benefits of the credit towards communities that may benefit most from improved access to alternative fueling options.
Clarification on Bi-Directional Charging: The IRA clarified that property capable of both charging vehicle batteries and discharging electricity back to the grid (bi-directional charging) still qualifies as alternative fuel vehicle refueling property. This clarification encourages the deployment of more versatile and grid-interactive charging infrastructure.
Expansion to Two- and Three-Wheeled Vehicles: The definition of qualified alternative fuel vehicle refueling property was broadened to include depreciable property designed for charging two- and three-wheeled electric vehicles, expanding the scope of the credit to support a wider range of electric mobility solutions.
Credit Amount Adjustment and Enhanced Credit: For depreciable qualified alternative fuel vehicle refueling property, the base credit amount was modified from 30 percent to 6 percent. However, the IRA introduced the concept of an enhanced credit for projects meeting prevailing wage and apprenticeship requirements or those commencing construction before January 29, 2023. This tiered credit system incentivizes high-quality job creation and timely project development.
Direct Pay and Credit Transfer Options: The IRA also introduced provisions for applicable entities to elect direct pay under § 6417, essentially treating the credit as a tax payment. Additionally, eligible taxpayers can elect to transfer all or a portion of their § 30C credit to unrelated taxpayers under § 6418, enhancing the flexibility and accessibility of the credit.

SECTION 3. DEFINING KEY TERMS FOR 30C CREDIT ELIGIBILITY IN 2024

To fully grasp the implications of Notice 2024-20 and the § 30C credit, it’s crucial to understand the definitions of key terms as outlined in the notice.

3.01 QUALIFIED ALTERNATIVE FUEL VEHICLE REFUELING PROPERTY

This term, defined by § 30C(c)(1), encompasses property used for dispensing alternative fuels or recharging electric vehicle batteries. The IRA’s amendments and Notice 2024-20 further refine the specifics of what qualifies under this definition, particularly concerning location and capabilities.

3.02 PLACED IN SERVICE: ESTABLISHING THE CREDIT TIMELINE

The “placed in service” designation is critical for determining the taxable year in which the credit can be claimed. The criteria differ based on whether the property is depreciable or non-depreciable.

(1) Depreciable Property: For depreciable property, it is considered placed in service in the earlier of the taxable year when depreciation begins or the taxable year when the property is ready and available for its specific function in a trade, business, or income production activity.
(2) Non-Depreciable Property: Non-depreciable property is considered placed in service when it is installed at the taxpayer’s principal residence and is fully operational.

3.03 LOW-INCOME COMMUNITY CENSUS TRACT

As defined in section 4.03 of the notice, this refers to a population census tract that meets specific economic criteria, often based on poverty rates and median family income levels. These tracts are crucial for determining eligibility based on location.

3.04 NON-URBAN CENSUS TRACT

Section 4.04 defines this term. It refers to a population census tract that is not designated as an urban area, providing an alternative geographic pathway to credit eligibility.

3.05 GEOGRAPHIC IDENTIFIERS: 2020 NON-URBAN CENSUS TRACTS, 2011-2015 & 2016-2020 NMTC TRACTS, 2015 & 2020 CENSUS TRACT BOUNDARIES

These terms specify different datasets and boundary delineations used to identify eligible census tracts over time. Understanding these distinctions is vital for using the correct resources to verify property location eligibility, especially when considering the transition periods outlined in Notice 2024-20.

3.06 GEOID AND 11-DIGIT CENSUS TRACT GEOID

A GEOID is a numeric identifier for geographic areas. The 11-digit census tract GEOID is a unique identifier for each population census tract, crucial for precise location verification using Census Bureau tools and IRS resources like Appendices A and B. The notice highlights that GEOIDs can vary based on census tract boundary updates over time, emphasizing the need to use the correct boundary year for eligibility determination.

