The Inflation Reduction Act (IRA), signed into law on August 16, 2022, substantially extends and enhances the federal income tax credits and incentives available for the installation of geothermal heat pump (GHP) systems in commercial buildings. The IRA includes the introduction of a new direct payment option for non-taxable entities.

For taxable businesses, there are also new carryback and transfer provisions along with a continuation of the accelerated depreciation benefits. Because the requirements for taking advantage of these incentives are very specific, we have designed a guide that provides a detailed evaluation of the new tax and depreciation incentives available for commercial GHP energy property under the IRA.