Estimate the cost, uncapped 30% federal credit, annual savings and payback of a geothermal (ground-source) heat pump for your home.
SCReviewed by Sarah Chen, Energy AnalystUpdated May 28, 2026Sources: DOE, ENERGY STAR, IRS
The earth as your heat source
Stable ground temperatures give geothermal the highest efficiency and the uncapped 30% credit.
Quick answerA geothermal heat pump costs $18,000–$45,000 installed but qualifies for the uncapped 30% federal credit — a $9,600 credit on a $32,000 system. With a COP of 4–5 it has the lowest running cost of any system, with payback typically in the 10–18 year range.
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Geothermal estimate
2,200 sq ft
Vertical loops cost more to drill but suit small lots.
$
Net cost after 30% credit
$22,400
gross ~$32,000 − $9,600 credit
Annual savings
$1,560
Payback
14 yr
Credit (uncapped)
$9,600
Geothermal qualifies for the uncapped 30% Residential Clean Energy Credit (25D). 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 apply the uncapped 30% credit and estimate payback.
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. The big offset is the federal credit — geothermal qualifies for the uncapped 30% Residential Clean Energy Credit (the same one solar gets), so a $32,000 system earns a $9,600 credit, not the $2,000 cap that applies to air-source units.
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're adding solar too, the uncapped credits stack — see 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. After the uncapped 30% federal credit, net costs typically fall to $13,000–$32,000.
Does geothermal qualify for the 30% tax credit?
Yes — and importantly, with no dollar cap. Geothermal heat pumps qualify for the Residential Clean Energy Credit (25D): 30% of the total cost through 2032, the same uncapped credit as solar. That's far more generous than the $2,000 cap that applies to air-source heat pumps.
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?
With annual savings of $1,200–$2,500 against a net cost of $13,000–$32,000, simple payback usually lands in the 10–18 year range. It's shorter when replacing expensive propane or oil, and longer against cheap natural gas. The uncapped 30% credit is what makes the math work.
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 →