Considered a big win for homeowners, business owners, and the entire geothermal industry, President Trump has signed a bill into law that restores valuable tax credits that had been lost since the end of 2016.
The new bill provides a 30% federal tax credit for residential geothermal heat pumps and a 10% credit for qualifying commercial installations through 2021.
Thank the GEO
The Geothermal Exchange Organization can take most of the credit for having the credit reinstated. They launched a campaign to get the credits back that included visiting local legislators on countless occasions, executive fly-ins to Washington and setting up job site visits for key legislators to witness the value of geothermal energy. The goal was to achieve tax credit parity with solar energy, and luckily for everyone involved in the industry, they were successful in their mission.
Retroactive to 2017
The tax credits signed into law are retroactive to January 1, 2017, which means any homeowner or qualified business owner that purchased a system during 2017 can now apply for the credit.
The idea is for the credits to remain at 30% until December 31, 2019, then move to 26% for 2020, and then 22% as the final incentive until the end of 2021.
Installations Plummeted After 2016
Supposedly, there was an error when tax credits for various types of power were being handed out. Credits for solar and wind turbines were extended to 2021, but fuel cell and geothermal home tax credits were left to expire at the end of 2016.
The GEO estimates that as a result of the error, geothermal installations fell by up to 50 percent in 2017. With the new legislation and retroactive credit, it will be like there was no pause in the credit at all.
Benefits of Geothermal Heating
Geothermal heat pumps can be costly for homeowners, which is why reinstating the credit was so important.
Now, the upfront cost will be easier to manage, and homeowners can enjoy the many benefits of having a geothermal heating system installed on their property. Some of the benefits include:
- Savings of up to 60 percent on heating and up to 50 percent on cooling costs
- Quiet operation with no noisy fans or compressors
- Low maintenance and long operating life
- Possible installation in new construction and retrofits
- Clean, renewable energy source with no harmful emissions or combustion-related issues