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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

Commercial 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.

See the Economics of Geothermal Savings Versus Traditional HVAC!

Additional State and Local Geothermal Energy Tax Incentives Available

Check with your your state and local governments! There may be additional incentives for installing a ClimateMaster geothermal heating and cooling system. Visit the DSIRE Website (link below) shown below to find out if there are state and local commercial and residential energy tax credits available in your area.

NOTE: Once you reach the DSIRE Website, simply select “Geothermal Heat Pumps” from the “Technology” drop down menu and then click on your state to view all the programs or energy credits available for geothermal heat pumps in your state.

ClimateMaster, Inc.

7300 S.W. 44th Street

Oklahoma City, OK 73179


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