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How to maximize alternative fuel tax credits
From charging incentives to government rebates, businesses that invest in critical infrastructure for electric vehicles already enjoy a range of financial benefits. In some cases, these advantages can be claimed year after year during tax season.
Alternative fuel tax credits not only help your business save money but also prepare you for the future of transportation. However, to fully benefit from these credits, it's essential to understand what they are and how they apply to your specific operations.
Whether you're based in the United States or Canada, taking advantage of every available incentive is crucial. Here’s how you can identify 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 savings is understanding which incentives you’re eligible for. When you think of "alternative fuel," electric vehicles often come to mind—but that’s just one of 12 power sources recognized by both U.S. and Canadian governments. Other options 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 promising emissions-free option.
- **Natural gas**: This abundant fuel can provide significant cost savings compared to traditional gasoline and diesel.
- **Ethanol**: Made from corn and other plant materials, ethanol is commonly blended with gasoline for vehicle use.
It's important to note that electric vehicles currently dominate the market for alternative fuel vehicles. While several fuels may qualify for tax credits, the current landscape places more emphasis on businesses involved in EVs and their infrastructure, such as charging stations.
The type of business you run also plays a role in determining which incentives you can access. For instance, 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 such cases, the focus is more on the infrastructure than the specific fuel type.
**Examples of Alternative Fuel Tax Credits**
To maximize your savings, it's vital to stay informed about state, provincial, and federal incentives. This helps you determine which credits you already qualify for and plan for future growth. For example, 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, you can use ChargeLab’s **Rebate Finder** tool to locate incentives tailored to your location and needs. Simply enter your zip code and answer a few questions about the types of chargers you're installing and where.
In 2023, the Canadian government proposed five new investment tax credits to encourage clean energy adoption. If passed, these credits could allow Canadian businesses using alternative fuels to claim refunds for infrastructure investments.
Many other incentives already exist in Canada, though they vary by province. For example, municipalities in Alberta may 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 ends, meaning you pay upfront and get the money back later. But alternative fuel tax credits are just one way to save. By combining them with other incentives, you may receive funds upfront and more when tax season comes around.
Here are a few types of rebates you should consider:
- **Prescriptive rebates**: These offer fixed amounts per unit and often have specific qualifications related to charger types 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, which are expensive to install, these rebates can offset construction and electrical work.
- **Turnkey rebates**: Covering everything from materials to installation, these are popular among installers.
- **Case-by-case rebates**: Some programs or grants offer unique criteria that may help reduce costs for EV installations.
As the world shifts toward cleaner energy, more legislation is likely to emerge, offering even greater benefits for business owners. Be sure to consult with your accountant or tax team 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, the demand for charging infrastructure is rising. Our data shows that 60% of EV drivers still use public chargers, even if they have at-home options.
This presents a great opportunity for savvy business owners to tap into this expanding market while saving money through alternative fuel tax credits. Of course, installing EV chargers isn’t just about hardware—it also requires smart software. That’s where ChargeLab comes in.
Our backend software powers North America’s 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 manage your business. Want to learn more? **Reach out to the ChargeLab team today.**