In case everyone was not aware, the American Recovery and Reinvestment Act of 2009 included removal of the $2,000 cap on the 30% tax credit for geothermal installations that was passed into law last fall.  Under the old law, a $20,000 system would get a tax credit of $2,000.  Under this law, the same $20,000 system will get a $6,000 tax credit.

The house passed the bill Weds evening and President Obama supports the house bill.  The Senate is poised to debate the bill next week and everyone has promised the President they would have the bill ready for him to sign by mid-Feb.

I think the significance of this change is difficult to understate.  If it passes, and it looks like it will, this is huge.

Here is where you can track the bills progress if you are interested http://www.opencongress.org/

If it where to fallow the Solar tax change ( which simply removed the cap )

No wording would be changed except to remove the "up to 2000"

the senate has plegded to have it on the Pres. desk by the end of the month

with out a fillabuster of course , if that is true and all goes well should be applicable for 08 returns

Long-Term Extension of Energy Property Tax Credit — Section 48 of the Tax Code provides tax credits (in addition to the PTC) for investments in energy property. The 2008 Act expands the scope of qualified energy property, removed or raised the caps on this tax credit, and extended the sunset for the credit in certain instances. Specifically, the Act extends through 2016 the 30 percent tax credit for investments in solar energy property and fuel cell property and the 10 percent tax credit for commercial microturbines. The Act amends the definition of energy property to provide a new 10 percent investment tax credit for combined heat and power sources and geothermal equipment that uses ground water for heating or cooling purposes. The Act also increases the tax credit available for investments in qualified fuel cells from $500 to $1,500 per half KW.

Long-Term Extension and Modification of the Residential Energy-Efficient Property Tax Credit — Section 25D of the Tax Code allows for a 30 percent credit for investments in residential solar and fuel cell properties. The 2008 Act extends through 2016 the credit available for solar property and adds residential small wind and geothermal heat pumps as qualifying property. Significantly, the Act eliminates the $2,000 cap on the 30 percent tax credit available for solar facilities; the credit can now be applied to the total cost of photovoltaic solar facilities.

What I saw was an email from John Kelly at the Geothermal Heat Pump Consortium to the GHPC board on January 20th that was forwarded to me by staff at the SMU Geothermal Lab.  Here is the pertinent language from that email:

Removal of dollar limitations on certain energy credits. Under current law, businesses are allowed to claim a thirty percent (30%) tax credit for qualified small wind energy property (capped at $4,000). Individuals are allowed to claim a thirty percent (30%) tax credit for qualified solar water heating property (capped at $2,000), qualified small wind energy property (capped at $500 per kilowatt of capacity, up to $4,000), and qualified geothermal heat pumps (capped at $2,000). The bill would repeal the individual dollar caps. As a result, each of these properties would be eligible for an uncapped thirty percent (30%) credit.

In the full text version of the bill online, I didn't see all of this specific language.  However, under Subtitle G, Part 1, Section 1603, it did reference a repeal of certain limitations on credit for renewable energy property which is how John led off the above paragraph.  Please see below