Financial Incentives for Geothermal Heat Pumps

There is a US federal tax credit for both residential and commercial geothermal (ground source) heat pump installations equal to 30% of the total system cost.

The Inflation Reduction Act, adopted in August 2022, allows for a 30% tax credit for costs associated with ENERGY STAR qualified geothermal heat pumps installed in residences, as noted in section 25D of the Internal Revenue Code. The 30% credit applies to geothermal equipment placed in service through 2032.

US Incentives

Incentives in the United States

Any geothermal equipment meeting ENERGY STAR requirements at the time of installation is eligible for the residential geothermal tax credit. The geothermal system must be installed in the United States in a home owned by the taxpayer. The tax credit applies for geothermal installations in new and existing homes. 

The credit is equal to 30% of the eligible system costs, including the heat pump, ground loop field, etc. There is no limit to the number of times the credit can be claimed, so if the taxpayer has more than one home, the credit can be claimed for each home where geothermal equipment is installed. The tax credit also applies to geothermal installations replacing an old geothermal system.

IRS Form 5695 Is Used To Claim The Residential US Tax Credit
Guide to U.S.Residential Geothermal Tax Incentives
Fill out the form to receive our free Guide to U.S.Residential Geothermal Tax Incentives.
Rebates & Incentives

In addition to the commercial and residential federal geothermal tax credit, numerous states, local municipalities, and utilities also offer rebates, tax incentives, and/or low interest loans to support your geothermal installation.

DSIRE USA is a database of state and local geothermal incentives.

Incentives in Canada

A list of incentives related to energy efficiency from provincial/territorial governments, major Canadian municipalities, and major electric and gas utilities is available by province at the Natural Resources Canada website.

Geothermal Certificates for Tax Credit

If you purchased an ENERGY STAR qualified geothermal heat pump during the federal tax credit period, you may download the appropriate year's certificate for your records. This is purely for your records, and we recommend consulting a tax professional when claiming your credit. 

by Enertech Global, LLC
2506 S Elm Street
Greenville, IL 62246