Updated for 2026

Heat Pump Rebates & Tax Credits: Your Complete Guide

Save up to $8,000 or more on your heat pump installation. Learn about federal tax credits, IRA rebates, state programs, and utility incentives available in 2026.

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Available Incentives at a Glance

Multiple programs can be combined to significantly reduce your upfront costs

Federal Tax Credit

Up to $2,000

25C Energy Efficient Home Improvement Credit covers 30% of installation costs

IRA Point-of-Sale Rebate

Up to $8,000

Income-qualified homeowners can receive instant rebates at time of purchase

State & Utility Rebates

Varies by Location

Many states and utilities offer additional rebates of $500-$3,000+

Federal Heat Pump Tax Credit (25C)

What You Need to Know

The Energy Efficient Home Improvement Credit (Section 25C) provides a tax credit of 30% of project costs up to $2,000 for qualifying heat pump installations. This credit is available annually through 2032.

Eligibility Requirements

  • Must be your primary residence (not rentals)
  • Heat pump must meet ENERGY STAR requirements
  • Must meet CEE highest efficiency tier specifications
  • No income limits apply

How to Claim

  • 1Save your receipts and manufacturer certifications
  • 2Complete IRS Form 5695 with your tax return
  • 3Credit reduces your tax liability dollar-for-dollar

💡 Pro Tip

The $2,000 cap is per household per year. If you're also installing a heat pump water heater, you can claim an additional $2,000 credit for that upgrade separately!

IRA High-Efficiency Electric Home Rebates (HEEHR)

Income-Based Point-of-Sale Rebates

These rebates are applied instantly at the time of purchase—no waiting for tax refunds!

Income LevelRebate AmountCoverage
Below 80% Area Median IncomeUp to $8,000100% of project costs
80-150% Area Median IncomeUp to $8,00050% of project costs
Above 150% Area Median IncomeNot eligibleUse 25C tax credit instead

How HEEHR Works

  • Applied at point of sale by participating contractors
  • Reduces your out-of-pocket cost immediately
  • Can be combined with state and utility rebates
  • Available for heat pumps, water heaters, and more

Program Availability

HEEHR rebates are administered by individual states. Program launch dates vary:

  • New York, California, ColoradoNow Available
  • Most other statesRolling out 2026
Check your state's status →

⚠️ Important: Cannot Double-Dip

If you receive HEEHR rebates, you cannot claim the 25C tax credit for the same portion of costs covered by the rebate. However, if your project costs exceed the rebate amount, you may be able to claim the tax credit on the difference.

State & Local Heat Pump Rebates

Many states offer their own incentive programs that can be stacked with federal incentives. Here are some of the most generous state programs currently available:

🗽

New York

EmPower+ & NYS Clean Heat

Up to $4,000+
  • Clean Heat rebates: $1,000-$4,000 depending on system type
  • EmPower+ for income-qualified: Free or reduced-cost installations
  • Con Edison customers: Additional $1,000 rebate available
☀️

California

TECH Clean California

Up to $5,600
  • $3,000-$5,600 for qualifying heat pump HVAC systems
  • Higher rebates for disadvantaged communities
  • PG&E, SCE, and SDG&E customers have additional utility rebates
🦞

Maine

Efficiency Maine

Up to $2,400
  • $800-$2,400 rebates for heat pump installations
  • Additional $600 for low-income households
  • 0% interest Heat Pump Loan available
🏔️

Colorado

Colorado Heat Pump Incentives

Up to $4,500
  • State rebate up to $3,000 for qualifying systems
  • Xcel Energy customers: Additional $1,500 rebate
  • Income-qualified bonus rebates available
🌲

Massachusetts

Mass Save

Up to $10,000
  • Up to $10,000 for whole-home heat pump systems
  • $1,250-$3,000 for ductless mini-split systems
  • 0% interest HEAT Loan for 7 years
View all state incentive programs

Utility Company Rebates

Many electric utilities offer their own rebate programs to encourage heat pump adoption. These rebates are typically stackable with federal and state incentives.

Utility rebates typically range from $300 to $2,500 depending on your location and the type of heat pump system installed.

Common Utility Rebate Requirements

  • Must be a current customer of the utility
  • Equipment must meet efficiency standards
  • Installation by licensed contractor often required
  • Pre-approval may be needed before installation

🔍 How to Find Your Utility Rebates

The easiest way to find available utility rebates is through the DSIRE database (Database of State Incentives for Renewables & Efficiency) or by contacting your electric utility directly.

Search DSIRE Database

Estimate Your Total Savings

Here's an example of how incentives can stack for a typical heat pump installation:

Typical Installation Cost$15,000
Federal Tax Credit (30%)- $2,000
State Rebate (example)- $2,000
Utility Rebate (example)- $1,000
Your Out-of-Pocket Cost$10,000
Total Savings: $5,000 (33%)

*This is an example calculation. Actual savings depend on your location, income, and specific programs available in your area.

Qualifying Heat Pump Equipment

To qualify for federal incentives, your heat pump must meet specific efficiency requirements. Here's what to look for when shopping:

Air-Source Heat Pumps

Must meet ENERGY STAR Most Efficient or CEE Highest Tier:

  • SEER2 ≥ 16.0 (cooling efficiency)
  • EER2 ≥ 12.0 (energy efficiency ratio)
  • HSPF2 ≥ 9.0 (heating efficiency)

Ground-Source (Geothermal)

Must meet ENERGY STAR requirements:

  • EER ≥ 17.1 (closed loop) or ≥ 21.1 (open loop)
  • COP ≥ 3.6 (closed loop) or ≥ 4.1 (open loop)
  • Eligible for 30% tax credit with NO cap

🏷️ Look for the ENERGY STAR Label

The easiest way to ensure your heat pump qualifies is to look for the ENERGY STAR Most Efficient certification. Your installer should be able to provide manufacturer certification statements for tax purposes.

Frequently Asked Questions

Can I combine multiple rebates and tax credits?
Yes, in most cases! You can typically combine state rebates, utility rebates, and the federal tax credit. However, if you receive the IRA HEEHR rebate, you cannot claim the 25C tax credit for the same costs. Always check with your tax advisor for your specific situation.
Do I need to pay upfront and get reimbursed?
It depends on the program. The federal tax credit is claimed when you file your taxes. IRA HEEHR rebates are point-of-sale, meaning they reduce your cost immediately. State and utility rebates vary—some are instant, others require submitting receipts for reimbursement.
What if I don't owe $2,000 in taxes?
The 25C tax credit is non-refundable, meaning it can reduce your tax liability to zero but won't result in a refund. However, if you don't owe enough taxes this year, you may want to consider the IRA rebates instead (if you qualify based on income) since those are direct rebates, not tax credits.
Does my rental property qualify?
The 25C federal tax credit is only for your primary residence. Rental properties and second homes don't qualify. However, some state and utility rebates may be available for rental properties—check your local programs.
Can I claim the credit on a DIY installation?
While the federal tax credit doesn't explicitly require professional installation, most state and utility rebates do. Additionally, manufacturer warranties and proper permitting typically require licensed installation. We strongly recommend using a certified installer.
How long do these incentives last?
The federal 25C tax credit is available through 2032. IRA HEEHR rebates will be available until funds are exhausted (expected to last through 2031-2032 in most states). State and utility programs vary in duration and may change annually.

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