Take advantage of heat pump
rebates and incentives

Begins with tax year 2023 (January 1, 2023), claim credit in 2024 on your 2023 taxes. Up to $600 per item up to $1,200 credit: breaker panel, insulation, fossil fuel systems (meeting elevated efficiency limits). 30% of total cost, up to $2,000 is applicable for the category of heat pumps and heat pump water heater installations. The heat pump system must meet or exceed the highest performance tier set by the Consortium for Energy Efficiency (CEE).*

• Claim in 2024 on your 2023 taxes.
• Heat pump meet or exceed the highest performance tier set by the Consortium for Energy Efficiency (CEE)
• Resets annually! households can claim tax credit any installations completed during the tax year.
• Households must have adequate tax liability to receive credit.
• You may qualify to receive a tax credit and a rebate for the same project.

Designed to support low-to-moderate income (LMI) households. Allocates $4.5 billion in grants to states and tribal governments for home energy improvement projects including point-of-sale heat pump rebates. Single-home maximum cost offset is $14,000. Caps per qualified equipment type: $8,000 for a heat pump. $1,750 for a heat pump water heater. $1,600 for insulation, air sealing, and ventilation. $2,500 for electric wiring. $4,000 for an electric load center upgrade. $840 for a stove, cooktop, range, oven, or heat pump clothes dryer.

Example: Households making up to 80% of area median income are eligible to receive a 100% rebate of up to $8,000 on the cost of heat pump installation.

Moderate-income households (making 80-150% of area median) are eligible for a 50% rebate up to the same limits.

E.g., To claim up to the cap of $8,000, must spend $16,000 in heat pump installation dollar-for-dollar.

• Activation varies by state, timing and structure of rebates will vary.
• Designed to support low-to-moderate income (LMI) households.
• 10-year program, administered through State Energy Offices.
• Low-income households can get 100% rebate on heat pumps up to $8,000
• Moderate-income households get 50% of rebate up to $8,000.
• Households with incomes above 150% of area median are not eligible.
• Single-home maximum cost offset is $14,000.
• ENERGY STAR® will be the criteria to qualify heat pump systems.
• HEAR and HER grant funds cannot be used for the same measure within any home.

Provides funding to DOE for state energy offices ($4.3 billion) to develop and implement a rebate program to homeowners and aggregators for whole-house energy saving retrofits. Based on modeled energy savings (measured in kWh, or kWh-equivalent) for single and multifamily.

Potential rebate levels: Homes with energy reduction of 20% are eligible for maximum rebate of $2,000, or half the cost of the retrofit project (whichever is less). Homes with energy reduction of 35% are eligible for maximum rebate of $4,000. Homes with energy reduction of 35% and qualify as lower income (<80% of area median income) are eligible for maximum rebate of $8,000.

• Activation varies by state, timing and structure of rebates will vary.
• HEAR and HER grant funds cannot be used for the same measure within any home.

Beginning January 1, 2023, the deduction will be increased. Energy reduction (ER) will be lowered from 50% to 25% compared to the most recent ASHRAE Standard 90.1, determination no later than four years prior to the placed-in-service date. Tax deduction levels: $.50 per square foot, plus $.02 for each percentage point above 25% ER, not to exceed $1.00 per square foot. “Prevailing wage” provision: taxpayers can claim the bonus deduction for $2.50 per square foot, plus $.10 per square foot for each percentage point above 25% ER, not to exceed $5.00 per square foot if the prevailing wage requirement is met (any laborers, workers, contractors, and subcontractors who worked on the project were paid wages not less than base wages determined by local labor authorities). The Act introduces new qualified retrofit plan qualifications and removes partial benefit allowances. 179D’s expansion will allow 179D deductions to be allocated to any non-profits, tribal properties, and real-estate investment trusts (REITs), and it includes the existing provision for publicly funded projects.

Most programs started on January 1, 2023, especially the tax credits and deductions. The 25C tax credit is in place today (at $500 max), but the expansion started for projects billed as of January 1, 2023. The HEAR rebates will be available as early as 2024, but will depend on each state's delivery schedule. Check back for more information as states bring their programs online.

For the rebate programs, states will have to adhere to the criteria in the law (i.e. efficiency performance standards) but will be able to alter the allocations, except when exceeding the amounts and percentages specified in the law. The tax credits are available directly through your federal tax deductions. Consult your tax advisor for advice.

As of 2023, homeowners are eligible for a tax credit of 30% of the cost, up to $2,000, for heat pumps, and/or heat-pump water heater, in accordance with section 25C of the US tax code. Only certain models qualify for the tax credit, and you must have a tax liability from which to reduce your taxes. Consult your tax advisor for advice.

The 45L tax credit is aimed at contractors that build and sell qualifying energy-efficient new homes that meet specified energy efficiency requirements. If a new home meets the provisions of the ENERGY STAR® New Home program, the contractor rebate is $2,500. Likewise, the contractor rebate is $5,000 if the new home meets the Net Zero Ready designation from the Department of Energy.

As part of the IRA, Congress introduced the High-Efficiency Electric Home Rebate Program, now called Home Electrification & Appliance Rebates (HEAR). This defines a $4.5 billion rebate program, targeted at low to moderate income homeowners, that includes up to $8,000 in rebates for heat pumps, with additional rebates for electrical panel upgrades and other improvements, with a total cap of $14,000 for all efficiency upgrades per household. The programs will be administered separately by each individual state and distributed through state and tribal governments that establish their own qualifying programs. Low income households, those making less than 80% area median income (AMI), can receive 100% of the project cost (equipment + installation) in a rebate. Moderate income homeowners (making 80% to 150% AMI) can receive 50% of project cost in a rebate.

The HER Act provides rebates for all homeowners based on modeled energy savings for efficiency improvements, including heat pumps. If the improvement measures yield 20% modeled savings, a homeowner can receive a $2,000 rebate, and $4,000 modeling in excess of 35% savings. This rebate is doubled for lower income homeowners and building owners with lower income occupants to $4,000 and $8,000.

Congress specified $4.3B for the HER Act, available through 2031. The HER Act provides rebates for homes that cut energy by 20% across their whole home. Homeowners would be eligible for a maximum rebate of $2,000 or half the cost of the retrofit project, whichever is less. That dollar threshold rises to $4,000 for those who cut energy by at least 35%. These rebates are double — up to $4,000 and $8,000, respectively — for households with income lower than 80% of an area’s median income (AMI). Activations will happen by state. Check back to see what states are live.

Currently, in order to qualify for the 25C tax credit, equipment must meet the Consortium for Energy Efficiency (CEE) highest tier. In order to qualify for the HEAR rebate program, a homeowner must qualify as low-to-moderate income (LMI) and equipment must meet or exceed the ENERGY STAR® 6.2 specification. A listing of 25C-qualified products can be found higher up on this page.

We believe the funding for the rebates specified in the IRA will be available on a first-come-first-served basis until funding is depleted.