The American Recovery and Reinvestment Act, as noted in section 25D of the Internal Revenue Code, includes a 30% U.S. tax credit for installation costs connected to ENERGY STAR qualified geothermal heat pumps. Tax credits will be available at a reduced rate in 2020 and 2021.
Geothermal heat pump equipment that meets ENERGY STAR requirements at the time of installation qualifies for the U.S. residential geothermal tax credit. The tax credit equals 30% of the total system cost, which includes installation cost.
The tax credit is available for new construction or existing homes owned by the tax payer. There's no limit to the amount of times it can be claimed, so if the taxpayer owns multiple homes, the tax credit is eligible for each home where geothermal heat pump equipment is installed. To find out more details, download our Guide to U.S. Residential Geothermal Tax Incentives below.
IRS Form 5695 is used to claim the 30% Residential U.S. Tax Credit. We recommend consulting with a tax professional.
Many states, local municipalities, and utilities offer rebates, tax incentives, and/or low interest loans to encourage geothermal heat pump installations. These offers are in addition to the residential and commercial federal tax credits.
DSIRE USA lists state and local geothermal heat pump incentives, or you can contact us to learn about incentives in your area.
The Natural Resources Canada website offers a list of energy-efficient incentives from provincial/territorial governments, which includes major utilities and Canadian municipalities.
If you've purchased a geothermal heat pump that qualifies for the U.S. residential geothermal tax credit, you can download the corresponding year's certificate for your personal records. You don't need this certificate to claim the tax credit. It is for your personal records. We suggest meeting with a tax professional to claim your tax credit.