Federal Incentives
The Incentive Stack
Up to 50% of your commercial geothermal project cost is covered by federal tax incentives. Here's how it works.
30%
Base ITC rate with PWA
+20%
Maximum bonus adders
50%
Maximum total ITC
2032
Full-rate deadline
How You Claim It
Three paths, one incentive
The IRS provides a different mechanism for each entity type. All three deliver real, measurable value.
Claim or Sell the Credit
For-profit entities claim the ITC on their tax return, reducing federal tax liability dollar-for-dollar. Or sell the credit to a third-party investor via §6418 transferability - converting the credit into immediate cash even if your tax position is limited.
Direct Pay from the IRS
Tax-exempt entities - nonprofits, schools, municipalities, and government agencies - receive a direct cash payment from the IRS equal to the full ITC value. No tax liability required. The IRS cuts you a check.
Third Party Ownership
While the residential §25D tax credit no longer applies to geothermal heat pumps, third-party ownership and lease structures for geothermal are becoming available for the first time in 2026. The barriers that kept geothermal out of reach for most homeowners are coming down. Ask us what's available for your project.
Incentive Stack Builder
Calculate your federal incentive stack
Estimate your §48 ITC for commercial and nonprofit geothermal projects. Click the dollar amount to enter a custom project cost.
All figures are estimates - consult a qualified tax professional for project-specific guidance.
Entity Type
Click to enter a custom amount
Investment Tax Credit
Bonus Adders
Bonus Depreciation
* §168(k) assumes 21% corporate tax rate.
§6418 Transferability or Tax Credit
Claim on your tax return or sell the credit to a third-party buyer via §6418 transferability.
Estimates only. Consult a qualified tax professional.
Act Before the Step-Down
The ITC phase-out schedule
Projects must be placed in servicebefore year-end to qualify for that year's rate - not just contracted or started.
2025–2032
30%
Full credit - act now
2033
26%
4% reduction
2034
22%
8% reduction
2035+
0%
Credit expires
FAQ
Common questions
This page is for general educational purposes only and does not constitute tax or legal advice. Consult a qualified CPA or tax attorney for project-specific guidance.
Ready to Stack Your Incentives?
Dragon coordinates every layer of the federal incentive stack - so you don't have to.
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