By a vote of 215-214, the U.S. House of Representatives on May 22 narrowly passed the One Big Beautiful Bill Act, sweeping tax and domestic policy legislation.
The bill proposes to end several energy tax credits used in the housing industry, including Section 25D Residential Clean Energy Credit after December 31, 2025 (currently runs through 2034). Under current law, taxpayers may claim a credit for residential expenditures for geothermal heat pump property, solar electric property, solar water heating property, fuel cell property, small wind energy property, and battery storage property. The value of the credit is currently 30 percent of the expenditures and decreases to 26 percent for systems placed in service in 2033 and 22 percent for those in 2034.
The bill now moves to the Senate where any changes to the bill made by the Senate must then pass the House.
This comes on the heels of some people expecting significant growth in the geothermal market. According to a U.S. Department of Energy “Liftoff” report published in January, ground source heat pumps (GSHPs) could heat and cool 80 million homes by 2050 — up from just over 1 million today.
NGWA is joining other associations to advocate for geothermal and solar tax credits. Solar credits are becoming increasingly important for NGWA members that are investing more in solar pumping systems to help farmers meet their water needs.
The Association has always played a significant part in geothermal tax credits. NGWA was instrumental in the tax credit’s creation in 2008 and its reinstatement in 2018. When the tax credit was set to expire in 2023, its extension was a focal part of NGWA’s legislative advocacy efforts. Extension for both the residential and commercial tax credits were finally included the Inflation Reduction Act of 2022.
The NGWA and WQA 2025 Fly-In that took place March 25-26 in Washington, D.C., connected attendees with key decision-makers in Congressional offices, government agencies, and departments to foster better working relationships and understanding about geothermal. Click here for more information on NGWA’s funding and policy priorities.