Estimate the cost, annual savings and payback of a geothermal (ground-source) heat pump for your home.
SCReviewed by Sarah Chen, Energy AnalystUpdated October 1, 2026Sources: DOE, ENERGY STAR, IRS
The earth as your heat source
Stable ground temperatures give geothermal the highest efficiency of any system.
Updated October 2026 — federal credits have ended. The One Big Beautiful Bill Act (signed July 4, 2025) ended the 30% federal Residential Clean Energy Credit (25D: solar, batteries, geothermal) and the Energy Efficient Home Improvement Credit (25C: air-source heat pumps, up to $2,000) for anything installed after December 31, 2025. Systems completed by Dec 31, 2025 can still be claimed on a 2025 return. Any 30% or $2,000 figure on this page applies only to those installs — our calculators now default to $0 federal credit. What is still available in 2026 →
Quick answerA geothermal heat pump costs $18,000–$45,000 installed and, since the 30% federal credit ended after 2025, that is your net cost for a 2026 install. With a COP of 4–5 it has the lowest running cost of any system, with payback now typically in the 14–25 year range.
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Geothermal estimate
2,200 sq ft
Vertical loops cost more to drill but suit small lots.
$
Net installed cost
$32,000
gross ~$32,000 − $0 credit
Annual savings
$1,560
Payback
20 yr
Federal credit (2026)
$0
The 30% Residential Clean Energy Credit (25D) ended for systems installed after Dec 31, 2025. Loops last 50+ years; the heat pump unit 20–25.
How this calculator works
1
Enter home size
Larger homes need a bigger loop and unit.
2
Choose loop type
Horizontal trenches are cheaper; vertical boreholes suit small lots.
3
Enter current heating + cooling cost
To estimate annual savings.
4
See net cost and payback
We estimate payback on the full cost (no federal credit in 2026).
Is a geothermal heat pump worth the cost?
A ground-source (geothermal) heat pump uses the stable temperature of the earth a few feet down — around 50–55°F year-round — instead of the outdoor air. That stability lets it run at a COP of 4–5, the highest efficiency of any heating and cooling system, with running costs 30–60% below a typical furnace-and-AC setup.
The catch is the upfront cost: installing the ground loop (horizontal trenches or vertical boreholes) pushes the total to $18,000–$45,000. Until the end of 2025, the uncapped 30% Residential Clean Energy Credit (25D) cut that sharply: a $32,000 system earned a $9,600 credit. That credit ended for systems installed after December 31, 2025, so a 2026 install costs the full $32,000, and payback runs roughly 40% longer than it used to. Utility and state rebates are the main offsets left.
Ground loops are warrantied for 50+ years; only the indoor heat pump unit (20–25 years) is eventually replaced. Over decades, geothermal often has the lowest total cost of ownership of any system.
Geothermal vs air-source
Air-source heat pumps are far cheaper to install and now perform well even in cold climates, so they're the right choice for most homes. Geothermal makes the most sense if you'll stay in the home long-term, have suitable land or budget for drilling, and want the lowest possible running cost. Compare the air-source path with the Cost Calculator, and if you installed solar or geothermal in 2025, check what you can still claim with the Solar Tax Credit Calculator.
Questions
Frequently asked questions
How much does a geothermal heat pump cost?
A residential ground-source (geothermal) system costs about $18,000–$45,000 installed, driven mostly by the ground loop. Vertical borehole loops cost more than horizontal trench loops. The 30% federal credit (25D) ended for systems installed after December 31, 2025, so for a 2026 install your net cost is the full installed price, minus any utility or state rebate.
Does geothermal still qualify for the 30% tax credit?
Not for systems installed in 2026. Geothermal heat pumps used the Residential Clean Energy Credit (25D), 30% of cost with no dollar cap, but the One Big Beautiful Bill Act (signed July 4, 2025) ended it for expenditures after December 31, 2025, meaning installation completed after that date. A system finished in 2025 can still be claimed on your 2025 return with Form 5695, or added with an amended return (Form 1040-X) generally within 3 years.
Is geothermal worth it compared to an air-source heat pump?
Geothermal has the lowest running cost (COP 4–5) and the longest-lived components, but the high install cost means it pays off best for long-term owners with suitable land or budget. For most homes, a modern air-source heat pump delivers most of the benefit at a fraction of the upfront cost.
How long do geothermal systems last?
The buried ground loop is typically warrantied for 50 years or more and often outlives the home's other systems. The indoor heat pump unit lasts about 20–25 years before replacement — longer than a typical air-source unit because it isn't exposed to weather.
What's the payback on geothermal?
Without the federal credit, annual savings of $1,200–$2,500 against the full installed cost put simple payback at roughly 14–25 years, about 40% longer than when the 30% credit applied. It's shorter when replacing expensive propane or oil, and longer against cheap natural gas. Utility and state rebates are now what shorten it.
Sarah has spent 12 years modeling US residential solar economics, including 4 years contributing to NREL's Distributed Generation Market Demand model. She holds a BS in Mechanical Engineering from UC Berkeley and reviews every calculator and state guide on GreenCalcs against current IRS, DSIRE and EIA data. Read our methodology →