Geothermal Tax Information Here

The 30% Geothermal Federal Tax Credit is back, which can save you thousands on installing a system and makes Geothermal more affordable than ever.  If you are replacing a conventional heating and cooling system, be sure to get a quote for Geothermal.

We can not offer tax advice to customers, but we are glad to share what we know. Please consult with a tax professional to understand your individual benefits.*

Tax Credit Amounts

  • From January 1, 2017-December 31, 2019 – 30%
  • From January 1, 2020-December 31, 2020 – 26%
  • From January 1, 2021-December 31, 2021 – 22%

 

Tax Credit Highlights

  • There is no maximum credit. You get the true percentage based on the year you install the Geothermal HVAC system.  It is a direct reduction of your taxes. (see example below)
  • Systems must be placed in service on or before December 31, 2021
  • The geothermal heat pump must meet federal Energy Star criteria. All geothermal systems that we install meet this criteria
  • The tax credit can be taken on any home served by the geothermal system
  • Can be combined with energy efficiency upgrade tax credits
  • Can be carried forward if you don’t have enough tax liability to use the entire credit in one year
  • The tax credit can be used to offset both regular income taxes and alternative minimum taxes
  • A taxpayer will not receive a tax refund for any amount that exceeds the taxpayer’s tax liability for the year

 

Tax Credit Examples*

House A:
I make $60,000 a year
I owe $15,000 in taxes to Federal Government
I installed Geothermal! It cost $30,000 (before rebates)(financing available)
30% of $30,000 is $9,000
I can now subtract the $9,000 credit from the $15,000 and my new tax bill is only $6000!
(If the tax credit exceeds the income tax liability, the remaining balance can be carried forward into future years.)

House B:
I make $30,000 a year
I owe $7,500 in taxes to Federal Government
I installed Geothermal! It cost $30,000 (before rebates)(financing available)
30% of $30,000 is $9,000
I can now subtract the $9,000 credit from the $7,500 and my new tax bill is covered with $1,500 to carry in next year
(If the tax credit exceeds the income tax liability, the remaining balance can be carried forward into future years.)

 

The the tax credits are administered by the IRS. Please contact the IRS with your question:

*Disclaimer: The tax credit information contained within this website is provided for informational purposes only and is not intended to substitute for expert advice from a professional tax/financial planner or the Internal Revenue Service (IRS).

 

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