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30% Federal Geothermal Tax Credit

Updated: Aug 16, 2022

No need to overthink this tax credit. It is a Federal incentive to move away from fossil fuel energy sources to green energy sources. Thanks to the Historic Inflation Reduction Act (IRA) or more commonly called the "Climate Change" bill signed by President Biden on August 16, 2022, residential geothermal projects -retro-fit, heat pump swap outs and new builds- all qualify for a 30% tax credit.

This is an incredible advantage to homeowners and reduces the the overall cost of installing a geothermal system by 30%. For instance, if your geo project proposal is $60,000 you would receive $18,000 in tax credits reducing your overall "out-of-pocket" cost to $42,000.

For new home construction this makes real "cents" as you need to consider some type of heating and cooling system. The benefits and savings can be substantial to install geothermal for any new build. And remember, geothermal systems heat AND cool your home. Geothermal can also run your hot water.

If you have an existing oil or fossil fuel system and are switching to geothermal the 30% tax also applies to you. In addition retro-fit homeowners can claim a rebate with the program Energize Connecticut. The rebate is up to $1500 per ton. For instance if your geo project proposal contains a 4-ton heat pump and total cost is $60,000, you would receive $18,000 in tax credits PLUS an additional $6,000 in rebates reducing your overall "out-of-pocket" cost to $36,000.

How do you claim your tax credit?

When completing your taxes for the year of your install complete IRS Form 5695

How do you claim your rebate?

King Energy, we help you do it. We guide you through the form process to ensure the information is correct

The bill, signed into law, August 16, 2022 extends the federal tax credit at the following rates:

Installs in 2021 = 26%

Installs in 2022-2032 = 30%

Installs in 2033 = 26%

Installs in 2034 = 22%

Installs in 2035 = 0%

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