geothermal tax credits

Tax Credits & Incentives

In February 2018, the tax credit was reinstated through 2019 and can be retroactively applied to installations placed in service on January 1, 2017 or later. Geothermal equipment that uses the stored solar energy from the ground for heating and cooling and that meets ENERGY STAR requirements at the time of installation is eligible for the tax credit. The credit has no limit and there's no limitation on the number of times the credit can be claimed.

US Tax Credits Through 2021

The energy tax credit can be combined with solar and wind credits as well as energy efficiency upgrade credits. While the 30% credit expired at the end of 2019, a 26% credit is still available through 2020. The incentive is set to decrease once again down to 22% in 2021, though, so act quickly to save the most on your installation.

tax credit percentage
local tax incentives for geothermal systems

Check For More Local Incentives

In addition to the federal tax credit, some state, local, and utility incentives may be available in your area for even more savings on installing a geothermal heat pump. Check out the Database of State Incentives for Renewables & Efficiency (DSIRE) website to find policies and incentives in your area.

The Energy Credit

The federal tax credit amount is scheduled to decrease each year through 2021, so act now for the most savings!

In February 2018, the geothermal federal tax credit was reinstated and can be retroactively applied to installations “placed in service” on January 1, 2017 or later. Property is usually considered to be placed in service when installation is complete and equipment is ready for use. However, if the system is part of the construction or renovation of a house, it’s considered placed in service when the taxpayer takes residence in the house. To save the most on your installation, you’ll want to act quickly—this credit has already decreased from 30% in 2019 to 26% in 2020 and will drop to 22% in 2021 before expiring altogether.