From charging incentives to government rebates, businesses that invest in critical infrastructure for electric vehicles already enjoy a variety of financial benefits. In some cases, these advantages can be claimed year after year during tax season.
Alternative fuel tax credits can help your business save money while also preparing for the future. But to fully benefit from these credits, it's essential to understand what they are and how they apply to your specific situation.
Whether your business is based in the United States or Canada, you should take full advantage of every available incentive. Here’s how to identify which alternative fuel tax credits apply to your business and determine if you qualify.
**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,†you might immediately think of electric vehicles, but this is just one of the 12 power sources defined by the U.S. and Canadian governments as alternative fuels. Others include:
- **Biodiesel and renewable diesel**: Biodiesel is made from vegetable oils, animal fats, or recycled cooking grease, while renewable diesel is derived from biomass.
- **Hydrogen**: Though not yet widely commercialized, hydrogen-powered vehicles offer a potentially emissions-free 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 use in vehicles.
It's important to note that electric vehicles currently dominate the market for alternative fuel vehicles. While many fuels could technically qualify for tax credits, the current landscape places a stronger focus on businesses that own, manufacture, or maintain electric vehicles and their supporting infrastructure, such as charging stations.
The type of business you run also plays a role in determining which tax credits you may qualify for. For example, the **Alternative Fuel Infrastructure Tax Credit (AFITC)** applies to those who install EV chargers and other refueling stations, including multi-family buildings, hotels, and commercial parking lots. In these cases, the type of alternative fuel is less important than the infrastructure itself.
**Examples of Alternative Fuel Tax Credits**
To maximize your savings, it's crucial to stay updated on state, provincial, and federal incentives. This helps you identify which credits you're already eligible for and allows you to plan for future growth. For instance, if you know you'll receive 30% of the depreciable costs back under the AFITC, you can better budget for expansion.
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 you locate incentives specific to your location and the types of chargers you're installing.
In 2023, the Canadian government proposed five new investment tax credits to encourage clean energy adoption. If passed, these proposals would allow Canadian business owners using alternative fuels to receive tax refunds for their infrastructure investments.
Many incentives already exist across Canada, though they vary by province. For example, municipalities in Alberta can receive up to $5,000 per **Level 2 charger** or $75,000 per **direct-current fast charger (DCFC)** under the **MCCAC Electric Vehicle Charging Program**.
**Combining Tax Credits with Rebates for Maximum Savings**
Tax credits typically appear as refunds after the tax cycle is complete, meaning you pay upfront and get the money back later. However, combining tax credits with other incentives can provide immediate financial relief and additional savings when tax season arrives.
Consider the following types of rebates:
- **Prescriptive rebates**: These offer fixed amounts per unit and often have specific requirements based on charger type and features.
- **Point-of-purchase rebates**: More common for residential projects, these are usually offered by EV manufacturers or third-party vendors.
- **Make-ready rebates**: Targeting Level 3 chargers, these rebates cover construction and electrical work and require advance planning.
- **Turnkey rebates**: Covering everything from materials to installation, these are often used by installers.
- **Case-by-case rebates**: Other grants or promotions with unique criteria may also help reduce costs for EV installations.
As the world shifts toward more sustainable energy sources, more legislation is expected to introduce new benefits for businesses. Always consult with your accountant or tax team to explore all possible credits and regularly check government websites for updates on rebates.
**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, the demand for charging infrastructure is increasing—our data shows that 60% of EV drivers use public chargers even when they have at-home options.
This growing trend presents a valuable opportunity for smart business owners to tap into the market while saving money through alternative fuel tax credits. But installing EV chargers isn't just about hardware; you’ll also need reliable software to manage operations efficiently.
That’s where **ChargeLab** comes in. Our backend software powers North America’s top 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.
Ready to learn more? **Contact the ChargeLab team today** and start building a smarter, more profitable future.
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