§48E Geothermal Investment Credit: A Buyer's Guide

Geothermal electricity is one of the technologies IRS materials list as an example under the §48E clean electricity investment credit, and it is not subject to the earlier wind-and-solar cutoff added in 2025. That makes geothermal credits a distinct diligence file for buyers: eligibility turns on a zero-emissions electricity facility, not on a heat pump, and foreign-entity rules still apply. This page is a buyer-focused guide to transferable §48E geothermal credits under §6418.

What can qualify

§48E is an emissions-based, technology-neutral investment credit for qualified facilities and energy storage technology placed in service after December 31, 2024 (IRS: Clean Electricity Investment Credit). A qualified facility is used to generate electricity, is placed in service after that date, and has an anticipated greenhouse gas emissions rate of not greater than zero (§48E(b)(3)(A)).

IRS Publication 6045 lists geothermal among example technologies eligible under the final §48E regulations, alongside wind, solar, hydropower, energy storage, marine and hydrokinetic, nuclear and certain waste energy recovery property. Treasury's description of the January 15, 2025 final rules likewise names geothermal among the zero-emissions technologies the rules clarify.

Timing: why geothermal is not on the wind and solar clock

The One Big Beautiful Bill Act (Public Law 119-21, July 4, 2025) added earlier termination rules for applicable wind and solar facilities under §48E(e)(4) and §45Y(d)(4): generally, those facilities keep the credit only if construction began by July 4, 2026, or the facility is placed in service by December 31, 2027. That cutoff is about wind and solar (with a statutory exception for energy storage). It does not, by its terms, put geothermal electricity on the same early deadline. For the wind and solar rules themselves, see what buyers verify on solar and wind deadlines and the OBBBA summary.

Geothermal facilities are still subject to the generally applicable §48E placed-in-service rule (after December 31, 2024) and to the credit's later phase-out. The IRS Clean Electricity Investment Credit page describes the phase-out as starting for the later of 2032 or when U.S. greenhouse gas emissions from electricity are 25% of 2022 emissions or lower. Confirm the current statutory phase-out percentages and any later amendments with your advisors before modeling long-dated inventory.

Rates (framework only)

The rate framework is the same as for other qualifying §48E facilities (IRS §48E page):

• Base credit of 6% of qualified investment.
• Increased to 30% when prevailing wage and registered apprenticeship requirements are met, or under the statute's small-capacity / beginning-of-construction exceptions.
• Possible 10-percentage-point bonuses for domestic content and for energy community location. These are not automatic; they require documentation.

This is not a quoted rate or a promise that any project earned the higher percentage. Confirm the applicable percentage and bonuses with your CPA and counsel. Overview: bonus credits and pricing.

Foreign-entity (FEOC) rules still apply

For a §48E qualified facility that begins construction after December 31, 2025, the facility cannot include material assistance from a prohibited foreign entity (§48E(b)(6), as added by OBBBA; Notice 2026-15). The test is a material assistance cost ratio (MACR). Material assistance exists when the MACR is below the statutory threshold. For a qualified facility (the category that includes geothermal electricity), §7701(a)(52)(B) sets that threshold at 40% if construction begins in 2026, then 45% (2027), 50% (2028), 55% (2029) and 60% for 2030 and later. Energy storage, if it is part of the same deal, has a higher schedule (55% in 2026, rising to 75%).

Notice 2026-15 provides interim safe harbors. Treasury safe harbor tables are due by December 31, 2026; as of the November 9, 2026 check on our FEOC buyer page, those tables had not been issued. Buyers typically ask for MACR workpapers, supplier certifications, the construction-start date and any safe-harbor statement the seller intends to use.

Buyer diligence for geothermal credits

• Technology and Code section. Confirm this is a §48E electricity-generating facility, not a legacy §48 heat pump or a production credit under §45Y for the same facility (you cannot claim both the investment credit and the production credit for the same facility).
• Emissions and facility definition. Support for a not-greater-than-zero anticipated greenhouse gas emissions rate and for the property being used to generate electricity, consistent with the final §48E regulations.
• Placed-in-service and basis. Evidence the facility was placed in service after December 31, 2024, and support for the qualified investment the credit percentage applies to (including any qualified interconnection property, which has its own rules and a 5 MW AC cap under §48E(b)(1)(B)).
• Construction-start date. Needed for the FEOC material-assistance rule (after 2025) even though the wind/solar early cutoff does not apply.
• Registration and transfer hygiene. IRS pre-filing registration number, cash purchase from an unrelated eligible taxpayer, transfer election statement and Form 3800 reporting. See transfer agreement terms and the Form 3800 guide.
• Recapture. Purchased §48E credits are investment credits: a five-year recapture period can follow the buyer if the property is disposed of or ceases to qualify, unless the contract allocates that risk. Diligence indemnity and, if used, insurance (recapture checklist).
• Bonus adders, if claimed. Energy community and domestic content are documentation tests, not labels. Do not assume they apply.

How geothermal compares with solar, wind and storage

	Geothermal electricity	Wind / solar	Energy storage
§48E category	Qualified facility (zero-GHG electricity)	Qualified facility, plus OBBBA early cutoff	Energy storage technology (separate category)
OBBBA July 4, 2026 / end-2027 cutoff	Not the wind-and-solar termination	Applies unless an exception is met	Carved out of that termination (§48E(e)(4)(C))
2026 MACR threshold (construction after 2025)	40% (qualified facility)	40% (qualified facility)	55%
Recapture	Five-year investment-credit recapture	Same	Same

Supply, price and contract terms vary by project. Nothing in this comparison is a quote, a discount or a statement that geothermal credits are lower-risk. Compare all-in cost per dollar of credit and the indemnity package. Many buyers still start with the §48E buyer guide; storage-specific issues are in the storage buyer guide.

Educational information only, not tax, legal or investment advice, and no outcome is promised. Rules and figures were checked against the cited sources on November 13, 2026; they change, so confirm with your CPA and counsel before acting. Veritas does not offer or solicit investments, does not prepare tax forms and does not guarantee a discount, savings or eligibility. See our disclaimer.