Is there a federal tax credit for geothermal in 2025 and 2026?

Yes. The Inflation Reduction Act extended and enhanced the federal Residential Clean Energy Credit for geothermal heat pumps — 30% of the total installation cost through 2032, then stepping down to 26% in 2033 and 22% in 2034.

There's no dollar cap on the credit. This means a $20,000 installation yields a $6,000 federal tax credit. The credit applies to the full installed cost including equipment and labor.

Consult your tax advisor for your specific situation.