A geothermal heat pump uses the earth’s stable underground temperatures to reduce energy costs by 30 to 70 percent on heating and up to 50 percent on cooling. And for years, a federal tax credit made that investment dramatically easier to say yes to. Incomplete IRS figures show that at least 80,730 households took advantage of the credit for a geothermal system in 2023, with the average credit just over $12,000. Existing ductwork compatibility is another hidden variable: geothermal heat pumps move more air at lower temperatures than gas furnaces, so undersized ducts can cause comfort issues. The catch that landed on January 1, 2026The federal residential geothermal tax credit ended on December 31, 2025.