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School Bus Industry Eligible for Alternative Fuel Vehicle Refueling Property Credit

Funding experts confirmed that school districts and bus companies that meet eligibility for being located in a low-income census tract can receive a tax credit for electric vehicle charging infrastructure, CNG and propane fueling, and at least a 20-percent mixture of biodiesel with diesel.

The credit is included in the Inflation Reduction Act and is administered by the Department of the Treasury and the IRS.

The Section 30C credit of the Internal Revenue Code was first enacted with the signing of the Energy Policy Act of 2005 and has been amended several times since. The IRA extended the 30C credit for qualified alternative fuel vehicle refueling properties placed in service after Dec. 31, 2021, and modified the credit to apply per single item of qualified alternative fuel vehicle refueling property rather than per location. The 30C credit is limited to $100,000 for depreciable property and $1,000 in all other cases.

IRA also added a requirement that qualified alternative fuel vehicle refueling properties must be placed in an eligible census tract, namely a low-income and non-urban area. Construction must have begun on or after Jan. 29, 2023, and meet “certain prevailing wage and apprenticeship requirements” in the area for any laborers and mechanics employed by taxpayers, a contractor or subcontractor.

The U.S. Department of Labor explained during a webinar last year that the prevailing wage is calculated by combing the hourly wage rate and any “bona fide fringe benefits,” such as health insurance and retirement accounts. It is also based on the workers’ specific labor classification, type of construction being performed, and the prevailing wage of the geographic area.

Related: What to Know About Federal Fuel Tax Credit on Diesel
Related: Alternative Fuel Tax Credit Retroactively Extended for Propane Autogas Vehicles
Related: $740B Inflation Reduction Act Funds Grants, Tax Credits for Bus Industry

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