Ground-Source Heat Pumps: Full Speed Ahead
Plan ahead and move projects forward
Ground-source heat pumps are a cost-saving, clean alternative to legacy heating and cooling technology in schools.
School districts can qualify for federal tax credits and cover up to 50% of the project costs.
Explore resources to take advantage of this opportunity and examples of schools that have.
What is the Opportunity for Schools?
Ground-source (or geothermal) heat pumps provide heating by moving heat from the ground into buildings and doing the reverse - moving heat from buildings into the ground - to provide cooling.
Efficient Heating & Cooling: Ground-source heat pumps are an efficient heating and cooling solution for new and existing buildings. Many classrooms are not equipped with cooling. Overheated classrooms are associated with lower test scores and the cause of school closures.
Cost Savings: Because they are highly efficient, ground-source heat pumps can reduce utility costs. And schools can earn a cash reimbursement from the federal government for installing them.
Reduced Air Pollution: Ground-source heat pumps promote clean air. As all-electric systems, ground-source heat pumps do not require schools to burn fuels on site and reduce greenhouse gas emissions from buildings. Cleaner air benefits the whole community.
Tax Credit for Ground-Source Heat Pump Projects
Schools can claim the Investment Tax Credit (Sec. 48) through Elective Pay for ground-source heat pumps.
The tax credit for ground-source heat pumps is available for projects that were placed into service on or after Jan 1, 2023 and that commence construction by Dec 31, 2034.
Reimbursements may range from 6% to 50% of the project costs of a ground-source heat pump. Schools can maximize their credit if the project meets prevailing wage and apprenticeship requirements or exceptions, uses domestic content, and is sited in an “energy community”.
Is your project over 1 MW and commencing construction in 2026 or later? No credit will be earned if the project does not meet the domestic content provision. Districts should ensure they understand their project size before they begin the procurement process.
Additional Information:
Cornell Law School: 26 U.S. Code § 48 - Energy credit
IRS: Prevailing Wage & Apprenticeship Overview and FAQs about PWA
U.S. Department of Labor: Prevailing Wage Guidance
Baker Tilly: Energy Communities Map
School Districts Leading The Way
Schools across the country have installed ground-source heat pumps and received cash reimbursements through Elective Pay. See examples of schools and districts leading the way and benefitting from this clean, cost-saving technology.
Nevada
Kentucky
Minnesota
Share your ground-source heat pump project with us to be featured here next!
Jefferson County Public Schools in Kentucky receives a $1,824,613 check!
Westwood Public Schools in Massachusetts receives a $5,055,655 check!
North Fayette Valley Community School District in Iowa receives a $873,483 check!
Seattle Public Schools in Washington receives a $7,970,439 check!
Additional Resources for Tax-Filing Support
We Build Progress & Lawyers for Good Government (L4GG) Monthly Elective Pay Office Hours
Thursday, April 9 at 1pm ET
We Build Progress and L4GG host monthly office hours on Elective Pay. Share your clean energy project project plans, talk through roadblocks, and ask your questions.
Internal Revenue Service (IRS) Monthly Elective Pay Office Hours
Wednesday, March 18 at 1pm ET
The IRS hosts monthly office hours dedicated to Elective Pay and energy tax credits. Attend to ask your questions. See dates scheduled through 2026.
L4GG has launched the Elective Pay Sprint Hub to help entities maximize energy tax credits while they are still available. Complete the intake form and receive assistance for your project.
Tax Credits for Ground-Source Heat Pumps Remain Intact
The tax credit for ground-source heat pumps (Sec. 48) remains intact despite changes to tax credits with the July 2025 budget reconciliation law. This includes maximizing the credit by meeting additional provisions.
This tax credit is not subject to any of the Prohibited Foreign Entity (PFE) rules that apply to solar energy, energy storage, and storage storage.
The tax credit for schools that install ground-source heat pumps (Sec. 48) is different from the tax credit for homeowners that install ground-source heat pumps (Sec. 25D). Sec. 25D has expired.
Questions? Reach out to us at: info@undauntedk12.org.
The information on this page represents our best understanding of certain tax provisions for general informational purposes only and is not itself tax guidance. Please consult qualified tax professionals about your specific circumstances and refer to guidance issued by the IRS for detailed information on the rules associated with energy tax credits, elective pay, and other relevant tax provisions.