Heat Pump Incentives

The Inflation Reduction Act of 2022 recognizes the crucial role of energy efficiency measures in curbing inflation, reducing carbon emissions, and promoting sustainable practices. It offers incentives for insulation improvements, and energy efficiency measures to address both inflationary pressures and environmental concerns. By offering tax credits, grants, and promoting consumer education, the act aims to accelerate the adoption of these energy-efficient technologies and practices, leading to reduced energy consumption, lower operating costs, and ultimately contributing to inflation reduction and a more sustainable future.

According to Rewiring America, the leading electrification nonprofit: 

“For low-income households (under 80 percent of Area Median Income), the Electrification Rebates cover 100 percent of your heat pump costs up to $8,000. For moderate-income households (between 80 percent and 150 percent of Area Median Income), the Electrification Rebates cover 50 percent of your heat pump costs up to $8,000. The rebates may be implemented differently in each state, so we cannot guarantee final amounts, eligibility, or timeline. And without additional appropriations from Congress, the rebate programs will end once their initial IRA funding is exhausted. Total Electrification Rebates discounts across all qualified electrification projects are capped at $14,000.”

There is also a Federal Tax Credit. “25C provides households a 30 percent tax credit for heat pumps and heat pump water heaters, capped at $2,000 per year. The credit resets each tax year, effectively becoming available again for additional projects. 25C also includes a 30 percent tax credit up to $600 for an electrical panel upgrade, but only if it’s upgraded in conjunction with another upgrade covered by 25C (like a heat pump). So it might be advantageous to do both at once!”

Many state and local governments offer rebates,These incentives can make it more affordable to make energy-efficient upgrades to your home. In addition to the financial benefits, energy-efficient homes can save you money on your energy bills and help to reduce your carbon footprint. DSIRE is the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.

Database of State Incentives for Renewables & Efficiency®

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