It depends on the grants/programs themselves.
If your project is eligible for geothermal grants and tax credits, you can apply both to the same project if the Funding Opportunity Announcement (FOA) specifies allowability. An FOA is a document all federal agencies use to announce the availability of grants to the public, so make sure you check that or ask a professional, such as your tax advisor or an informed installer. First, determine allowability, then calculate the project’s total cost to identify the tax basis, apply the grant project, and adjust the grant amount if necessary to avoid coordination rule violation. Think about how you can weave incentives with the tax credit to get the most money back.
If you qualify, the 30% tax credit (ITC base credit) covers the entire project amount before applying any grants. If your project costs 1M, the 30% tax credit covers $300,000 before any other grants are used. You cannot exceed 100% of the project cost with grants, bonuses, and tax credits.
Check with the IRS, your tax advisor, and your installer to see if your project qualifies for bonuses.
Using Rebates with the Geothermal Tax Credit
There are also local/state rebates that can be used in addition to the 30% tax credit. Check with your installer to see if they know of any local rebates, and use dsireusa.org to search for any that you qualify for. If you qualify, many of these can be used in addition to the 30% tax credit.
By combining grants and rebates that you are eligible for, you could potentially save thousands of dollars when investing in geothermal. Although the initial cost can be high, there are various ways to lower it through tax credits and rebates. To ensure that you are taking full advantage of these opportunities, seek advice from experts such as tax advisors.
Are you in search of a local installer who can let you know of rebates available to you? Reach out to us, and we'll recommend our top installers in your area.
Sources
Cranor, Taylor, Dennis, Keith, Dougherty, Fitzmorris, Doug, Ryan, Kaercher, Mike, McCleery Rachel, “BEL Webinar - Direct Pay -1/4/2023.”
“U.S. Department of Energy Analysis Highlights Geothermal Heat Pumps as a Pathway to a Decarbonized Energy Future.” Energy.Gov, 6 Dec. 2023, www.energy.gov/eere/articles/us-department-energy-analysis-highlights-geothermal-heat-pumps-pathway-decarbonized.
