Available Tax Credits for Geothermal Heat Pumps in 2023
Could your Orem home benefit from a geothermal heat pump? These high-efficiency heating and cooling systems are becoming more popular across the country, and it’s easy to see why.
Also known as ground-source heat pumps, a geothermal system taps into the constant underground temperature to offer Utah homeowners a cost-effective and environmentally friendly way to heat and cool their homes. You can install these systems beneath the ground or in a lake or pond.
Now is a great time to act on high-efficiency geothermal systems, as the federal tax credits to offset their installation cost have significantly increased starting in 2023.
Skylake Heating & Air installs, replaces, repairs, and services geothermal heat pumps for Orem, UT property owners. As more communities begin implementing guidelines to reduce carbon emissions, we remain committed to offering products designed to keep you comfortable and safe with less impact on our environment.
Geothermal Heat Pumps Qualify for Federal Tax Credits
Under the Inflation Reduction Act (IRA) of 2022, the federal tax credit for residential geothermal system installations was increased from 26 to 30 percent, effective January 1, 2023.
The 30 percent tax credit runs through 2032 and then gradually reduces until expiring in 2034. Did you purchase a geothermal heat pump in 2022? If so, you qualify for the increased amount.
Here are a few highlights of the geothermal tax credit:
- The geothermal heat pump must meet ENERGY STAR® requirements.
- You must own the home where the heat pump is installed, and use the home as one of your primary residences. You cannot use the tax credit on a rental property.
- You can use the tax credit multiple times—meaning you can apply it to your primary residence and a vacation home. Eligible properties must be located in the United States.
- The tax credit will not apply if the geothermal heat pump is used solely for heating hot tubs or pools.
- You can apply the tax credit retroactively to geothermal systems that were installed—or “placed in service” on January 1, 2022.
Geothermal systems lead the way toward a greener future. According to the U.S. Department of Energy (DOE), a geothermal heat pump uses up to 50 percent less electricity than a conventional heating, ventilation, and air conditioning (HVAC) system.
A geothermal system also improves humidity controls by maintaining about 50 percent relative indoor humidity.
These systems cost more upfront than a conventional HVAC system, but they have a faster payback period through lower energy bills. Plus, you only have to maintain one unit with a heat pump system—as opposed to maintaining a furnace and an air conditioning unit.
In addition to these tax credits, some states offer local rebates for geothermal heat pumps and other high-efficiency HVAC products. Our team at Skylake Heating & Air will let you know if your purchase qualifies.
A Geothermal Future in Heating and Cooling
A gas furnace burns fuel to generate heat, creating carbon emissions. A heat pump uses electricity to move heat from one place to another, making them much more eco-friendly than a conventional HVAC system.
The ground right below the surface (about 10 feet) maintains a constant temperature between 45 and 75 degrees. A geothermal heat pump taps into this energy source to keep your Orem home comfortable year-round.
Geothermal systems circulate a treated antifreeze liquid through a closed underground loop installed a few feet below your property or in a nearby body of water. A ground heat exchanger extracts the heat from the liquid and transfers it to the heat pump, which circulates the heat throughout your Orem home.
In the summer, the process reverses itself, and the heat pump works identically to an air conditioner, removing heat from your home.
The tubing in a geothermal system will operate efficiently for over 50 years, while the heat pump has a service life of up to 25 years. Your geothermal system will provide comfort to your homes for decades to come, in an environmentally friendly way.
Call Your Geothermal Heat Pump Experts
Skylake Heating & Air is your go-to company in Orem, UT for geothermal heat pumps and other HVAC products. Call us today at 801-226-7878 or request service online.