Geothermal Tax Credits are available for newly installed systems. Since these are tax credits, rather than deductions, they save you full dollars, rather than just a percentage of a dollar. When comparing installation or replacement of regular air-to-air HVAC systems to geothermal, don’t forget to keep in mind that tax credits can make up a good portion of the upfront cost of the geothermal system.
30% Federal Geothermal Tax Credit
The 30% Federal tax credit was reinstated in February 2018. Energy Star certified Geothermal heating and cooling system installations in U.S. homes qualify for a 30% Federal income tax credit through 2021. The tax credit is retroactive, so installations completed in 2017 qualify. There is no cap to the credit and it can be carried forward into future years. The home does not have to be the taxpayers principal residence. For more information about the Renewable Energy Tax Credit, visit the Energy Star Website.
25% South Carolina Tax Credit
A 25% South Carolina Income Tax Credit was signed into law by Governor Nikki Haley on February 16,2016. The tax credit applies to residential geothermal installations from January 1, 2016 to December 31, 2018.
- Installation must be in South Carolina and owned by the taxpayer claiming the credit.
- The credit cannot exceed $3,500 for each residential property or 50% of the taxpayers total tax liability for any one tax year.
- If the credit exceeds $3,500, the remaining amount can be carried over to the next tax year for up to 10 years.
North Carolina State Geothermal Tax Credit
The North Carolina Renewable Energy Tax Credit expired at the end of 2015. No additional state tax credit is currently in place.
For more on state tax credits, visit Database of State Incentives for Renewable Energy