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Geothermal Tax Credit Overview

Posted by Taylor Hendricksen on Jan 16, 2012 in Geothermal Costs | 0 comments

Geothermal Tax Credits

Geothermal Tax Credit Overview

Right now is the absolute best time ever to be getting a geothermal heating system. With the newest economic stimulus from Washington DC, more money than ever is being allocated for renewable energy.

There is currently a 30% Geothermal Tax Credit available towards the installation of a geothermal heat pump system. That is money straight off the top of our taxes, and back into your pocket. This can make an absolutely huge difference in the overall decision for a geothermal system. If you can put 30% of the money it takes to install the system back into your pocket, not pay it to Uncle Sam, and have a lower tax liability and potentially drop a bracket or two, it greatly changes the game.

All of that in addition to the energy savings you will see makes geothermal the most cost effective renewable energy system you can get. No 30-year payback period like you could see from a solar photovoltaic system, or futile attempts at being “green”, just straight money back in your pocket that you would normally pay to the utility companies.

Qualifications

There are a few qualifications that have to be met to receive this tax credit though. First of all, the residence cannot be an income property, such as a rental. It can be a vacation home or a second residence, but cannot be a rental. Second, the geothermal heat pump must meet the requirements of the Energy Star Program at the time the expenditure is made. You can find all of the qualified units on the Energy Star Website. Most heat pump manufacturers meet this standard, and are Energy Star verified. Third, the system must have been placed in service after January 1, 2009 and before December 31, 2016.

All of these requirements are very easy to meet and apply for almost every home out there.

State Renewable Energy Tax Incentives

Many states also have renewable energy tax incentives such as tax credits and tax rebates. Each state is different and has adopted the renewable energy industry differently. Some states have significant rebates, and others have not put incentives in place. For example, here in Montana there is a $1,500 state tax credit available for geothermal systems. Other states such as Alaska don’t have a set incentive, but there are programs in place that can get you a significant rebate. You can check all of the state incentives at the DSIRE Website.

What is included in the tax credit?

What can be included in this tax credit is a whole different issue that is a somewhat controversial one across the industry. We have another article called What Federal Tax Credits Include that will explain this issue a little bit further.