The tax credit for installing geothermal heat pumps was extended to 2034 in August 2022. Geothermal tax credit is available for geothermal technology that utilises the underground storage of solar energy for heating and cooling and satisfies ENERGY STAR standards at the time of installation. Both the credit’s maximum amount and the maximum number of claims are unlimited.
US Tax Credits Through 2034
Energy tax credits, credits for solar and wind energy, and credits for energy efficiency improvements can all be combined. Through December 31, 2032, a 30% federal tax credit is available for ground source heat pump installations in homes. For systems installed in 2033 and 2034, the incentive will be reduced to 26% and 22%, respectively, so move quickly to maximise your installation savings.
Check For More Local Incentives
A geothermal heat pump installation may be even more affordable in your location if the state, local, and utility incentives are added to the federal tax credit. To find laws and incentives in your area, visit the Database of State Incentives for Renewables & Efficiency (DSIRE) website.
Geothermal: The Smart Choice
It merely makes sense to install a geo system, even without incentives. It is the only system that will give you money back. When installation costs are financed, the majority of homeowners save more on monthly fees than they do on the system itself. Any extra cost incurred beyond that of conventional equipment is typically recouped within a few years, and many homeowners experience returns on their investments of between 10% and 20% throughout the course of the system.
Are there any federal tax incentives for installing geothermal energy in my home?
President Joe Biden signed the federal Inflation Reduction Act into law in August, and it includes tax credits and rebates for people who reduced their carbon footprint by investing in energy-efficient appliances, electric vehicles, and other similar items.
From January 1, 2022, through December 31, 2032, homeowners who install geothermal heat pumps are qualified to receive a federal “residential clean energy credit” worth 30% of the installation costs. The credit phases out completely in 2035 after dropping to 26% in 2033, 22% in 2034, and then 26% in 2035. Household income is not a factor in determining eligibility for the tax credit.
In addition to the federal “residential clean energy credit,” a new income-based rebate program can further help customers recoup cost-related expenses to install geothermal heat pumps. Geothermal heat pumps may also be a good option for older homes, particularly those with less modern HVAC systems.
In addition to the government “residential clean energy credit,” customers may be able to recover installation costs for geothermal heat pumps through a new income-based rebate scheme. Customers can receive up to $8,000 in refunds on geothermal heat pumps if their income is less than 80% of the median income in their state, and between 80% and 150% of the median income can receive up to $4,000 in rebates. No rebates are available to anyone whose incomes are greater than 150% of the median income for the state. Incentives will begin after December 31, 2022.