SECTION 4. ELIGIBLE CENSUS TRACTS: NAVIGATING LOCATION REQUIREMENTS FOR 2024

4.01 GENERAL ELIGIBILITY CRITERIA FOR CENSUS TRACTS

To qualify for the § 30C credit, § 30C(c)(3) mandates that qualified alternative fuel vehicle refueling property must be placed in service within an eligible census tract. As previously mentioned, an eligible census tract falls into one of two categories:

Low-income community census tracts as described in § 45D(e).
Non-urban census tracts.

Notice 2024-20 clarifies that forthcoming regulations will formally adopt these definitions for eligible census tracts. Furthermore, the notice addresses property used in US territories, confirming that eligible census tracts also include low-income community and non-urban census tracts located within US territories.

4.02 CENSUS BUREAU TERMINOLOGY: A GEOGRAPHIC PRIMER

Understanding Census Bureau terminology is essential for accurately identifying eligible census tracts. Key terms include:

(1) Census Block: The smallest geographic unit for data collection.
(2) Population Census Tract: Small geographic divisions within counties, used for data tabulation and presentation. Each tract has a unique 11-digit GEOID.
(3) Census Tract Boundaries: Delineated based on population and housing density, updated periodically (decennially and annually for updates). The 2020 Census boundaries are currently in use.
(4) Urban Area: Defined by the Census Bureau as densely developed territory based on residential, commercial, and non-residential land uses, delineated after each decennial census.

4.03 LOW-INCOME COMMUNITY CENSUS TRACTS: DETAILED CRITERIA

These tracts are defined by § 45D(e) for the New Markets Tax Credit (NMTC) program. Generally, a population census tract qualifies as a low-income community if:

The poverty rate is at least 20 percent, based on the relevant American Community Survey (ACS) 5-year estimates.
For tracts outside metropolitan areas, the median family income does not exceed 80 percent of the statewide median family income.
For tracts within metropolitan areas, the median family income does not exceed 80 percent of the greater of the statewide or metropolitan area median family income.

While § 45D(e) also includes provisions for certain targeted populations and specific low-population tracts, Notice 2024-20 indicates that current data limitations prevent verifiable identification of these categories for § 30C credit purposes. The IRS is seeking public comment on how these tracts could be accurately identified in future guidance. Areas described in § 45D(e)(3) are also excluded as they are not population census tracts.

The Community Development Financial Institutions Fund (CDFI Fund) determines low-income community census tracts, updating them roughly every five years based on ACS 5-year estimates. Prior to September 1, 2023, the 2011-2015 ACS estimates (using 2015 census tract boundaries) were used. On September 1, 2023, this was updated to the 2016-2020 ACS estimates (using 2020 census tract boundaries).

For § 30C credit purposes, Notice 2024-20 establishes a transition period. For property placed in service after December 31, 2022, and before January 1, 2025, taxpayers can use either the 2011-2015 NMTC tracts (Appendix A) or the 2016-2020 NMTC tracts and 2020 non-urban census tracts (Appendix B) to determine eligibility. After December 31, 2024, and through 2029, only the 2016-2020 NMTC tracts and 2020 non-urban census tracts (Appendix B) will be applicable. This transition period aligns with the NMTC program’s updates and provides flexibility for taxpayers during this shift.

4.04 NON-URBAN CENSUS TRACTS: DEFINITION AND APPLICATION

§ 30C(c)(3)(B)(ii) defines an urban area by referencing the Secretary of Commerce’s designations in the most recent decennial census. However, the 2020 Census defines urban areas based on census blocks, not population census tracts. To address this, Notice 2024-20 clarifies that a “non-urban census tract” for § 30C purposes is any population census tract where at least 10 percent of its census blocks are not designated as urban areas, using 2020 census tract boundaries and urban area designations. These “2020 non-urban census tracts” are included in Appendix B and are considered eligible census tracts. This 10% threshold reflects feedback received and is deemed consistent with the intent of § 30C to support alternative fuel infrastructure in non-urban locations.

