INFLATION REDUCTION ACT (IRA)

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.

Geothermal Federal Tax Guide

Tax Incentive Guide
  • Investment tax credit (ITC) up to 30% of system cost basis
  • Domestic content bonus tax credit up to 10% of system cost basis
  • Energy community bonus tax credit up to 10% of system cost basis
  • Direct-pay option for non-taxable entities
  • No cap on total credit amount
  • Can be used to offset AMT tax
  • Can be used in more than one year
  • Can be carried back up to 3 years or transferred/sold to an unrelated party
  • Can be combined with solar and other clean energy tax credits

Learn how to make the Inflation Reduction Act work for you.