Geothermal Tax Credits | The Ultimate Guide
Geothermal heat pumps, which utilize renewable energy, are a long-used heating source for homes in the U.S. In fact, since the 1940s, geothermal heat pumps have offered a greener alternative to electric- and gas-powered heating/cooling systems for homeowners.
These systems use a pipe-loop buried vertically underneath the ground beside the home. This earth pipe-loop gathers the energy held below the earth’s surface and transfers that energy into the home that provides heating and or air conditioning. There are two types of geothermal heat pumps: Water-to-water systems and water-to-air systems. Water-to-water systems are used to power hydronic radiant heating systems, while water-to-air heating systems power forced-air heating ducts. In most cases, GHPs also will provide most of the domestic hot water for the home.
Today, with rising energy costs, geothermal heat pumps make more sense than ever. Not only will updating your home’s HVAC system with a geothermal heat pump lead to substantial energy bill savings. Years past they had a substantial tax credit. ENERGY STAR rated geothermal heat pumps were eligible for a 30% federal tax credit, including cost and installation, and there was no maximum for the credit.
What Types of Geothermal Heat Pumps Qualify?
Both types of geothermal heat pumps qualified for the 30% federal tax credit, but they must be ENERGY STAR certified. All ENERGY STAR certified GHPs are eligible for the credit, and there are numerous options to use. ENERGY STAR has provided this comprehensive list of eligible heat pumps, which you can use to research models. Also, unlike in the past, qualified GHPs no longer have to provide a percentage or all of the home’s hot water supply to qualify.
Although GHPs may cost more upfront than traditional heating system, they do greatly reduce home energy costs. In fact, all ENERGY STAR certified models are more than 45% more energy efficient than traditional HVAC options.
There is no tax credit at present for 2017 but could change at a moment’s notice depending on our Government agencies’. Currently, the geothermal tax credit is in effect through 2016, and expires on December 31, 2016.
Homeowners apply for the tax credit when they file taxes for the installation year. IRS Form 5695 for Residential Energy Tax Credits. A more detailed summary of Form 5695 is available from the IRS.
Pennsylvania Specific Geothermal Rebates
There are many rebate programs available in Pennsylvania for geothermal customers. If you are provided power by one of the following companies, you may qualify:
- Allegheny Power
- Duquesne Light Company
- Met Edison
- PECO Energy
- Penn Power
- PPL Electric Utilities
If you are unsure what you qualify for, feel free to checkout this tool to learn more.
Want to learn more about the benefits of geothermal heat pumps for your home? Contact Comfort Pro today. We install and service a wide variety of GHPs