4.05 ANTICIPATED AND POTENTIAL UPDATES TO CENSUS TRACT DESIGNATIONS

The IRS anticipates future updates to both low-income community and non-urban census tract designations:

Low-income community census tracts will be updated based on future NMTC census tract determinations by the CDFI Fund, expected around late 2028. The current 2016-2020 NMTC tracts will likely remain valid for § 30C credit eligibility through 2029.
Non-urban census tracts may be updated if the Census Bureau releases 2030 urban area determinations earlier than January 1, 2033. Until then, the 2020 non-urban census tracts should be used.

Taxpayers should stay informed about these potential updates to ensure continued compliance and credit eligibility in the long term.

SECTION 5. VERIFYING PROPERTY LOCATION IN AN ELIGIBLE CENSUS TRACT: A STEP-BY-STEP GUIDE FOR 2024

5.01 USING APPENDICES A AND B TO DETERMINE ELIGIBILITY

Appendices A and B are critical resources for verifying if your property is located in an eligible census tract.

Appendix A: Lists eligible low-income community census tracts using 2011-2015 NMTC tracts and 2015 census tract boundaries. This is primarily relevant for property placed in service before January 1, 2025, during the transition period. Appendix A Link
Appendix B: Lists eligible low-income community census tracts using 2016-2020 NMTC tracts and 2020 non-urban census tracts, both using 2020 census tract boundaries. This is applicable for property placed in service both before and after January 1, 2025, and is the sole resource for eligibility verification for property placed in service after December 31, 2024, and before January 1, 2030. Appendix B Link

For property placed in service after December 31, 2022, and before January 1, 2025, eligibility is confirmed if the 11-digit census tract GEOID of the property’s location is found in either Appendix A or Appendix B. For property placed in service after December 31, 2024, and before January 1, 2030, only Appendix B is used for verification.

It’s important to note that the same physical location might have different 11-digit census tract GEOIDs under the 2015 and 2020 census tract boundaries. In such cases, eligibility is determined by checking the GEOID against the appendix corresponding to the relevant census tract boundary year.

5.02 DETERMINING THE 11-DIGIT CENSUS TRACT GEOID: TOOLS AND RESOURCES

To use Appendices A and B effectively, you need to determine the 11-digit census tract GEOID for your property’s location. Notice 2024-20 provides guidance on how to do this using online tools:

(1) For 2015 Census Tract Boundaries (Relevant for Appendix A and transition period): Utilize the CDFI mapping tool available at CDFI Mapping Tool. On this platform:
- Select “CDFI”.
- In “Layers,” check “2015 CDFI Tract” and uncheck other “CIMS Layers,” especially “2020 CDFI Tract.”
- Enter the property address or latitude/longitude in the “Search Addresses” bar.
- Left-click on the location on the map to display the 11-digit GEOID.
(2) For 2020 Census Tract Boundaries (Relevant for Appendix B and post-2024 eligibility): Use the Census Geocoder:
- Address-based search: Census Geocoder Address Search
- Latitude/Longitude-based search: Census Geocoder Coordinates Search
- In the “Benchmark” dropdown, select “Public_AR_Census2020.”
- In the “Vintage” dropdown, choose “Census2020_Current.”
- The 11-digit GEOID is listed under “Census Tracts.” Further instructions are available at Census Geocoder Instructions.

5.03 RELIANCE ON NOTICE 2024-20

Until the IRS issues formal proposed regulations, taxpayers can rely on Notice 2024-20 and its appendices for determining § 30C credit eligibility based on census tract location. The IRS will administer § 30C consistently with this notice and its guidelines during this interim period.

SECTION 6. CONTACT INFORMATION

For further inquiries regarding Notice 2024-20, please contact the Office of Associate Chief Counsel (Passthroughs & Special Industries) at (202) 317-6853 (not a toll-free number).

Disclaimer: This rewritten article is for informational purposes only and does not constitute professional tax or legal advice. Consult with a qualified tax advisor or legal professional for personalized guidance regarding the § 30C credit and your specific circumstances. Always refer to the official IRS Notice 2024-20 and any subsequent IRS guidance for definitive information.