Federal tax credits are available to offset the cost of installing or converting to a geothermal system. Homeowners can receive tax credits from state and federal green stimulus programs who install geothermal heat pump systems between January 1, 2009 and December 31, 2016. Tax credits are available up to 30% of the cost, with no upper limit (for existing homes and new construction) for heat pump installations that qualify. For example, if a homeowner installs a geothermal heat pump system in 2010 for $15,000, a tax credit of $4,500 could apply. The taxpayer has to file IRS Form 5695 to receive the credit.
For more details on these credits go to energystar.gov. Information on state rebates and incentives for ground source heat pumps can also be located at dsireusa.org.
As part of the Emergency Economic Stabilization Act of 2008 incentives were created for commercial property owners who install heat pumps. Credits are available between October 3, 2008 and December 31, 2016.
Federal tax credits:
- Apply to 10% of total system cost
- No upper limit on total credit amount
- 10% grant available in lieu of tax credit
- Can use to offset Alternative Minimum Tax
- Can combine with solar and wind tax credits
- Can combine with energy efficient building deduction
- 5 Year MACR depreciation of entire system