A tax credit reduces the tax you owe dollar for dollar, unlike a tax deduction which removes only a percentage of the tax you owe. The federal tax credit is 30% of the cost of your geothermal heat pump system. This also includes installation and labor costs as well as the cost to purchase the heat pump equipment. There is no upper limit, or cap, on the tax credit for installing a new geothermal heat pump; prior to the American Recovery and Reinvestment Act of 2009, the credit was capped at $2,000.00.
To qualify, your heat pump system must be installed at residential properties; rental homes are not qualified. If you are building a new home before the deadline, you can also take advantage of this tax credit when you install a geothermal heat pump system. Second homes or vacation homes are also eligible for the tax credit. Your heat pump system must also meet the federal equipment requirements for efficiency:
· EER ≥ 14.1
· COP ≥ 3.3
· EER ≥ 16.2
· COP ≥ 3.6
If you have installed a qualifying geothermal heat pump system in recent years, you may be eligible to receive the tax credit, too. This tax credit covers qualifying systems installed January 1, 2009 to December 31, 2016.
Some local rebates are also available for installing qualified geothermal heat pump systems. Through the New Jersey's Clean Energy Program residents can apply for a $500 rebate. In Pennsylvania, PECO customers can apply for $217 per ton rebate. For example, if your home needs a 4 ton geothermal heat pump. You can apply for a $868 rebate.
The federal tax credit can certainly help you recoup installation expenses faster for your new geothermal heat pump system. Take advantage of these incentives now; contact Smith Sustainable Design to begin planning for the installation of a new heat pump system at your home.