Heat pump incentives: Save big on clean HVAC

Heat pumps are a win-win: Great for homeowners, great for the environment, and sometimes even good for the electrical grid. These high-efficiency, super-comfortable, all-electric home heating and cooling systems use much less energy than traditional HVAC equipment and can run entirely on renewable energy.

Given the plethora of benefits, it makes sense that governments and utilities are eager to install heat pumps in more homes—and they’re offering financial incentives to achieve that. While federal heat pump subsidies expired in 2025, many utilities, states, and local governments still offer heat pump incentives.

How much can you save on a heat pump? It depends on where you live, what sort of heat pump you install, and your household income. Here's a guide to all the free money you might be able to claim when you add a heat pump to your home.

The total price of a heat pump system varies by type and installation complexity, but on average, it costs about $4,350 per ton—that’s before any heat pump rebates and incentives. 

State and local incentives can significantly reduce what you pay out of pocket. Here’s a look at average costs before and after incentives:

No, the federal tax credit worth 30% of your project cost, up to $2,000, is no longer available for heat pump systems installed in 2026 or later. This includes air-source heat pumps, geothermal heat pumps, and heat pump water heaters.

The Energy Efficient Home Improvement Tax Credit expired on December 31, 2025.

Federal point-of-sale rebates for new heat pump installations—worth up to $8,000—may still be available for qualifying low-income households. Moderate-income households may qualify for rebates worth up to $4,000.

Funded through the Home Electrification and Appliances Rebate (HEAR) Program, this initiative launched with a $4.5 billion budget to be distributed to states through September 30, 2031, or until funds are depleted, whichever comes first. However, clean energy funding was frozen in 2025 under the Trump administration, and the HEAR program still hasn't launched in most states.

To qualify, your heat pump must meet Energy Star standards. That’s a bit easier than the stricter CEE requirements tied to the federal tax credit, and identifying eligible models is straightforward—manufacturers and retailers usually highlight Energy Star certification in their listings, or you can confirm it in the Energy Star database.

However, these rebates may be trickier to access than the tax credit, for a few reasons:

• Not yet available everywhere: According to the NASEO Residential Energy Efficiency Task Force, the rebates are active in only twelve states as of May 6, 2026: Arizona, California, Colorado, Georgia, Indiana, Maine, Michigan, New York, North Carolina, Wisconsin, and Washington, D.C. New Mexico offers incentives for heat pump clothes dryers and water heaters and Rhode Island has one for clothes dryers only.

• Income-based eligibility: Households with an income below 80% of the area median income are considered low-income and may be eligible for the full $8,000. Households with incomes between 80% and 150% of the median are considered moderate-income and could receive $4,000. Above 150%, you’re ineligible.

• Limited funding: The program’s $4.5 billion budget will only cover a few hundred thousand homes nationwide. For context, if every rebate went to low-income households at the full $8,000 level, that would help just 562,500 homes—a tiny fraction of the roughly U.S. households.

• You can’t claim it yourself: Unlike the 25C tax credit, this rebate is applied at the point of sale through approved contractors, who must coordinate with their state energy office. The approval process is lengthy and varies by state, meaning the timeline is largely out of the homeowner’s control.

There are hundreds of state, local, and utility incentives that can make installing a heat pump much more affordable. These programs can range from a few hundred dollars to thousands of dollars—it all depends on where you live.

According to the Database of State Incentives for Renewables and Efficiency (DSIRE), 49 states and Washington, D.C. currently offer state- or utility-level heat pump incentives. (As of May 6, 2026, Alaska is the only state with no heat pump-related listings in DSIRE.)

That said, DSIRE isn’t exhaustive—it can exclude county, city, and town programs. For example, a quick Google search reveals that Juneau, Alaska does have a pretty substantial heat pump subsidy available for low- and moderate-income residents. A quick Google search for “[your town] heat pump incentives” is often the fastest way to find local programs. The table below shows the states with the most significant heat pump incentives as of May 2026.

Top states for heat pump incentives

*May contain income-qualified incentives.

As more states and utility companies expand their clean energy programs, now is a smart time to explore your heat pump options. Local incentives, energy savings, and improved comfort can make upgrading more affordable than you might expect.

Even if you’re not ready to install yet, getting quotes and learning which state or utility programs apply in your area can help you plan ahead—and position your home for lower energy bills for years to come.