Key highlights: Renewable energy is experiencing a surge in popularity — electric vehicle sales are at an all-time high, and residential and commercial solar projects are going up in virtually every community in the country. This is unsurprising; since 2022, the U.S. government has significantly ramped up incentives for green […]
Renewable energy is experiencing a surge in popularity — electric vehicle sales are at an all-time high, and residential and commercial solar projects are going up in virtually every community in the country. This is unsurprising; since 2022, the U.S. government has significantly ramped up incentives for green energy through the Inflation Reduction Act, making renewable projects more appealing than ever. And the current administration, despite the optics, has continued and even strengthened support for these projects via the July 2025 tax bill, which increased certain deductions for renewable building and retained existing benefits through at least 2027.
As a result of these community-wide economic and policy shifts, EV charging projects have become a common destination for retail and institutional funds.
The potential financial returns are significant: For a typical high earner, purchasing an EV project can increase take-home income by 50% or more. And these benefits apply broadly; they can reduce all forms of personal and business taxable income, including income from salary, RSUs, a bonus, business profits, capital gains, and other sources.
In this guide, we’ll explore the financial benefits of EV projects, the process of buying in, the risks, a real-life example, and a few other considerations.
Like solar, EV charging projects should be a familiar concept to anyone looking around their community in 2025. You’ll see these projects anytime you pull into a mall, big box store, or other commercial parking lot of a certain scale: A modern, digital EV charging station installed in several parking spots close to the entrance, where an EV owner can pay to charge their vehicle while shopping. It turns out, unsurprisingly, that these charging stations are profitable for the owner, both because they produce significant revenue and because they come with serious tax benefits.
Purchasing EV projects offers three major benefits.
A tax credit is a dollar-for-dollar reduction in the amount of taxes you owe. It is similar to a gift card or store credit you can use to reduce your tax bill.
For example: if you owe $1,000 in taxes and you have a $600 tax credit, your tax liability will be reduced to $400.
The government typically offers tax credits to incentivize certain behaviors or purchases. Over the last few years, tax credits have become an increasingly popular tax-mitigation tool due to incentives tied to renewable energy.
Depreciation is the amount of value that a physical asset loses over time. From a tax standpoint, it’s important because you may be able to take a deduction for this amount, reducing your taxable income and saving money on your taxes. The IRS presumes that EV projects will depreciate like any other physical business asset, and so they are subject to the very advantageous “bonus depreciation” schedule, which allows most owners to depreciate the entire value of the project (subject to a couple of nuanced limitations) in the first year
Example: Suppose you earn $2 million in income and, at the highest federal marginal tax rate of 37% (ignoring state taxes for this example), would owe about $740,000 in federal taxes. If you had $800,000 in depreciation, you could use it to reduce your taxable income by that amount—bringing it down to $1.2 million. At a 37% tax rate, that would save you roughly $296,000 ($800,000 × 37%) in federal taxes.
EV projects include a 20-year income stream tied to the electricity purchased from the station by vehicle owners. These returns depend on the location of the project and local energy rates among other factors but typically will generate between 1-5% annually of your purchase amount.
Now that you understand the general benefits of buying EV projects, let’s talk about how these deals are structured.
EV charging projects are typically structured as an asset purchase, where the the company that builds the charger sells it to the buyer — that is, the person or business looking for tax savings — outright. This way, the purchaser benefits from the tax incentives and a steady income stream from the project with minimal overhead. While operations and maintenance (O&M) are typically handled by a third party, the owner can choose to manage the project themselves or hire an O&M company. The builder, meanwhile, makes a profit from the “offtaker” — that is, the company hosting the charger.
This structure allows the purchaser to benefit from both the tax incentives and the long-term cash flow, but also requires them to take on all administrative and operational responsibilities.
Who is this for?
EV projects are a particularly good fit for individuals and businesses aiming to offset more than $500,000 in annual income. Asset purchases, in general, are a good fit for individuals or businesses who want full ownership and control over the project, including its day-to-day operations. (This isn’t a heavy lift: Management is typically outsourced to a third party.)
What are the financial benefits?
Want to explore the tax benefits of EV projects?
While the benefits of EV projects are significant, it’s equally important to understand the potential risks and constraints involved.
The IRS categorizes income into two buckets: active income (e.g., W-2 earnings, income from a business you actively run) and passive income (e.g., rental income from property you don’t actively manage). Importantly, tax benefits must match the character of income — passive losses can offset passive income, and active losses can offset active income, but the two can’t cross.
EV projects follow the same rule. If you want to use the tax benefits from an EV project to offset active income, you must be active in the EV space. So, you will need to set up an LLC through which you will make your purchase, and you will also need to materially participate in the EV business. In this context, “material participation” means participating in the EV space for more than 100 hours during the tax year in activities that are considered regular, continuous, and substantial, and participating at least as much as any other individual involved in the business.
Why is this a gray area? Due to the lack of clarity from regulators: The IRS and tax court have so far chosen not to define what activities constitute material participation in the EV space. As a result, there isn’t complete certainty as to what specific activities will satisfy the 100-hour requirement. That being said, we work closely with a national accounting firm that’s overseen over a billion dollars in renewable energy transactions and whose clients have been audited. Their advice: treat your EV project like a business – spend time on regular, continuous, and substantial activities that will benefit your EV business.
