Geothermal vs air-source: the loop is the extra invoice

An air-source heat pump is an outdoor box that steals heat from winter air and dumps heat into summer air. Geothermal, which installers also call a ground-source heat pump, does the same job against dirt instead of weather. The dirt ten feet down stays closer to 50°F year-round than a January night does. That is why the brochure looks unbeatable. The extra invoice is the pipe in the yard.

EnergySage’s 2026 marketplace average for an air-source install is $15,393 before incentives. Ducted systems sit around $14,529. Whole-home ductless around $25,957. Hybrid (heat pump plus furnace) around $14,353.

EnergySage: heat pump cost

Geothermal is not on that marketplace. EnergySage’s ground-source page still puts a typical install at $15,000 to $40,000 or more, well above their air-source average, because someone has to trench or drill the loop. They note some jobs run much higher.

EnergySage: ground source heat pump cost

The federal 25D credit that used to take 30% off geothermal is done for work finished after December 31, 2025. So is 25C for air-source heat pumps. A 2026 bid that subtracts that IRS money is using last year’s form.

Federal 25C expired is the tax-year page. Utility rebates is what can still pay. Heat pump vs furnace is whether you want a heat pump at all. Once you do, the leftover fork is air or ground.

What is the loop, in plain words?

Ask horizontal trench, vertical bore, or pond, because those three are not the same dirt work.

A closed loop is plastic pipe full of water or antifreeze. Horizontal loops need a yard you can open with a trencher, often a large rectangle a few feet down. Vertical loops need a drill rig and boreholes, which fit a small lot and cost more when the bit hits rock. A pond loop only works if you actually have a pond deep enough and a permit to use it. Open-loop systems pull well water and dump it back. That is a well conversation, not a trench conversation.

The indoor unit looks like a furnace cabinet. It is not a volcano. You are not mining steam. You are exchanging heat with dirt that does not swing 80 degrees between July and January.

EnergySage says ENERGY STAR geothermal has to use 61% less energy than a standard model on that program’s test, and closed-loop water-to-air units need a COP of at least 3.6 and an EER of 17.1. COP is heat out per electricity in. 3.6 means 3.6 units of heat for one unit of power, in the lab. Your January bill is not the lab.

Air-source efficiency lives on SEER2 and HSPF2, which are outdoor-air tests. Reading SEER2, HSPF2, and EER2 is that sticker. Do not compare a geothermal COP to an air-source SEER2 and call it a winner. They are different tests.

Three envelopes that all say “heat pump”

Bid A, ducted air-source on the ducts you have. EnergySage $14,529 before incentives. One outdoor unit, indoor coil or air handler, existing vents if they are any good. Cold-climate models exist. They still sit outside, and they still hear the neighbor. Heat pump noise and setback is that pad.

Bid B, hybrid air-source plus the furnace you already like. EnergySage $14,353 before incentives, and their after-incentive column drops more because programs still like dual fuel. The outdoor unit does the mild days. The furnace takes the worst nights. Dual fuel is when that split earns the extra flue.

Bid C, geothermal. EnergySage $15,000 to $40,000 or more. The indoor box is not most of that. The loop is. If the yard cannot take a trench, you are buying vertical bores. If the ducts are junk, you still buy duct repairs on top. A $15,000 geothermal number that skips the drill is not a geothermal bid.

Whole-home mini-splits at $25,957 can land in the same neighborhood as a cheap geo job and still not be geo. They are wall heads. Compare indoor layout, not the word “heat pump.”

When is the extra dirt work the product?

Ask whether you have yard the loop can live in, because a city lot with a driveway and a maple is a drill quote.

If the outdoor unit has nowhere legal to sit, geothermal moves the noise inside and the exchange into the ground. That can be the neighbor product. It is not cheaper.

If you already need a new well, a septic field, or a driveway rebuild, stacking the loop into dirt you are opening anyway is the only time the trench looks “free.” It still is not free. It is bundled.

If you are keeping this house for decades, EnergySage repeats DOE-style longevity: underground loop 50+ years, indoor gear up to 25. Air-source outdoor units do not last that long. EnergySage also attributes a 10 to 15 year payback-through-energy-savings line to DOE. That is a planning range, not a promise on your rate. Do not let a salesperson guarantee the bill.

