Geothermal Heat Pumps

Geothermal heat pumps are similar to ordinary air source heat pumps, but use the ground instead of outside air to provide heating, air conditioning and, in most cases, hot water. Because they use the earth's natural heat, they are among the most efficient and comfortable heating and cooling technologies currently available.

Recent Congressional legislation has improved the tax credit for installation of residential heat pumps. With the new laws, a residential customer who installs a residential geothermal heat pump may be eligible for a tax credit of 30% of the installed cost of the system, no cap.

As part of the economic rescue bill (HR 1424) passed in October 2008, a residential system installed and placed in service anytime between January 1, 2008 and December 31, 2016 was eligible for a tax credit equal to 30 % of the installed cost of the system up to a cap of $2000 for a single residence.

The Stimulus Bill signed recently by President Obama improves that tax credit.  Specifically, systems placed in service after January 1, 2009 are no longer subject to the caps. As a result, an installed system now is eligible for a 30% tax credit of the total installed cost of the system. In addition, if the taxpayer can’t use the credit in  the year the system is installed, he or she can carry any unused credit into the next tax year.

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