Geothermal Tax Credit
Federal Budget and Stimulus Signed into Law – Credits for Geothermal Included
Dec. 28, 2020 – President Trump ended several days of uncertainty last night, signing into law a massive budget, economic stimulus, and Covid-19 relief package. The legislative package includes an extension for commercial and residential geothermal heat pump (GHP) tax credits.
The new law extends the credits for GHP installations through 2023.
- Residential Credits:
- 30% ~ January 1, 2017 thru December 31, 2019
- 26% ~ January 1, 2020 thru December 31, 2022
- 22% ~ January 1, 2023 thru December 31, 2023
- Commercial Credits:
- Remain at 10% thru December 31, 2023.
Qualifying geothermal heat pump models 'placed in service' between January 1, 2009 and December 31, 2023, are eligible for the one-time tax credit.
Note: Clarifications issued by the IRS Notice 2013-70 explain that the distribution system for the home and back-up emergency heating or cooling system are not eligible for the tax credit.
It is recommended to consult with a tax preparer about receiving this credit. No proof of purchase will be required; however in case of an audit, owners are encouraged to keep a detailed invoice of their purchase on file. The contractor who sold and installed the system should list the purchase as a “Geothermal Heat Pump” on the invoice and that it “Exceeds requirements of Energy Star program currently in effect”. The taxpayer must have a copy of the Manufacturer's Certification (see link below). A copy of the Manufacturer's Certification document is not submitted with the taxpayer's return, but must be retained by the taxpayer for tax records.
Qualifying Bard Units: