Geothermal heat pumps
The most efficient way to heat and cool a home — at the highest upfront cost. Here's how ground-source systems work and whether the payback adds up.
How geothermal heat pumps work
A geothermal (ground-source) heat pump exchanges heat with the ground instead of the outdoor air. A few feet down, the earth stays a stable 45–75°F year-round, so the system has a mild source to draw from in winter and reject to in summer. Buried loops — horizontal trenches or vertical boreholes — circulate fluid that carries the heat to an indoor heat pump.
Installation cost
Geothermal is the priciest type to install — typically $18,000–$45,000 — because of the ground loop (drilling or trenching). That's the trade-off for the lowest operating cost and longest lifespan of any system. Estimate a system with our cost calculator (select "Geothermal").
Rebates & incentives
Savings and payback
Ground-source units reach COPs of 3–5 and stay efficient regardless of outdoor air temperature, so running costs are the lowest available. On low bills alone (plus any state/utility incentives), payback is often 7–15 years, after which savings continue for the 20–25+ year life of the equipment (the ground loop can last 50 years).
Pros and cons
Pros: lowest running cost, very long lifespan, quiet, no outdoor unit. Cons: high upfront cost (and the federal credit has expired), requires land for trenching or drilling access, and installation is more involved.
Frequently asked questions
How much does a geothermal heat pump cost?
Typically $18,000–$45,000 installed. The federal 25D tax credit expired at the end of 2025, but running costs are the lowest of any system and some state/utility rebates remain.
Is geothermal worth it?
If you plan to stay in the home long term and have suitable land, often yes — very low running bills (plus any local incentives) usually pay back in 7–15 years.
How long do geothermal systems last?
The indoor heat pump lasts 20–25 years; the buried ground loop can last 50 years.
Does geothermal work everywhere?
It works in nearly all climates because ground temperature is stable, but installation needs space for horizontal loops or access for vertical drilling.
Related
Sources & further reading
Educational guide, reviewed against US DOE & ENERGY STAR guidance and updated June 2026. Estimates only — not a substitute for a professional assessment or Manual J load calculation.