On July 24, the Alliance for Electric School Buses and WRI's Electric School Bus Initiative hosted a webinar to help school districts navigate a source of funding for their new electric school buses.  

With the recent changes to the Qualified Commercial Clean Vehicle tax credit, the event explained the tax credit process, eligibility, and next steps for interested operators. 

Here are the highlights from the presentation.

Due to the Inflation Reduction Act of 2022, public school districts and other entities that don't owe federal income tax are now able to claim clean energy tax credits thanks to a new process called elective payment, explained Katherine Roboff, deputy director, external affairs, for WRI's Electric School Bus Initiative. Tax-exempt entities that make qualifying investments will receive a check or a direct payment equal to the value of the tax credit that they're claiming.

There are two tax credits available to those investing in a new electric school bus.

Originally, the credits were available through 2032, but through the budget bill signed into law July 4  this year, Congress dramatically accelerated the expiration of multiple clean energy tax credits.

45W Commercial Clean Vehicle Tax Credit

The 45W credit covers 30% of the cost or incremental cost, whichever is lesser, up to $40,000. There are no location restrictions. The bus must be made by a qualified manufacturer acquired for use or lease. Electric school buses do qualify, and all from the major electric school bus OEMs.

It expires for vehicles placed into service after September 30, 2025.

30C Alternative Fuel Vehicle Refueling Property Tax Credit

The 30C credit covers between 6% and 30% of the EV charger cost, up to $100,000 per charger. It’s only for those in low-income or non-urban areas. There is a bonus for meeting prevailing wage and apprenticeship requirements. 

It expires for chargers placed into service after June 30, 2026.

Note: “Placed into service” means delivered, meaning the product is ready and available for use — not simply on order. However, it does not have to be operating regularly. And, incremental cost refers to the price difference between an electric school bus and a comparable gas or diesel ICE school bus.

Credit Stacking & Elective Payments

Both opportunities are available for elective payments.

They are:

• Non-competitive.

• Unlimited.

• Reimbursed as cash (or rather, a check).

• Stackable with federal funds.

• Now available to non-profits.

To the first point, “This is not a grant competition in which some applicants will be selected and others won't,” Roboff said.

The 45W credit can be combined with tax-exempt grants and forgivable loans to further offset the cost of an electric school bus investment. However, the credit will be reduced if the value of the grants (such as the EPA Clean School Bus Program or Clean Heavy-Duty Vehicles program awards) plus the credit would exceed the price of the vehicle. 

“So in other words, no one is going to be making extra money off of their credits,” Roboff said.

Application Notes

In the webinar, Tim Farquer, superintendent of Mercer County Schools in Illinois, also shared his experience successfully applying and receiving a check, and demonstrated how to file for the tax credit. He noted to be careful on the identifying number part of form, as he mistakenly put the organization’s EIN number there instead of the number the IRS provided through in the pre-registration process.

With a shortened timeline, WRI acknowledged that some viewers may not have their new buses by the September 30 deadline. “ I know this must be very disappointing and bring a whole lot of uncertainty to your planning,” Roboff said. “I have a lot of sympathy for this situation, because this is not what people were counting on.” 

However, she presented a few ideas for potential gap funding, including calling the state energy office for support, checking with a green bank for financing, asking your OEM or dealer for a discount, and asking your electric utility provider for leads on other funding programs or opportunities for support.

Regarding a dealer deal, “I know it might sound a little far-fetched, but I think it's worth reaching out,” she said. “This is an unusual turn of events and change in the circumstances from the time when you probably signed your contract with them. If you have buses that are slated to arrive soon after September 30, I would call the dealer right away and see if there's any way they can deliver those buses before September 30.”

To file for the tax credits, you must be the vehicle owner and pre-file using your IRS online account. (See slides 11-18 for more info on this.)

View the full webinar and all slides online here.