Alternative Energy Tax Incentives

See Individual State GEO $$ Incentives»

There are numerous incentives offered for geothermal heating and cooling systems across the United States.

The United States Energy Bill Offers Incentives for Geoexchange
On Monday, August 8, President Bush signed the bipartisan Energy Policy Act of 2005 at a signing ceremony held at Sandia National Laboratories in Albuquerque. This new multi billion-dollar National Energy Plan is the first signed into law in more than a decade and comes to us at a time when new energy-related policy is more critical than ever. Among the many features of this 1,724-page law, Congress has provided new incentives for geoexchange.

Sec. 1333: Credit for certain non-business energy property
One of the highlights of the new bill addresses homeowners, who are granted up to $300 in tax credits for the cost of new Geoexchange systems. To be eligible, the standards that must be met are 14.1 EER & 3.3 COP for closed loop, 16.2 EER and 3.6 COP for open loop and 15 EER and 3.5 COP for DX. However, the system must include a desuperheater or integrated water heating to meet the credit's criteria.

Sec. 1332: Credit for construction of new energy efficient homes
Provisions also offer credit for construction of new energy efficient homes, up to $2,000, for homes that cut energy use for heating and cooling only (no hot water) by 50 percent compared to the national model code - the 2004 International Energy Conservation Code Supplement (assuming an SEER-13 air conditioner). Producers of manufactured homes can also qualify for a tax credit of $1,000 for homes that save 30 percent.

Sec. 1331: Energy efficient commercial buildings deduction
Another highlight of the new Energy Policy Act addresses commercial facilities by awarding energy efficient commercial buildings deductions of up to $1.80 per square foot for buildings that achieve a 50% reduction in annual energy cost to the user, with partial credits offered at $0.60/sf. This reduction amount is compared to a base building defined by the industry standard ASHRAE/IESNA 90.1-2001. The amount of the deduction is the lesser of: 1) $1.80/sf or 2) the costs incurred or paid for the energy-efficient property. In addition, the property must 1) be otherwise depreciable property, 2) located in the United States, 3) paid to be constructed by the taxpayer seeking the deduction.

Sec. 206: Renewable Energy Security
It is also important to note that the section covering renewable energy security offers a 25 percent rebate, up to $3,000, for renewable energy systems. Although this section’s language now includes geothermal heat pumps as an eligible system, this rebate has not been funded yet and until such appropriations are made, no financial incentives are available through this section. Please keep checking back on this web page for updates, as we will post any news once it comes available.

The Geothermal Heat Pump Consortium works hard to represent our industry, making sure our voices are heard and that we are included in policies that direct the future of our country's energy market. We applaud both Congress and the Bush administration for passing a comprehensive energy plan that encourages conservation and energy efficiency, and that specifically addresses our industry's future when we need it most.

A full copy of the Conference Report for H.R. 6, the Energy Policy Act of 2005, is available for download

The IRS issued tax credit rules for homeowners info can be found at: http://www.irs.gov/newsroom/article/0,,id=154657,00.html

The information for builders is located at: http://www.irs.gov/newsroom/article/0,,id=154658,00.html

For information on any other tax credits, please visit ENERGY STAR

United States Department of Agriculture Assistance Programs

The Farm Security and Rural Investment Act (Farm Bill)
The Farm Security and Rural Investment Act of 2002 (the Farm Bill) established the Renewable Energy Systems and Energy Efficiency Improvements Program under Title IX, Section 9006. This program currently funds grants and loan guarantees to agricultural producers and rural small business for assistance with purchasing renewable energy systems and making energy efficiency improvements, including the installation of geothermal heat pumps.

New for 2006, the program offers both grants and guaranteed loans for eligible projects. In addition, projects with total eligible costs under $200,000 can apply under a Simplified Application Process designed to streamline the application process for small projects.

Some key provisions of the program are:

* Applicants may qualify for a grant, a guaranteed loan, or a combination of both.
* Grant request must not exceed 25% of the eligible project costs. Renewable energy grants can range from $2,500 to $500,000. Energy efficiency grants can range from $1,500 to $250,000.
* Projects under $200,000 total project costs qualify for a simplified application process.
* Loan guarantees can be for up to 50% of total eligible project costs. Guarantees can range from $5,000 to $10,000,000 per project.
* Projects can qualify for combined grant and loan guarantee, but the grant portion is still subject to the above limits and combined funding assistance cannot exceed 50% of total eligible project costs.

To learn more about the Farm Bill, please visit the USDA’s site

Your individual state may also have specific rebates or tax credits for installing geothermal or solar equipment. Please check their Web site for further information.