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30% Federal Geothermal Tax Credit

Updated: Aug 9, 2023

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 $70,000 you would receive $21,000 in tax credits reducing your overall "out-of-pocket" cost to $49,000.

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.

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 $2000 per ton. (capped at $15,000) For instance if your geo project installed a 4-ton heat pump and your total cost is $70,000, you would receive $21,000 in tax credits PLUS an additional $8,000 in rebates reducing your overall "out-of-pocket" cost now down from $70,000 to $41,000.

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 online process to ensure all the information is correct.

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

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