FEDERAL TAX CREDITS FOR COMMERCIAL GEOTHERMAL
Commercial geothermal systems may qualify for the federal Investment Tax Credit under Section 48 of the Internal Revenue Code. ClimaCool water-source modular chillers can serve as the heat pump plant in a ground-coupled system.
The law changed in 2025. The One Big Beautiful Bill Act amended the Inflation Reduction Act. Some clean energy incentives ended. The commercial credit for geothermal heat pump property remains in place.
What the credit covers:
- Commercial geothermal heat pump energy property in U.S. buildings
- Projects that begin construction before January 1, 2035
- A credit rate that depends on project size, prevailing wage, apprenticeship terms, and site conditions
- Bonus credits for domestic content and for projects in energy communities
- Direct payment for tax-exempt owners, including schools and municipalities
- Transfer, sale, or carryback of the credit for taxable owners
Before you rely on a number
Rates, deadlines, depreciation treatment, and ownership rules have all changed since 2022. We will not publish a figure that may be wrong by the time you break ground. Confirm the current rules with your tax advisor.
For current federal guidance:
- U.S. Department of Energy: Tax credits, incentives, and technical assistance
for geothermal heat pumps - IRS: Instructions for Form 3468, Investment Credit
This page is general information, not tax advice. Reviewed September 2026.