Polestar Electric Vehicle (EV) Tax Credit Guide
Are you unsure about which electric car (EV) to buy, and which ones qualify for the federal tax credit? Check out our guide on EV and plug-in electric car tax credits, also addressing state incentives and EV polestar model tax credits.
What Is a Polestar Electric Vehicle?
Polestar is a brand of electric performance cars owned by Volvo Car Group and Zhejiang Geely Holding. Polestar has special technological and engineering synergies with Volvo Cars making it easier to design, develop, and manufacture separate brand electric performance automobiles. Many drivers assume Polestar and Volvo are the same, but they aren’t, and this is key when determining tax credit eligibility.
Polestar debuted in 2017 with the Polestar 1, with 609 horsepower and the world’s then-longest electric-only range of 77 miles. The Polestar 2 was unveiled in 2019 as the company’s first full-electric, high-volume luxury vehicle. The Polestar 3 will be added to the range in the future as a completely electric performance SUV.
What Is the EV Tax Credit?
Section 30D of the Internal Revenue Code offers a tax credit to anyone who purchases a qualified EV passenger car or light-duty truck that year. The credit was created by the Energy Improvement and Extension Act of 2008 and amended by the American Recovery and Reinvestment Act of 2009, the latter of which is responsible for the tax credits.
As it stands, you may receive a credit of up to $7,500 when you declare an EV purchase on your taxes for the year you purchased the car. So, if you purchased an EV in 2021, you would deduct the cost while submitting your 2021 taxes in 2022.
What Are the Eligibility Criteria for the Federal Tax Credit?
Under the Qualified Plug-in Electric Drive Motor Vehicle Tax Credit, the purchaser of a new electric car is eligible for an up-to-$7,500 tax credit. The car must be brand new and acquired from a manufacturer, and it must be a plug-in electric automobile. It must be propelled by an electric motor, have an onboard battery with a minimum capacity of 4 kWh, and be able to draw electricity from an external power source. A standard hybrid vehicle, for instance, would not meet these requirements.
The tax credit is only available to the original buyer/owner and is non-transferable. In the case of a lease, the tax credit is retained by the manufacturer or leasing company as the owner of the vehicle. However, the tax credit generally factors into the cost of the lease, so drivers can still save.
The vehicle should not be acquired to resell; rather, it should be obtained with the intent of being driven, and primarily in the United States. A car transferred from another nation does not qualify. A qualifying vehicle can only get the federal tax credit once in its lifetime.
Other important points to consider:
- The maximum gross vehicle weight rating of the vehicle must be 14,000 pounds.
- It must be purchased after Dec. 31, 2009.
- It must uses a traction battery (nearly all EVs do).
- It must comply with emissions regulations.
The federal electric car tax credit is available for both all-electric and plug-in hybrid vehicles, and the amount you may claim varies by car model. Before you choose an electric vehicle, be sure to speak to an expert and find out how much your prospective new car will save you in federal electric car tax credits.
Which Polestar Cars Are Eligible for Tax Credits?
When shopping for a polestar electric vehicle, a tax credit that takes up to $7,500 off the cost is something most people would never pass up. Polestar cars qualifying for federal EV tax credits are the Polestar 1 (2020-2021), Polestar 2, and Polestar 2 Long Range-Single and Dual Motor (2022).
Polestar announced it would qualify for the $7,500 federal tax credit, and the business claims it will do so independently of the parent company, Volvo. Volvo’s parent business is Geely, however, the two firms have an equal share in Polestar, which qualifies Polestar independently for the tax credit. As a result, it’s suspected that Polestar will qualify for the credit as an independent brand, untethered to Volvo’s electric constraints.
Are Federal Credits Available on Used or Leased EVs?
Unfortunately, no. Again, although state or local incentive schemes may apply to the purchase of a used electric car, the federal EV tax credit is for newly bought cars.
As noted earlier about leasing, the credit is only available for new electric cars purchased. However, many leased cars were recently bought new, so the savings may be passed on to the lessee in the form of a decreased monthly payment.
What Are State Credits or Incentives?
In addition to federal tax credits, several states provide incentives for acquiring a new electric vehicle. Depending on the state, cost relief might take the form of tax credits, cash refunds, or reduced registration and inspection costs. In California, new automobile purchasers can receive a $2,000 cash incentive for electric vehicles and a $1,000 rebate for PHEVs.
Buyers of FCEVs may be eligible for a $4,500 tax credit under the same scheme. California’s EV rebate program is aimed at rewarding consumers with low-to-moderate incomes, and therefore has a $60,000 price ceiling. Vehicles costing more than this amount do not qualify for the refund.
How Do I Get the Federal EV Tax Credit?
First, you must purchase a new, qualifying electric car like the Polestar 1 or 2. Following that, you must complete IRS Form 8936 to claim your credit of up to $7,500. Although electric cars are becoming more affordable, especially when factoring in the cost of fuel, they still generally cost more than traditional vehicles. If you are not able to make use of the Federal EV tax credit, other benefits such as municipal rebate programs, may be available to assist you in offsetting some of the cost.
At Unstoppable Automotive Group, you may be eligible for up to $7,500 off the cost of electric cars with the federal tax credit, and perhaps additional benefits depending on the vehicle. If you have any questions about how to get the most out of owning a new EV, contact Unstoppable Automotive Group’s tax professionals.