Renewable is a term applied to natural resources and refers to those resources that can be renewed or replenished in a short period of time. Renewable energy is also called "clean" or "green" energy because it does not pollute the air or harm the environment.
Geothermal is a renewable energy source because it uses the unlimited amount of heat generated by the earth's interior. Geothermal heat pumps are highly-efficient, using a small amount of electricity to capture a large amount of free renewable energy from the earth. In fact, geothermal heat pumps can cut home heating and cooling bills by up to 70 percent.
Iowa Lakes Electric Cooperative has promoted geothermal heat pumps for many years with our cash back rebate program coupled with the federal and state tax credits to help offset the high initial capital cost of the systems.
Unfortunately, it appears that the State's lawmakers have un-leveled the playing field for geothermal as the only renewable energy technology to be "orphaned" by our tax policy.
While there will be welcomed reductions to individual income rates by an average of 10 percent and a gradual increase of the Chapter 179 asset deduction beneficial to many farmers, the bill will expedite the elimination of the geothermal tax credit that is tied to the Federal credit.
With the passage and signing into law SF2417, State level geothermal credits are set to be eliminated beginning January 1, 2019.
The following is an outlook of Federal geothermal tax incentives from now through 2021 and beyond.
Federal Tax Credit - Geothermal Incentives Yearly
2018 - 30%
2019 - 30%
2020 - 26%
2021 - 22%
2022 - 0%