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Understanding Tax Incentives for Geothermal Heat Pumps

Everything you need to know about geothermal heat pump incentives

What Federal and State incentives apply to you as a NY state homeowner?

In 2018, Department of Energy passed a Federal Tax Incentive for geothermal ground source heat pumps. In the form of personal tax credits, these incentives save Dandelion customers thousands of dollars.

As a New York State homeowner, you qualify for the New York State Energy Research and Development Authority (NYSERDA) Ground Source Heat Pump Rebate initiative. To promote geothermal installations, NYSERDA allocated $15 million for heat pump installations. Dandelion is a NYSERDA approved Ground Source Heat Pump (GSHP) designer and installer, which means Dandelion customers qualify for NYSERDA incentives in addition to Federal Incentives.

Federal Tax Credit
30% off the price of the system in 2019
26% in 2020, 22% in 2021*
*For systems installed in the calendar year
NY State Incentive
$1,500 per ton for small systems*
$1,200 per ton for large systems**
*systems with 10 or fewer tons of capacity
**systems with 10 or more tons of capacity
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Why is sooner better than later?

For 2020, Federal incentives will cover 26% of a Dandelion geothermal system. However, the percentage covered by tax incentives will decrease next year with tax incentives covering 22% of GSHP system in 2021 and potentially 0% in 2022.

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What doesn’t apply?

The credit does not apply to equipment used primarily for pool or hot tub heating. It also does not apply to installation in rental homes.

Are there any limits to the New York State initiative?

Yes. Because the initiative is a finite amount of allocated money, rebates are offered on a first-come first-served basis, and will run out. Additionally, single family homes can only receive up to $15,000, buildings up to $500,000, a single site with multiple buildings up to $1 million, with no single designer or installer receiving more than $7.5 million.

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How do the New York State rebates work?

The NYSERDA initiative consists of two tiers of rebates - for small and large systems. “Small systems” are systems will 10 or fewer tons of cooling capacity. For small systems, NYSERDA offers rebates of $1,500 per ton of cooling capacity. “Large systems” are systems that use 10 or more tons of cooling capacity that receive $1,200/per ton in rebates.

Less than 10 tons
$1,500
per ton of cooling capacity
10 or more tons
$1,200
per ton of cooling capacity
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What systems qualify for these incentives?

Ground source geothermal heat pumps like Dandelion’s qualify for these incentives.

Are there any other incentive programs apart from state and federal incentives for geothermal heat pumps?

Apart from state and federal incentives. Regional utilities such as Con Edison offer additional incentives to customers who are looking to install ground source heat pumps. Here’s a list of all the available utility incentives / rebates:

ConEd Incentive
Up to $5,000 off
ConEd customers in Westchester can get up to $5,000 off their Dandelion Geothermal system
National Grid Incentive
$200 or $400 per ton
Total incentive amount not to exceed $1,500 Current natural Gas customers are not eligible
Central Hudson Incentive
$264 paid annually
Must enroll in CHGE’s Insights+ Program
Orange & Rockland Incentive
$2,000 bonus rebate
Orange & Rockland homeowners who install a geothermal heat pump are eligible for a $2,000 bonus rebate