How to Claim a Rebate for Your Heat Pump

Heat pumps are an advancement in home climate control, providing both heating and cooling from a single, efficient system. Their ability to transfer heat rather than generate it results in lower energy consumption than traditional furnaces and air conditioners. To encourage this technology, government bodies and utility providers offer financial incentives to lower the initial investment for homeowners.

Available Rebates and Tax Credits

Federal Tax Credits

Homeowners can benefit from the Energy Efficient Home Improvement Credit, a federal program designed to reduce the financial burden of installing new, efficient equipment. This nonrefundable tax credit allows you to subtract 30% of the total cost, including equipment and installation, from your federal tax liability, up to a maximum of $2,000 per year. To be eligible, the heat pump must be installed in an existing home that serves as your primary residence. The credit has an overall annual limit of $3,200 for all combined energy-efficient home improvements.

Federal Point-of-Sale Rebates

A separate federal initiative, the High-Efficiency Electric Home Rebate Act (HEEHRA), is designed to offer direct discounts at the time of purchase. This program provides an immediate point-of-sale discount, unlike a tax credit. Eligibility is based on household income relative to the Area Median Income (AMI), with rebates of up to $8,000 available for qualifying heat pumps. Households earning less than 80% of the AMI may receive a rebate covering the full project cost, while those earning between 80% and 150% of the AMI can have up to 50% of the cost covered.

The HEEHRA program is not yet widely available to consumers. Although the law was passed in 2022, individual states must first establish their own programs to distribute the federal funds. As of mid-2025, most states have not yet launched their rebate programs, with many expected to become operational later in the year. Check with your state energy office for current information on local availability.

State and Local Government Programs

Many state and local governments also administer their own rebate programs. These programs are distinct from federal offerings and have their own rules and rebate amounts that vary by jurisdiction. Consult your state’s energy office website or a comprehensive database of incentives to find programs in your area. These resources provide the most current information on available rebates.

Utility Company Rebates

Local utility companies frequently offer their own financial incentives for customers who install energy-efficient appliances like heat pumps. In some cases, homeowners may be able to combine utility rebates with federal or state incentives, further reducing the overall cost of the upgrade. To learn about potential rebates, visit your electric utility’s website, which has a dedicated section for energy efficiency programs and application details.

Qualifying Equipment Requirements

Energy Efficiency Ratings

Key metrics for heat pumps include the Seasonal Energy Efficiency Ratio 2 (SEER2), which measures cooling efficiency, the Energy Efficiency Ratio 2 (EER2), assessing performance at peak outdoor temperatures, and the Heating Seasonal Performance Factor 2 (HSPF2), which gauges heating efficiency. Each incentive program will specify the minimum ratings a heat pump must achieve to qualify for financial benefits.

Specific Performance Tiers

Different incentive programs require heat pumps to meet distinct performance tiers. The federal Energy Efficient Home Improvement Tax Credit, for instance, requires equipment to meet the highest performance tier set by the Consortium for Energy Efficiency (CEE). Starting in 2025, eligibility for the federal credit is tied to products recognized as ENERGY STAR Most Efficient. Always verify the exact SEER2, EER2, and HSPF2 requirements for the specific rebate or credit you are pursuing.

Verification Tools

To ensure a specific heat pump model qualifies for an incentive, you must use official verification tools. The Air-Conditioning, Heating, and Refrigeration Institute (AHRI) provides a directory that allows you to confirm the certified ratings of a particular combination of indoor and outdoor units. Additionally, the Consortium for Energy Efficiency (CEE) maintains a directory that lists equipment meeting various performance tiers, which is helpful for verifying eligibility for certain programs.

Information and Forms Needed to Apply

To apply for a heat pump incentive, you will need to gather several documents.

• A dated sales invoice or receipt showing the total purchase and installation cost.
• A manufacturer’s certification statement confirming the heat pump meets the required efficiency standards.
• The AHRI Certificate for your specific system to validate its performance ratings.
• Your contractor’s name, address, and license number.

Completing Key Forms

The form for claiming the federal incentive is IRS Form 5695, Residential Energy Credits. Download the most current version of this form from the IRS website. The total cost from your invoice will be entered on the specified line for the Energy Efficient Home Improvement Credit. You will also need to include the product identification number provided by the manufacturer for equipment installed in 2025 or later.

How to Claim Your Rebate or Credit

Submitting for a Federal Tax Credit

After you have completed IRS Form 5695, you must file it with your annual federal income tax return, such as Form 1040. If you use tax preparation software, the software will guide you through entering the information for the credit and automatically attach the completed form to your electronic submission. For those who file by mail, you will need to physically attach the completed Form 5695 to your paper tax return.

Claiming a Point-of-Sale Rebate

The process for a point-of-sale rebate, like those from the HEEHRA program, occurs at the time of purchase. The discount is applied to your invoice by the contractor, lowering your out-of-pocket cost. Your primary action is to ensure you are working with a contractor who is an active participant in the state-administered program. The contractor is responsible for handling the paperwork to receive reimbursement from the program administrator.

Applying for a Mail-in or Online Rebate

For state or utility rebates that require a separate application, you will submit your claim through a mail-in process or an online portal. For mail-in applications, send the completed form and copies of all required documents. For online portals, create an account, fill out the application, and upload digital copies of your documents. After submitting, you should receive a confirmation and can expect a processing period before the rebate is issued.