The Department of the Treasury and the Internal Revenue Service (IRS) have issued Notice 2024-20 to clarify the location requirements for the Alternative Fuel Vehicle Refueling Property Credit, also known as the § 30C Credit. This credit, amended by the Inflation Reduction Act of 2022, incentivizes the installation of qualified alternative fuel vehicle refueling property. Understanding the specifics of this notice, especially concerning eligible census tracts, is crucial for taxpayers looking to claim this credit in 2024 and beyond. This article breaks down the key aspects of Notice 2024-20, providing a comprehensive guide to navigating the eligibility requirements and maximizing your potential tax benefits.
Understanding the 30C Credit and the Inflation Reduction Act
The § 30C credit was initially established to encourage the adoption of alternative fuels by providing a tax incentive for the installation of refueling infrastructure. The Inflation Reduction Act (IRA) of 2022 significantly expanded and extended this credit, making it more impactful for both individuals and businesses. Key changes introduced by the IRA include:
- Extension of the Credit: The credit is extended for property placed in service after December 31, 2021, and is available until December 31, 2032.
- Revised Credit Limits: The IRA shifted the credit limitation from a per-location basis to a per-item basis. For depreciable property, the credit is capped at $100,000 per item, and for non-depreciable property, it’s capped at $1,000.
- Geographic Eligibility: A significant addition is the requirement that qualified alternative fuel vehicle refueling property must be placed in service within an “eligible census tract” to qualify for the credit. This geographic targeting aims to direct incentives towards communities that can benefit most from improved refueling infrastructure.
- Credit Amount Modification: For depreciable property, the base credit amount is now 6%, with a potential enhanced credit for projects meeting prevailing wage and apprenticeship requirements or those started before January 29, 2023.
This notice specifically addresses the “eligible census tract” requirement, providing crucial details for taxpayers aiming to leverage the § 30C credit, particularly as we navigate the complexities of 2024 and the evolving guidelines.
Defining Qualified Alternative Fuel Vehicle Refueling Property and Placed in Service
Before delving into eligible locations, it’s important to understand what qualifies as “qualified alternative fuel vehicle refueling property.” According to IRS Notice 2024-20, this refers to property that meets the requirements outlined in § 30C(c)(1) of the Internal Revenue Code. This definition encompasses various types of refueling equipment, including EV chargers and hydrogen refueling stations.
The notice also clarifies “placed in service” dates, which determine the taxable year for claiming the credit:
- Depreciable Property: Property subject to depreciation is considered “placed in service” in the earlier of the year depreciation begins or the year the property is ready and available for its specific function.
- Non-Depreciable Property: For non-depreciable property, it’s considered “placed in service” when installed at the taxpayer’s principal residence and operational.
These definitions are critical for determining the correct tax year for claiming the § 30C credit and aligning with the specific timelines outlined in Notice 2024-20, especially concerning the 2024-2025 transition period.
Navigating Eligible Census Tracts: Low-Income and Non-Urban Communities
The IRA introduced a critical location-based requirement: to be eligible for the § 30C credit, refueling property must be placed in service in an “eligible census tract.” Notice 2024-20 elaborates on what constitutes an eligible census tract, defining it as either a “low-income community census tract” or a “non-urban census tract.”
Low-Income Community Census Tracts
These tracts are defined by § 45D(e) of the Internal Revenue Code, which pertains to the New Markets Tax Credit (NMTC). Generally, a low-income community census tract is one where the poverty rate is at least 20% or where the median family income does not exceed 80% of the area median. The determination of these tracts is made by the Community Development Financial Institutions Fund (CDFI Fund), utilizing American Community Survey (ACS) 5-year estimates.
Key considerations for Low-Income Community Census Tracts:
- NMTC Data Updates: The CDFI Fund updates these designations periodically. Notice 2024-20 highlights a transition period due to these updates.
- Transition Period (2023-2024): For property placed in service between January 1, 2023, and December 31, 2024, taxpayers have the option to use either the 2011-2015 NMTC tracts or the more recent 2016-2020 NMTC tracts to determine eligibility. This flexibility is particularly relevant for 2024 tax planning.
- Post-2024 Rule: For property placed in service after December 31, 2024, and before January 1, 2025, taxpayers must use the 2016-2020 NMTC tracts to determine if the location qualifies as a low-income community census tract. This is a critical shift for projects planned in late 2024 and beyond.
- Appendices A & B: Notice 2024-20 provides lists of eligible low-income community census tracts in Appendices A and B, based on the 2011-2015 and 2016-2020 NMTC data, respectively. These appendices are essential tools for verifying location eligibility.
Non-Urban Census Tracts
The second category of eligible census tracts is “non-urban census tracts.” These are defined based on designations by the Secretary of Commerce following the most recent decennial census. However, the Census Bureau’s urban area designations are based on census blocks, not census tracts.
To address this, Notice 2024-20 clarifies that a “non-urban census tract” is any population census tract where at least 10% of the census blocks within it are not designated as urban areas according to the 2020 Census. This 10% threshold was established after considering public comments and is intended to align with the goal of incentivizing refueling property in genuinely non-urban locations.
Key points regarding Non-Urban Census Tracts:
- 2020 Census Boundaries: The 2020 census tract boundaries and the Census Bureau’s 2020 urban area designations are used to determine non-urban census tracts.
- Appendix B: Appendix B of Notice 2024-20 includes a list of these 2020 non-urban census tracts, providing a definitive resource for taxpayers.
