From charging incentives to government rebates, businesses that invest in critical infrastructure for electric vehicles already enjoy a number of financial perks. In some cases, these benefits can be claimed year after year during tax season.
Alternative fuel tax credits can help your business save money while preparing for the future. However, to maximize these credits, you need to understand what they are and how they apply to your operations.
Whether your business is based in the United States or Canada, it's wise to take advantage of every available incentive. Here’s how to determine which alternative fuel tax credits are available and whether your business qualifies.
**Qualifying for Alternative Fuel Tax Credits**
The first step in maximizing your tax benefits is understanding which incentives you’re eligible for. When you think of “alternative fuel,†electric vehicles might come to mind—but that’s just one of 12 power sources defined by the U.S. and Canadian governments as alternative fuels. Others include:
- **Biodiesel and renewable diesel**: Biodiesel can be made from vegetable oils, animal fats, or recycled cooking grease, while renewable diesel is derived from biomass.
- **Hydrogen**: Although not yet widely used, hydrogen-powered vehicles could offer a zero-emission alternative.
- **Natural gas**: This fuel is often more cost-effective than traditional gasoline or diesel.
- **Ethanol**: Made from corn and other plant materials, ethanol is commonly blended with gasoline for vehicle use.
While EVs currently dominate the market for alternative fuel vehicles, the focus of current incentives is increasingly on businesses involved in electric vehicles and their infrastructure, such as charging stations.
The type of business you run also plays a role in determining which tax credits you can access. For example, the **Alternative Fuel Infrastructure Tax Credit (AFITC)** applies to those who install EV chargers, including multi-family buildings, hotels, and commercial parking lots. In such cases, the type of fuel may matter less than the infrastructure itself.
**Examples of Alternative Fuel Tax Credits**
To fully benefit from these credits, it’s important to stay informed about state, provincial, and federal incentives. Knowing which credits you qualify for can help you plan for future growth and budget effectively. For instance, if you know you’ll receive 30% of depreciable costs back under the AFITC, you can better manage your business finances.
Currently, over 70% of the U.S. is covered by EV charger rebates or incentives. If your business focuses on making electric vehicles more accessible, tools like ChargeLab’s **Rebate Finder** can help identify specific incentives for your location and type of charger installation.
In 2023, the Canadian government proposed five new investment tax credits to encourage clean energy adoption. If passed, these could allow Canadian businesses using alternative fuels to claim tax refunds for infrastructure investments.
Many other incentives exist across Canada, though they vary by province. For example, municipalities in Alberta may be eligible for up to $5,000 per Level 2 charger or $75,000 per DCFC (Level 3) charger through the **MCCAC Electric Vehicle Charging Program**.
**Combining Tax Credits with Rebates for Maximum Savings**
Tax credits typically work as refunds after you file your taxes, meaning you pay upfront and get the money back later. But combining tax credits with other incentives can provide funds upfront and additional savings at tax time.
Consider these types of rebates:
- **Prescriptive rebates**: Offer fixed amounts per unit, often based on charger type and features.
- **Point-of-purchase rebates**: Common for residential projects, offered by manufacturers or third parties.
- **Make-ready rebates**: Target Level 3 chargers, covering construction and electrical work.
- **Turnkey rebates**: Cover all aspects of installation, often used by installers.
- **Case-by-case rebates**: Vary by program and can offer unique savings opportunities.
As the world moves toward greater use of alternative fuels, more legislation is likely to emerge, offering even more benefits to business owners. Be sure to discuss all options with your accountant and regularly check government websites for updates.
**Charge into the Future**
Over 4.1 million plug-in hybrid and battery electric vehicles were sold in the U.S. between 2010 and 2023, and this number continues to grow. As EVs become more affordable, demand for charging infrastructure is rising. Our data shows that 60% of EV drivers use public chargers, even when they have home options.
This presents a great opportunity for forward-thinking business owners to tap into the growing EV market while saving money through tax credits. Of course, installing EV chargers isn’t just about hardware—it also requires software. That’s where ChargeLab comes in.
Our backend software powers leading EV charger manufacturers, turnkey installers, and network operators. As the only true operating system for EV chargers, our platform transforms any OCPP device into a smart charger, making it easier for you to run your business. Want to learn more? **Reach out to the ChargeLab team today.**
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