For most of 2023–2025, homeowners could claim a federal tax credit of 30% of the cost of a heat pump, up to $2,000 a year, under Section 25C of the tax code. That credit ended for equipment placed in service after December 31, 2025. The Residential Clean Energy Credit (25D) for geothermal heat pumps ended on the same date. If your system was installed in 2025, you can still claim the credit on your 2025 tax return. For 2026 installs, the savings have to come from elsewhere.
Tax rules change, so confirm with a tax professional or IRS guidance before you rely on any credit.
Incentives still available in 2026
1. Utility rebates
Many electric utilities pay rebates for heat pumps because they help balance summer and winter demand. Typical amounts range from a few hundred dollars to $2,000 or more per system, and some offer extra for replacing oil, propane or electric resistance heat. Some also offer reduced winter electricity rates for homes heated by heat pumps.
2. State programs
Several states run their own heat pump incentive programs, often funded by utility charges or state climate budgets. Some states have also launched income-qualified rebates funded by the 2022 Inflation Reduction Act (the HEAR and HOMES programs). Availability, amounts and eligibility vary widely by state and change as funding is used up.
3. Manufacturer and distributor promotions
Brands often run seasonal rebates of $100 to $1,500 on qualifying systems, usually in spring and fall. Ask installers which promotions apply to the models they quote.
4. Low-interest financing
Some states and utilities offer on-bill financing or low-interest loans for heat pumps. A 0–4% loan can make a heat pump cheaper overall than a cash purchase of a less efficient system.
How to find your rebates
- Check your electric utility’s website for “heat pump rebate” or “energy efficiency rebates”.
- Search the ENERGY STAR rebate finder by ZIP code.
- Check DSIRE, a database of state and local incentives.
- Ask each installer which programs they are registered with. Many rebates require a participating contractor.
Common rebate requirements
- Minimum efficiency, often ENERGY STAR certified or cold-climate listed
- Installation by a participating contractor
- Pre-approval before installation in some programs
- A load calculation (Manual J) on file
- Application within 60–90 days of installation
Factor rebates into your payback
Enter the total of the rebates you qualify for in the heat pump savings calculator to see how they change your payback period. See heat pump installation cost for typical prices before incentives.