After a long battle in Washington, D.C., the National Ground Water Association and its members succeeded in restoring tax credits for geothermal heat pumps. The NGWA has been advocating for GHPs since 2015 and their hard work paid off in early 2018.
These tax credits were originally established in 2008 as an incentive for businesses and home owners to install renewable energy technologies including fuel cells, small wind power and solar power. But the housing crisis and recession that year made it difficult for widespread installation and demand. In response, Congress made some changes and extended only wind and solar energy credits through 2021 while the remaining technologies were set to expire at the end of 2016.
In February of 2018 NGWA received notification that reinstatement of the tax credits had been included in the Bipartisan Budget Act. Now the tax credits are in place through 2021 and there is an expected increase in the demand for GHPs and drilling contractor services. As costs for propane and natural gas continue to rise, businesses and homeowners will begin to see the higher initial cost for GHP systems as a beneficial investment when they realize GHP heating and cooling is 72% more efficient and will continue to save them money long into the future.
The Federal Tax Credit allows homeowners to claim a credit of 30% of their qualified expenses when they install a geothermal heat pump system in a residence. The tax credits are set up on a gradual step down format, creating an immediate incentive for GHP installation. Homeowners can claim the full 30% credit for systems placed in service by 12/31/2019, with a slightly lower credit for those put into use in later years up until the end of the credit window. Now is the time to encourage your customers to install these green technologies and to make sure you have the right equipment to meet the rising demand.