Geothermal Tax Incentives and Credit Resources

July 3, 2025 - This afternoon the U.S. House of Representatives passed the final version of President Trump’s ambitious and wide-ranging domestic policy package, commonly referred to as the One Big Beautiful Bill. The President will sign the legislation into law tomorrow at the White House. While the bill represents a significant setback for the geothermal industry in some ways, there are other provisions that create new opportunities.

 First, the bad news. The Sec. 25D Residential Clean Energy Credit expires at the end of this year. GeoExchange fought for months to defend against this outcome, but it was an uphill battle from the start. This congressional majority simply does not like consumer tax credits and their insistence on repealing 25D for solar meant that we were collateral damage. There may be opportunities to restore some sort of consumer-facing tax credit in the future, but for now, it is important to communicate the short window of opportunity to residential channel partners and customers. State and utility incentives may be able to defray the adverse impacts of the loss of 25D, and we will ramp up our efforts to gain and advance existing support in these arenas.

 On the commercial side, the Sec. 48 Investment Tax Credit was untouched. There is a 30% credit for commercial projects until 2033 when the credit drops to 26%. It is 22% in 2034 and zeroes out in 2035. The domestic content and energy communities bonus credits are still available as is direct pay and transferability.

 Additionally, the law creates an exemption from longstanding IRS policy known as limited-use property doctrine and allows commercial geo systems to now be leased by third parties, including leases to homeowners. More work needs to be done to flesh out the particulars of geothermal leasing, but our hope is that these business models will ramp up quickly and help offset the loss of 25D.

 GeoExchange will continue its work in Washington on the back end of this bill as the focus moves to the U.S. Department of the Treasury and their task of implementing the law. The geothermal industry is resilient, and this legislation represents the start of a new chapter for us. Geo technology lowers energy costs, drives economic growth, and strengthens the electric grid. GeoExchange and our partners at IGSHPA will continue to serve this industry and help its professionals deliver those benefits.

 Stay tuned for more updates from D.C. and if you have questions about the bill, please don’t hesitate to send them to info@geoexchange.org.