(This is a very simplified explanation. For more details on material participation and common questions we hear from CPAs, check out this article.)
A quick note on tracking: Tracking these hours and activities can be a headache, but Valur streamlines your documentation process, enabling you to save relevant documents and log your participation hours directly on our platform. Read more about those tools here.
When purchasing an EV project, the experience and reliability of the developer are critical. To qualify for tax credits and depreciation in a given tax year, the project must reach “Mechanical Completion” within that same year. In practice, this means you’ll be buying new projects—not ones already in operation—and they must be both mechanically complete and placed in service in the same calendar year in which you plan to claim the incentives.
Once placed in service, the project must remain operational for at least five years and one day to avoid tax credit recapture.
Because of this, it’s essential to prioritize:
Depreciation for EV purchasers who want to apply it against W‑2 income (i.e., salaried income) is capped at $313,000 per individual or $626,000 per couple per tax year (adjusted annually for inflation) due to the excess business loss limitation. Any unused depreciation in a given calendar year can be carried forward to future tax years.
Importantly, if you are a business owner — with either active or passive business income — there is no limit on the amount of depreciation you can apply.
Tax credits work differently. The amount you can use in a given year is limited to 75% of your remaining federal tax liability after applying depreciation. Any unused credits can be carried forward and applied against your taxes for the next 15–18 years.
Lara is a tech executive living in California. In 2025, she will earn $3,000,000. As a result, she expects to have a substantial tax bill of approximately $1,509,000 in federal and California taxes in 2025 (assuming she falls into the highest federal marginal tax bracket of 37% and California’s highest marginal tax rate of 13.3%). After paying total taxes, that would leave Lara with $1,491,000.
However, buying an EV project could earn Lara significant tax credits, depreciation deductions, and ongoing income to mitigate her high tax burden.
Specifically, imagine that she choose to contribute $300,000 this year. As a result, Lara could reduce her tax bill in 2025 from $1,509,000 to up to $1,082,027 and also reduce it by up to $70,862 more in the following 5 years.
Let’s now see the numbers:
Situation Overview:
EV Impact:
Results:
Total tax savings: As a result of her EV purchase, Lara’s total tax bill will come down from $1,509,000 to $1,082,027 in year 1. That’s a total reduction in federal and state taxes of up to $426,973 in year 1, or 142% of the $300,000 purchase amount.
Tax credits and depreciation are subject to limitations based on the type and amount of income you’re applying them against in a given calendar year. However, any unused credits or depreciation can be carried forward to future years—they don’t expire or get lost. You can read more about these limitations [here].
Total Income: In addition to tax benefits, this strategy includes a cash flow component. Estimated distributions are around 1% of the purchase amount, which would be roughly $3,000 yearly and about $18,000 total over six years on a $300,000 purchase amount. While projections are subject to variation, these estimates are based on typical performance and current tax law.
What if Lara chose not to purchase an EV project?
This is, of course, a common question: How would she do if she simply paid her taxes and invested the remaining money? This is a pretty simple comparison as if Lara doesn’t put $300,000 into the EV project, she would owe more than that in taxes. Given that her income is $3,000,000.
Situation Overview:
Results:
If Lara simply paid her taxes, she’d owe the full $1,509,000. By contrast, participating in the EV Chargers would generate about $515,835 in tax savings and cash flow. Subtracting the $300,000 cost of the EV purchase, that’s a net gain of $215,835 compared to doing nothing.
The key point: the $300,000 she put in an EV project is money she’d otherwise send to the IRS and never get back. Instead, the EV project allows her to redirect those “lost dollars” into something that generates additional tax savings, produces cash flow, and contributes to a cleaner environment.
Some people try to compare this to investing the same amount in the stock market—but that’s not an apples-to-apples comparison. You invest after-tax dollars in the stock market. With the EV project, you’re putting pre-tax dollars—money you’d otherwise send to the IRS—to work for you.
Purchasing EV projects can be an effective strategy for high-income earners with significant ordinary income to reduce their tax liability.
How can you go about buying qualified projects? It’s relatively simple: Valur has partnered with reputable developers to make EV projects accessible to high-income earners. We help you identify and evaluate available opportunities, compare different project options, and visualize the potential benefits.
From there, we’ll help you seamlessly finalize your purchase—with no fees charged to you by Valur.
To learn more you can schedule a call with us here.
Need some help to understand which if this is the right fit for you?
We’ve built a platform that makes advanced tax planning – once reserved for ultra-high-net-worth individuals – accessible to everyone. With Valur, you can reduce your taxes by six figures or more, at less than half the cost of traditional providers.
From selecting the right strategy to handling setup, administration, and ongoing optimization, we take care of the hard work so you don’t have to. The results speak for themselves: our customers have generated over $3 billion in additional wealth through our platform.
Want to see what Valur can do for you or your clients? Explore our Learning Center, use our online calculators to estimate your potential savings or schedule a time to chat with us today!