- Future Updates: While the 2020 designations are current, the notice anticipates potential updates based on the 2030 Census data, likely to be released in 2033 or later. Until then, the 2020 non-urban census tract designations remain in effect.
Verifying Property Location within an Eligible Census Tract
To claim the § 30C credit, taxpayers must accurately determine if their refueling property is located within an eligible census tract. Notice 2024-20 provides clear guidance on how to verify this:
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Appendices A and B Utilization: The most direct method is to consult Appendices A and B of the notice. These lists contain the 11-digit census tract GEOIDs (geographic identifiers) for all eligible tracts under both the 2015 and 2020 census tract boundaries.
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Determining the 11-digit Census Tract GEOID:
- For 2015 Boundaries (Appendix A): Taxpayers can use the CDFI mapping tool available at https://www.cdfifund.gov/cims. By entering an address or latitude/longitude, the tool will identify the 11-digit census tract GEOID under the 2015 boundaries.
- For 2020 Boundaries (Appendix B): The Census Bureau’s Geocoder tool (https://geocoding.geo.census.gov/geocoder/) should be used. Specifically, the address geocoder or the coordinates geocoder can provide the 11-digit census tract GEOID under the 2020 boundaries. It’s crucial to select “Public_AR_Census2020” for the benchmark and “Census2020_Current” for the vintage within the Geocoder tool to ensure accuracy.
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Cross-Referencing with Appendices: Once the 11-digit census tract GEOID is obtained using the appropriate tool and census boundaries (2015 or 2020), taxpayers must check if this GEOID is listed in the relevant Appendix (Appendix A for 2015 boundaries, Appendix B for 2020 boundaries). Listing in the appendix confirms that the property is located in an eligible census tract.
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Boundary Discrepancies: Notice 2024-20 acknowledges that the same physical location might fall into different census tracts under the 2015 and 2020 boundaries. In such cases, eligibility is determined separately for each boundary set. For the 2023-2024 transition period, a location may be eligible if its GEOID is listed in either Appendix A (using 2015 boundaries) or Appendix B (using 2020 boundaries). However, for property placed in service after 2024, only Appendix B and the 2020 boundaries are relevant.
By following these steps and utilizing the provided tools and appendices, taxpayers can confidently determine if their alternative fuel vehicle refueling property meets the geographic eligibility requirements for the § 30C credit.
Key Dates and 2024-2025 Transition: Planning for the Future
Notice 2024-20 emphasizes several critical dates and transition periods that taxpayers need to be aware of, particularly as we move through 2024 and into 2025:
- Until December 31, 2024: Taxpayers can use either Appendix A (2015 NMTC tracts and boundaries) or Appendix B (2016-2020 NMTC tracts and 2020 boundaries) to determine low-income community census tract eligibility, and Appendix B for non-urban census tract eligibility. This dual approach provides flexibility for projects placed in service in 2023 and 2024.
- January 1, 2025 – December 31, 2029: Only Appendix B (2016-2020 NMTC tracts and 2020 non-urban census tracts, both with 2020 boundaries) is applicable for determining eligible census tracts. This means that after 2024, the 2015 NMTC tract data and Appendix A will no longer be relevant for § 30C credit eligibility.
- Anticipated 2028/2029 Update: The notice indicates that updated NMTC census tract designations are expected around late 2028. It is anticipated that these updated tracts will become relevant for § 30C credit eligibility starting in 2030, superseding the 2016-2020 NMTC tracts.
- Potential 2033 Non-Urban Tract Update: Updates to non-urban census tract designations based on the 2030 Census are not expected until 2033 or later. Therefore, the 2020 non-urban census tract designations (Appendix B) are expected to remain in effect for a longer period.
For businesses and individuals planning to install alternative fuel vehicle refueling property, understanding these timelines is crucial for strategic planning and ensuring credit eligibility. Projects planned for 2024 have the flexibility of using either the older or newer census tract data, while projects in 2025 and beyond must adhere to the 2020 census tract boundaries and Appendix B, until further updates are issued.
Conclusion: Leveraging Notice 2024-20 for 30C Credit Optimization
IRS Notice 2024-20 provides essential clarification for taxpayers seeking to claim the § 30C Alternative Fuel Vehicle Refueling Property Credit. By clearly defining eligible census tracts and providing practical tools for verification, the IRS has streamlined the process and enhanced accessibility to this valuable tax incentive. As we navigate 2024 and look ahead, understanding the transitional rules, key dates, and available resources outlined in this notice is paramount.
Taxpayers are encouraged to:
- Review Notice 2024-20 thoroughly: Familiarize yourself with the official guidance to ensure full compliance.
- Utilize Appendices A and B: These appendices are the definitive lists of eligible census tracts.
- Employ the CDFI and Census Bureau Geocoder tools: Accurately determine the census tract GEOID for your property location.
- Stay informed about future updates: Monitor for further guidance from the IRS and CDFI Fund regarding NMTC and census tract updates, especially around 2028-2030 and beyond.
By proactively engaging with these resources and adhering to the guidelines of Notice 2024-20, taxpayers can confidently navigate the § 30C credit requirements and contribute to the expansion of alternative fuel infrastructure in eligible communities, maximizing both tax benefits and positive community impact. For further inquiries, the IRS provides contact information for the Office of Associate Chief Counsel (Passthroughs & Special Industries) for direct assistance.
