**Applications are due May 1 for installations completed by December 31 the prior year.**
Taxpayers who have a geothermal heat pump installed on their residence on or after January 1, 2019, can now apply for the Geothermal Heat Pump Tax Credit with the Department of Revenue. Deadline to submit an application is May 1 following the year of installation. Taxpayers must first apply for a tax credit award with the Department before claiming a Geothermal Heat Pump Tax Credit for tax year 2019 and later; claims made on the IA 1040 without an award will be denied.
The credit is only allowed on residential properties located in Iowa. To qualify for the Geothermal Heat Pump Tax Credit, the resident of the home where the heat pump is installed must be the applicant. The credit is equal to 20% of the federal residential energy efficient property tax credit allowed for geothermal heat pumps provided in section 25D(a)(5) of the Internal Revenue Code.
Tax credits are awarded on a first-come, first-served basis. Completing the application does not guarantee that you will be awarded a Geothermal Heat Pump Tax Credit. Tax credit availability and application approvals are contingent upon availability of the tax credits in that particular tax year. Once awarded Geothermal Heat Pump Tax Credits reach the maximum amount of tax credit awards ($1,563,638 in 2021), the Department will establish a waitlist, also on a first-come, first-served basis. An application on the waitlist, as described above, shall not constitute a promise binding the state.
How to Apply
The application for the Geothermal Heat Pump Tax Credit can only be completed within the Tax Credit Award, Claim & Transfer Administration System (CACTAS). You will need to upload a copy of your invoice and download, sign, and upload the certification document available within the application. You will need to sign in using the Authorization and Authentication (A&A) State system. If you do not have an A&A account associated with your email account, you will need to establish that account before signing into CACTAS.
Installations on or before December 31, 2018
The Geothermal Heat Pump Tax Credit was previously available for installations beginning on or after January 1, 2012 through December 31, 2016. The credit was equal to 20% of the federal residential energy efficient property tax credit allowed for geothermal heat pumps provided in section 25D(a)(5) of the Internal Revenue Code. For installations during these earlier years, the credit did not require an award and the taxpayer could claim the credit, if eligible, on the IA 148 Tax Credit Schedule filed with the individual income tax return.
The Geothermal Tax Credit was available for installations beginning on or after January 1, 2017 through December 31, 2018. Taxpayers filing a claim for the Geothermal Tax Credit were required to submit Form IA 140 in addition to the IA 148 with the individual income tax return. The tax credit equaled 10% of the taxpayer’s qualified expenditures on equipment that uses the ground or groundwater as a thermal energy source to heat the taxpayer’s dwelling, or as a thermal energy sink to cool the dwelling. The equipment must meet the federal energy star program requirements in effect at the time the expenditure is made. The dwelling must be the taxpayer’s residence and be located in Iowa.