The loophole boosting clean heat under Trump's OBBBA
President Donald Trump's recent legislation, the One Big Beautiful Bill Act (OBBBA), has eliminated tax credits for homeowners who want to install heat pumps or improve energy efficiency. However, the law preserves incentives for commercially leased geothermal and thermal energy storage systems, offering a unique way to support clean home heating.
How the tax credits work under OBBBA
While individual homeowners can no longer claim these tax credits directly, companies owning geothermal heat pumps or thermal storage systems can still benefit. These companies may lease the systems to customers at rates reflecting federal tax discounts ranging from 30% to 50%, making clean heating more affordable.
Industry adjustment to new incentives
Some installers without previous leasing operations are now pivoting their business models to utilize these incentives. For firms already involved in deploying thermal energy storage in multifamily buildings through commercial partners, this shift is simpler and more natural.
Significance of the loophole
This leasing pathway stands out as a rare positive highlight amid the OBBBA's wider impact, which is expected to slow the overall transition from fossil fuel heating to cleaner heat pumps. Heat pumps offer benefits such as improved air quality, reduced carbon emissions, and potential cost savings for consumers.
The pathway available to companies that lease geothermal and other clean-heat systems could help soften the blow.
Despite the broader setbacks, this loophole allows continued federal support for clean heating through commercial leasing, helping to maintain momentum toward home electrification.
Author’s summary
This loophole in Trump’s OBBBA law preserves tax credits for leasing geothermal and thermal storage systems, offering a vital route to support clean home heating despite cuts to residential incentives.