The American Recovery and Reinvestment Act
Adopted in October 2008, the American Recovery and Reinvestment Act allows for a 30% tax credit for costs associated with Energy Star qualified geothermal heat pumps, as noted in section 25D of the Internal Revenue Code. The credit applies to geothermal equipment placed in service through December 31, 2016. To qualify, you must follow a few simple guidelines:
Guidelines for Geothermal Tax Credits
- The geothermal equipment must meet Energy Star requirements at the time of installation to be eligible for the federal tax credit.
- The geothermal system must be installed in the United States in a home owned by the taxpayer. Primary residency is not required for eligibility.
- The credit is equal to 30% of the total system cost. This includes equipment, labor, piping, etc.
The credit is versatile and can be used in the following ways:
- Can be used to offset the Alternative Minimum Tax (AMT)
- Can be used in more than one year
- Can be combined with other energy-efficiency upgrade credits
- Can be combined with solar and wind tax credits
- There is no cap to the tax credit
There is no limit to the number of times the credit can be claimed. If the taxpayer has more than one home, the credit can be claimed for each home where geothermal equipment is installed.
This information is provided with the understanding that Long Refrigeration is not providing tax, accounting, legal, or other professional advice. This material should not be used as a substitute for expert advice from a tax, accounting, or legal professional.