The Iowa Department of Revenue has adopted regulations that provide tax credits for geothermal heat pumps and solar energy systems. The regulations are effective November 7, 2012, and the tax credits are available for tax years 2012 through 2016 on qualifying property and equipment installed as of January 1, 2012. The heat pump tax credit is equal to 20 percent of the federal residential energy efficiency tax credit allowed under Internal Revenue Code (IRC) section 25D(a)(5). The solar tax credit against individual income tax is 50 percent of the federal residential energy efficiency property credit provided in IRC section 25D(a)(1) and (2), up to $3,000, plus 50 percent of the federal energy credit for solar energy systems provided in IRC sections 48(a)(2)(A)(i)(II) and (III), up to $15,000.
A solar energy system tax credit against corporate income tax is 50 percent of the federal energy credits for solar energy systems in IRC sections 48(a)(2)(A)(i) (II) and (III) up to $15,000. The total solar energy system credit is capped at $1.5 million per tax year for all taxpayers.