On the federal return ... the end of 2016, congress extended tax credits for solar energy systems for several more years, but left geothermal heating and cooling systems out of the extension. The credits for solar have built into them a reduction as time goes on, and that same approach has been taken with geothermal HVAC systems. The initial renewal is at the same 30% rate as was in place from initial passage in 2008 until they expired on December 31, 2016.
Tax Credit Amounts
- From January 1, 2017-December 31, 2019 – 30%
- From January 1, 2020-December 31, 2020 – 26%
- From January 1, 2021-December 31, 2021 – 22%
Rules are Mostly the Same
Rules for the geothermal federal tax credit are mostly the same as they were before the extension. The main exception is a new clause that allows for commercial projects to be in progress at the end of the tax period, rather than having to be in service. This makes a difference in that you can start a project late in the year that will not be up and running and it will still be eligible for the tax credits. However, this is only important in 2019, 2020 and 2021 when there are changes in the tax credit rate.
- There is no maximum credit. You get the true percentage based on the year you install the Geothermal HVAC system.
- Systems must be placed in service on or before December 31, 2021.
- The geothermal heat pump must meet federal Energy Star criteria. All geothermal systems that we install meet this criteria.
- The tax credit can be taken on any home served by the geothermal system. It does not have the be the taxpayer’s main home. It can be a vacation home or rental home.
- Can be combined with energy efficiency upgrade tax credits
- Can be carried forward if you don’t have enough tax liability to use the entire credit in one year
And the Solar credit :
- Q: How much do I get back from the solar tax credit?
- A: 30% of your costs to install solar, if you install before the end of 2019.
If you’re a homeowner who buys a solar panel system, you’re entitled to a tax credit of up to 30% of the total cost of that system. You can wipe out your entire tax bill if your credit is high enough, and you can take the credit over multiple years if you don’t owe that much in year 1. For example, if you spend $20,000 on a solar system, your 30% tax credit would be $6,000. But if you only owe $4,600 in taxes for 2017, your tax bill will be reduced to zero, and you’ll receive an additional $1,400 tax credit on your 2018 return.
Both are limited to your federal tax liability.
For the state :
New York - Energy Tax Credit, Solar Rebates And Incentives
New York offers a generous state tax credit for people who purchase solar systems. New Yorkers are eligible for a credit worth 25% of their system cost, or $5,000 (whichever is less). If you don't pay enough in taxes to claim the credit at once, the excess credit can be carried over to the next year.
