In the wee hours of the morning Feb 9, 2018, Congress passed the Continuing Resolution spending bill which included reinstatement of the tax credits for geothermal (ground-sourced) heat pump installations which had expired on December 31, 2016. Hours later the President signed it into law.
The reinstated tax credits are retroactive to Jan 1, 2017, and were extended through Dec 31, 2021. For installations completed by Dec 31, 2019, homeowners will be eligible for a 30% tax credit. In 2020, it will drop to 26% and in 2012, to 22%. The tax credit can be used in whole or in part for the subsequent six years of U.S. tax filings following completion of the installation. For commercial installations, the 10% tax credit and MACRS 5-year accelerated depreciation were extended for projects commenced by Dec 31, 2021.
This brings to an end the inequity that was created when, in Dec 2015, Congress extended the tax credits for solar and wind installations through 2021 but left other renewable energy technologies behind.
Implications to New York State Homeowners
Homeowners (and businesses) in New York State may also be eligible for the Ground Source Heat Pump Rebate through NYSERDA. In combination, these two incentives could cover as much as two-thirds of the cost installing a residential geothermal system.
If you currently heat with propane or heating oil, that typically equates to a payback (from energy cost savings) on your net investment in 3 to 5 years.
If you’re building new or needing to replace your existing heating & cooling system, the net cost of replacing with geothermal is now comparable to that for a fossil-fueled furnace and conventional central air conditioning system… and you’ll be saving energy regardless of whether you formerly heated with natural gas, propane, heating oil, or electric resistance.