If the furnace is new and only the AC died, geothermal is the wrong fork. You are in replacing AC when the furnace is new.

A manufactured home, a tiny lot, or a historic district that hates yard work will fight the loop. Air-source is the normal-house default. Geothermal is the house with land, time, and a bid that names the bore count.

What still pays in 2026?

Ask them to take the federal line off the quote unless the install finished in 2025.

IRS 25D, the Residential Clean Energy Credit, covered geothermal heat pumps at 30% of qualified cost with no dollar cap, for property installed from 2022 through December 31, 2025. The IRS page now says the credit is not available for any property placed in service after that date. You claim it on Form 5695 for the tax year the equipment is installed, not the year you signed or paid a deposit.

Geothermal units had to meet ENERGY STAR rules in effect at purchase. Labor, piping, and wiring that connect the system to the house could count. A 2025 deposit on a 2026 finish does not keep the credit.

IRS: Residential Clean Energy Credit

IRS 25C covered air-source heat pumps the same cutoff: nothing placed in service after December 31, 2025.

Living dollars are utility and state programs, plus HOMES and HEEHR where your state actually opened them. EnergySage still talks about HEAR up to $8,000 for income-eligible heat-pump installs in states that run it. That is not automatic, and it is not 25D.

Do not bake last year’s 30% into a 2026 geothermal napkin. The loop did not get cheaper because the credit died. The out-of-pocket went up.

What has to be on the bid before anyone brings a drill?

Ask air-source or ground-source, in those words, with the loop type if it is geo.

Ask for a written heating and cooling load. Manual J in plain English is that number. Oversizing a geothermal loop is an expensive way to be wrong.

Ask how many tons, how many bores or how many feet of trench, and who restores the lawn. A loop field with no as-built drawing is a future septic surprise.

Ask about the ducts. A ground-source cabinet on leaky trunks is still a leaky house. Weatherize before the heat pump is the envelope order.

Ask what happens if the bit hits rock, hits a boulder, or hits the neighbor’s unused oil tank. Change orders on drilling are how $40,000 becomes a story.

Ask which rebates they will file, with program names, not “incentives.” If they cannot name the utility form, they have not counted on it.

A finished scope looks like this: air-source or geo; outdoor pad or loop type; load on letterhead; tons; bore or trench count; duct plan; panel work yes or no; federal credit $0 for a 2026 finish; living rebate named or omitted. If they cannot fill those, wait on the rig.

What usually blows the geothermal number?

Ask who eats the rock, because that is how a $40,000 loop becomes a story.

The indoor cabinet is a known HVAC box. The unknown is underground. Vertical bores hit rock, a boulder, an old oil tank, or a water table the driller did not budget. If the bid has no rock clause, you are the change order.

Horizontal trenches look cheaper until the trencher cannot stay in the yard. Tree roots, a septic field, and a future addition all compete for the same dirt. A loop with no as-built drawing is a surprise for the next person who digs.

Undersizing the loop is the quiet failure. The cabinet still runs. It just cannot pull enough heat on the worst week, so the backup strips take over and the bill looks like resistance heat. That is why the load has to sit on letterhead before anyone counts bores.

Air-source fails a different way. The outdoor unit ices, it is loud at 5 a.m. defrost, and capacity falls as the air gets colder. Cold-climate heat pumps is that spec-sheet gap. You are not dodging a machine. You are picking which winter problem you can live with.

Neither bid should promise a bill. EnergySage’s $300 to $650 median annual savings on heat-pump switches is mixed fuels and mixed rates. Operating cost vs gas is the napkin, not a guarantee.

How do I decide this week?

Price a ducted air-source job next to a geothermal job on the same load, and make both bids drop any 25C or 25D line for a 2026 install.

Walk the yard and ask whether a trencher or a drill rig can actually work here, because the loop is the extra invoice.

Refuse a geothermal number that does not say horizontal, vertical, or pond, and does not say who puts the grass back.

Keep the quote checklist and utility rebates on the same table as this fork. Hire the install that names the outdoor box or the pipe in the dirt, before anyone digs.