What you need to know about the geothermal tax credit
Recently, the 30% tax credit for geothermal heat pump systems was reinstated after a fight to extend it took place throughout 2017. In February 2018, the tax credit was reinstated and is slated to be available through the end of 2021.
For example, a homeowner that pays $25,000 for a geothermal system will receive the 30% tax credit. They will have $7,500 taken off from the cost, and they will only have to pay $17,500.
But be aware – the tax credit lowers to 26% in 2020, and 22% in 2021 (the last year currently slated). Now is the time to take advantage of geothermal heating and cooling.
It’s retroactively reinstated to 2017
The tax credit has been reinstated until 2021, but it is also retroactively reinstated to January 2017. So, if you had a geothermal system installed last year, you are likely eligible for the tax credit.
The original tax credit was enacted in 2009, and was available through 2016.
What’s not eligible
The distribution system (ductwork) and emergency heat parts of the geothermal system are not eligible for the tax credit. However, the piping and wiring systems are included with the tax credit, as well as labor costs and installation.
This tax credit also covers geothermal systems built in second homes or vacation homes. It does not have to be the primary residence.
Systems used to heat solely a swimming pool or hot tub are not eligible.
Extra state and local incentives
Some states include extra incentive in addition to the federal tax credit of 30%. For example, the total credit is 35% in North Carolina.
To find out more about individual state incentives, check out this interactive map.
If you’re thinking of installing geothermal heating and cooling, now is a better time than ever to make the switch. The tax credit will be in place for almost four years.
Interested in our services?
If you’re ready to learn more about how we can fix your leaky, drafty home, you’re in the right place. Whether you’re looking at installing a new geothermal system, replacing or fixing ductwork, reducing leaks with Aeroseal, or adding insulation with spray foam, we’re here to help. Our team will assist you in determining the best solutions for you and estimate your cost-savings.