A geothermal tax credit of 30% of the total system price is available for systems using qualified geothermal heat pumps.
In October 2008, geothermal heat pumps were added to section 25D of the Internal Revenue Code. This created a 30% federal geothermal tax credit for costs associated with qualified geothermal equipment “placed in service” through the end of 2016.
Equipment is usually considered to be placed into service when installation is complete and equipment is ready for use, or for new construction, when the owner takes residence.
Geothermal Tax Credit Overview
• 30% of total system cost
• No limit to credit amount for 2009 and beyond
• Can be used to offset AMT tax
• Can be used in more than one year
• Can be combined with solar and wind tax credits
• Can be combined with energy efficiency upgrade credits