Geothermal energy represents a low-cost, renewable, relatively environmentally friendly source of power that has been used since ancient times. Globally, it is expected to increase in the coming decades, with the United States currently leading in megawatt capacity. Geothermal systems are the most efficient HVAC systems, making them an excellent investment.
The U.S. government has offered homeowners a tax credit for installed geothermal systems for the last few years. This tax rebate makes geothermal HVAC systems an even better buy for anyone looking for a new HVAC system. Also, many states add additional rebates on top of the Federal tax credit available to homeowners. This makes geothermal energy very attractive in terms of affordability. However, if you are thinking about buying a geothermal HVAC system, now is the time to do it —as these tax credits will soon be ending.
Geothermal tax credits are available to homeowners through December 31, 2021. After that, they will no longer be available.
There is no ceiling limit to how much you can claim other than the percentage that's stipulated for the year you place your claim.
The federal tax amount that you can claim is scheduled to decrease every year. So, if you're thinking about installing a system, do it as soon as possible to save the most money. For example:
As you can see, the amounts decrease each year. So, it’s important to contact your local HVAC installer if you are interested in saving money on both energy and your tax bill.
Your equipment must meet all the Energy Star requirements that are current at the time of its installation. It must also derive its power from ground-based stored solar energy that is then used for cooling and heating purposes.
The property the system is installed on is required to be in the United States and to be a residence, but it doesn't need to be the homeowner's primary residence.
You cannot claim the equipment used only for heating a swimming pool or a hot tub. You also can't get a rebate on equipment that has been previously used. If the system is for a rental property, it is not eligible.
Yes. A homeowner may claim the stipulated Federal percentage for the year of installation and also receive an Oklahoma state rebate in addition to that. For example, the Oklahoma Electric Co-op offers rebates starting at $375 per ton up to $1,050 per ton.
Many of the electric co-ops in the area offer rebates, including Canadian Valley, Central Electric Cimarron Electric, CKenergy Electric, Edmond Electric, Rural Electric, Oklahoma Electric. Kingfisher Public Works Authority and Oklahoma Gas and Electric also offer the federal geothermal rebates. You'll want to check with your particular company for the range of rebate amounts per ton.
You will need to fill out Form 5695 from the IRS and present it along with your income taxes for the year you are claiming. You can use the credit to offset either your standard income taxes or apply it to your AMT (alternative minimum taxes).
To claim your Oklahoma state rebate, you'll need to make the claim and schedule an inspection with your local energy company within six months of installation.