Geothermal Tax Credits

30% Tax Credit for Geothermal residential installations

The federal government recently extended the federal tax credit of 30% to homeowners who install a geothermal (ground source heat pump) system on their property. The property must be residential property within the United States, but does not need to be primary residence. Please note that the credit excludes geothermal systems used solely for swimming pools and/or hot tubs. The 30% tax credit counts toward the heat pump,ground loop and related equipment. Labor costs for excavation and installing the loop field, installing the heat pump,and any other plumbing, wiring and/or ducting needed to make the system work are also included. The system must meet or exceed current Energy Star requirements.

Geothermal installations claiming the extended tax credits should have been placed into service after January 1, 2017. The 30 percent tax credit is good through the end of 2019. Then the tax credit is reduced to 26 percent through 2020. The credit is reduced again to 22 percent for 2021, then the tax credits expire.

Commercial geothermal incentives were also extended under this action. Commercial geothermal systems are eligible for the incentives if they commenced by Jan. 1, 2022. The investment tax credit for commercial installations is 10 percent through Jan. 1, 2022.

Residential Energy Efficient Property Credit Form 5695