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30% US Tax Credit

There is a 30% US tax credit available for geothermal!

The information in this literature is for general information only. The information is not providing tax, accounting, legal or other professional advice. This material should not be used as a substitute for expert advice from a tax, accounting or legal professional.

The Inflation Reduction Act, adopted in August 2022, allows for a 30% tax credit for costs associated with ENERGY STAR qualified geothermal heat pumps, as noted in section 25D of the Internal Revenue Code. The 30% credit applies to geothermal equipment placed in service during 2022 through 2032.

The Geothermal Tax Credit Can Be Claimed Using IRS Form 5695

The equipment essentials

  • Any geothermal equipment meeting ENERGY STAR requirements at the time of installation is eligible for the federal tax credit.
  • The geothermal system must be installed in the United States in a home owned by the taxpayer. Primary residency is not required for eligibility.
  • The credit is equal to 30% of the total system cost. Inclusive of equipment, labor, piping, etc.

Tax credit basics

  • Can be used to offset Alternative Minimum Tax (AMT) tax
  • If the credit exceeds one year's liability, the remainder of the credit will apply to subsequent liabilities
  • Can be combined with other energy efficiency upgrade credits
  • Can be combined with solar and wind tax credits

Other geothermal incentives

Many entities beyond the federal government are now providing incentives for purchasers of geothermal heating and cooling equipment. Numerous states, local municipalities and utilities also now offer rebates, tax incentives or low interest loans to support your installation.

For more information on incentives available to you, please contact us or your local tax professional. You can also visit the Database of State Incentives for Renewables and Efficiency at DSIREUSA.ORG. DSIRE is a comprehensive source of information on state, local, utility and federal incentives and policies that promote renewable energy and energy efficiency.

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112 E. Gracia Ave.
Marceline, MO 64658

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