I'm confused by what this website is telling me about the tax-credit for a geothermal heat pump:


It says:

A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is at a new home, the "placed in service" date is the date of occupancy by the homeowner. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below.

So far, it sounds like there is a 30% personal tax credit. Further down the page, there is a section specific to geothermal heat pumps, that says:

Geothermal heat pumps

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2008, and on or before December 31, 2016.
  • The geothermal heat pump must meet federal Energy Star criteria.
  • The home served by the system does not have to be the taxpayer’s principal residence.

So, you can see the first bullet seems to confirm that it's a 30% tax credit for systems installed by 12/31/2019.

But, then the 5th bullet throws me off. It says:

Systems must be placed in service on or after January 1, 2008, and on or before December 31, 2016.

What does that 5th bullet mean? Doesn't it contradict the first bullet? I'm just trying to understand what the current tax credit is? Can anyone explain that to me?

1 Answer 1


The DOE page you linked copied this text verbatim from DSIRE, the Database of State Incentives for Renewables and Efficiency. It looks like this specific incentive program has changed a few times, and in the process of updating the text, the conflicting bits were not corrected. Either way, from the DSIRE page, you can get to the actual IRS documents.

IRS Form 5695 (pdf) is the 2017 tax form you would complete to get your credit for the 2017 tax year. This form confirms the 30% credit for geothermal systems: enter image description here

If you go to the instructions for form 5695 (pdf), you'll find this note under "What's New:"

Bipartisan Budget Act of 2018 (BBA) extended credits. The BBA reinstated the nonbusiness energy property credit for 2017, and it reinstated the residential energy efficient property credit for qualified small wind energy property costs, qualified geothermal heat pump property costs, and qualified fuel cell property costs to the end of 2021.

Thus, under the BBA, the 30% credit applies for all geothermal systems purchased between 1/1/2008 and 12/31/2021.

A bit further down in the instructions, "qualified geothermal heat pump property costs" are defined (emphasis mine):

Qualified geothermal heat pump property costs are costs for qualified geothermal heat pump property installed on or in connection with your home located in the United States. Qualified geothermal heat pump property is any equipment that uses the ground or ground water as a thermal energy source to heat your home or as a thermal energy sink to cool your home. To qualify for the credit, the geothermal heat pump property must meet the requirements of the Energy Star program that are in effect at the time of purchase. The home doesn't have to be your main home.

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