Geothermal Heat Pump Financial Incentives

Geothermal systems are among the most efficient ways to heat and cool your New Jersey home but are typically the priciest to install.

We are big supporters of geothermal at Comfort Now and are committed to helping customers obtain the financial assistance they need to install this eco-friendly heating and cooling technology.

In this blog, you will find information about tax credits and rebates we compiled to help you understand the funding options available for geothermal energy.

We can also discuss financial incentives with you in person. We always discuss funding options for geothermal installation during our in-home consultations. We believe it is essential for you to know as much as possible about your potential new system before you buy it.

That includes understanding how geothermal will save money in the long run, knowing what goes into its price, and identifying financial incentives to offset the cost.

How Do Geothermal Systems Save Money?

A geothermal system maintains comfort for next to nothing in energy costs by tapping the constant temperature underground.

According to the U.S. Department of Energy (DOE), geothermal heat pumps reduce energy consumption by up to 65 percent compared to air-source heat pumps that extract heat from outdoor air.  They can be 300 to 600 percent efficient on even cold winter nights.

That means a geothermal heat pump can convert one unit of electricity into three to six units of heat energy, saving you big bucks on monthly utility bills.

The system’s heat exchanger, which consists of liquid-filled underground pipes, can last 50 years or more, and the indoor geothermal heat pump typically lasts 25 years, making geothermal a great long-term investment.

In the short term, however, you may experience sticker shock.

How Much Does Geothermal Cost?

The price of an air-source heat pump installation typically includes the indoor air handler, outdoor heat pump, labor, and permits. An electric panel upgrade or ductwork repair will drive the cost higher.

Geothermal installation includes all of the costs above and then some. It also requires drilling or excavation to place the piping system, called a loop, below ground on your property.

The price also varies based on the loop used. A vertical arrangement tends to be more expensive than a horizontal pattern that uses more backyard space.

The cost of geothermal for your Galloway home also hinges on the soil condition and property accessibility. Excavation places a huge price tag on geothermal compared to air-source heat pumps.

 This Old House, for example, pegs the price of geothermal heat pumps from $3,000 to $6,000, and installation between $10,000 and $30,000. Forbes estimates $24,500 is the average cost of a geothermal heating and cooling system.

At Comfort Now, we install geothermal systems at all price ranges. We never oversell. We always tailor the project to your heating and cooling needs.

Fortunately, the federal government has financial incentives to take the sting out of the price.

The Federal Tax Credit for Geothermal

The Inflation Reduction Act (IRA) extended the Energy Efficient Property Credit for geothermal heating and cooling. It provides a 30 percent tax credit for geothermal systems placed into service after Dec. 31, 2021, and before Jan. 1, 2033.

Learn more about tax credits for home efficiency improvements at ENERGY STAR^®.

IRA Rebates for Geothermal

The IRA also allocated money to each state for the Home Energy Rebates program, which consists of two distinct rebate programs: the Home Efficiency Rebates (HOMES) and Home Electrification and Appliance Rebates (HEAR). 

Rebates Open to All

The HOMES program offers rebates based on the amount of energy you save by making a home improvement.

There are two ways to figure out how much you can save. Under the modeled method, you can earn a $2,000 rebate by saving an estimated 20 to 30 percent and $4,000 for saving more than 35 percent. The measured method considers actual energy savings you achieved for several months after completing your home improvement project.

You will earn a rebate if you save at least 15 percent on energy consumption. The more you save, the bigger the rebate.

Rebates Based on Income

The federal government specified that HEAR rebates go to low-to-moderate-income households. Low income means you earn less than 80 percent of the area’s median income. Moderate-income households earn 80 to 150 percent of the area median income.

Low-income households can receive a rebate covering the entire cost of their electrification project, and moderate-income households get a 50 percent rebate. Rebates max out at $14,000. 

When introducing the HEAR program, the federal government recommended specific electrification and home improvement projects, such as upgrading electrical wiring, installing heat pumps, and adding insulation. However, it allowed each state to shape its own HEAR program.

The electrification projects included in each HEAR program may differ from state to state.

As of December 2024, 10 states and the District of Columbia have launched at least one of the rebate programs, and in some cases, both. You can track the progress of every state on DOE’s tracker map.

States that have launched their version of the HEAR program include eligible appliances and home improvements on their websites. Some list heat pumps but do not specify if they include geothermal heat pumps.

The fastest way to clarify what a particular state program includes is by contacting the state’s energy office or a qualified contractor listed on their rebates web page.

Other Financial Incentives for Geothermal

Some state and local governments and utility companies may offer incentives for geothermal systems. These incentives can include:

• Property tax exemptions
• Rebate programs
• Low-interest financing

You can research incentives by contacting your utility company, state energy office, and city or county government.

A few helpful links include:

• Switch Is On offers information on a state-by-state basis, including incentives from utility companies. Find out more at Switch Is On.
• Rewiring America helps homeowners take steps toward electrification, including finding incentives. Link to its home page.
• N.C. State University’s Clean Energy Technology Center operates DSIRE, a comprehensive compilation of energy efficiency and renewable energy incentives. Click on programs after you land on its home page.

Start Planning for Geothermal Today!

As a qualified contractor, Comfort Now can find the financial incentives you need to make geothermal installation affordable for your Galloway home. You can schedule a consultation today by calling us at 609-241-9385 or request service online.