Heat pump incentives in 2026 are a patchwork of federal credits, state utility rebates, and income-qualified programs — and the combination can cut your out-of-pocket cost by 30–60% if you know where to look. The federal Section 25C credit alone covers 30% of installation costs up to $2,000/year, and it runs through 2032. State programs like Mass Save can stack on top of that. Here's what's available and how to claim it.
Disclaimer: Program availability and amounts change throughout the year. Confirm current rebate amounts directly with your state energy office or utility before purchasing. Tax credit eligibility should be verified with a tax professional or at IRS.gov.
Key Takeaways
- Section 25C provides a 30% federal tax credit, capped at $2,000/year for qualifying heat pump HVAC systems — active through December 31, 2032
- Mass Save (Massachusetts) offers $1,500–$4,000 per heat pump installation — among the most generous state rebates in the country
- Federal + state rebates can reduce a $10,000 cold-climate heat pump installation to $6,000–$7,500 out of pocket in high-rebate states
- Income-qualified households (under 80% area median income) may receive up to $8,000 through HEEHRA — administered by state energy offices
- A heat pump water heater also qualifies for a separate Section 25C credit: 30% up to $600/year
The Federal Section 25C Credit
The Energy Efficient Home Improvement Credit is the baseline incentive every qualifying homeowner can claim in 2026. It's a direct tax credit — meaning it reduces your tax liability dollar for dollar, not just your taxable income.
What it covers for heat pumps:
- Heat pump space heating and cooling systems
- Credit: 30% of purchase and installation costs
- Annual cap: $2,000 per year for heat pump HVAC
- Annual cap: $600 per year for heat pump water heaters (separate category)
- No household income limit
How to claim: File IRS Form 5695 with your federal tax return for the year of installation. Keep receipts and the manufacturer's certification statement (certifying the unit meets efficiency requirements).
Qualifying equipment: Units must be ENERGY STAR certified and meet the Consortium for Energy Efficiency (CEE) Tier 1 or higher specification. Most cold-climate heat pumps from Mitsubishi, Daikin, Bosch, Carrier, and Trane qualify. Confirm on the CEE directory or ENERGY STAR website before purchasing.
Important: The $2,000 cap is per year, not per lifetime. You can claim up to $2,000 for a heat pump in one tax year and another $2,000 for additional qualifying equipment (like a heat pump water heater at $600) in the same or a future year.
State Rebate Programs in 2026
Massachusetts: Mass Save
Mass Save is the gold standard for state heat pump incentive programs. Funded through utility efficiency charges, it offers some of the largest per-unit rebates in the country.
| System Type | Rebate Amount |
|---|---|
| Cold-climate air-source heat pump (ducted, 1–2 ton) | $1,500–$2,000 |
| Cold-climate ASHP (ducted, 3+ ton) | $2,000–$4,000 |
| Ductless mini-split (single zone) | $1,250–$1,500 |
| Heat pump water heater | $100–$750 (utility-dependent) |
Mass Save rebates are processed through participating contractors. Visit masssave.com to verify current amounts and find a qualifying installer.
New York: NY-Sun and Utility Programs
New York's heat pump rebates are utility-administered and vary by service territory.
- ConEdison: $500–$2,000 per qualifying heat pump unit
- National Grid (NY): Heat pump rebates available — check current program at nationalgridus.com
- NYSEG / RG&E: Similar rebate structures; amounts change annually
New York also has the Empower+ program for income-qualified households providing enhanced rebates and low-cost financing. Contact your utility directly for current availability.
California: BayREN and Utility Programs
California's incentive landscape is utility-specific:
- BayREN (Bay Area): $1,000–$2,000 rebates for qualified heat pump installations depending on utility and system type
- TECH Clean California: Statewide program offering $1,500–$3,000 per HVAC heat pump through participating contractors
- PG&E / SCE / SDG&E: Each utility offers separate equipment rebates; programs change frequently — check your utility's rebate portal
Oregon: Energy Trust
Oregon's Energy Trust program offers heat pump rebates through most Oregon utilities:
- Air-source heat pump: $300–$1,200 depending on efficiency tier
- Heat pump water heater: $200–$400
- Income-qualified: enhanced rebates up to $3,000 for HVAC heat pumps
Check energytrust.org for current amounts by utility territory.
Minnesota and Wisconsin
Xcel Energy (MN/CO): Heat pump rebates of $250–$1,000 per unit for qualifying ASHP systems. Check xcelenergy.com/rebates.
We Energies (WI): Heat pump rebates available through the Focus on Energy program. Amounts vary by year and program budget.
Maine: Efficiency Maine
Efficiency Maine offers some of the most straightforward heat pump rebates in the Northeast:
- Air-source heat pump: up to $2,000 per outdoor unit
- Heat pump water heater: $150–$300
Visit efficiencymaine.com for current program details.
HEEHRA: Income-Qualified Federal Rebates
The High-Efficiency Electric Home Rebate Act (HEEHRA) provides up to $8,000 for a heat pump HVAC system for households at or below 150% of area median income. Unlike Section 25C, HEEHRA is a point-of-sale rebate — applied immediately at purchase rather than claimed on a tax return.
Key details:
- Households at or below 80% of area median income: 100% of costs covered up to the cap
- Households at 80–150% of area median income: 50% of costs covered up to the cap
- Administered by state energy offices — program availability varies by state
- Check with your state energy office for current funding status
HEEHRA funding rolls out at the state level and some states have exhausted or not yet launched programs. The DOE maintains a map of state program status at energy.gov.
How to Stack Federal + State Incentives
The real savings come from combining programs. Here's an example for a Massachusetts homeowner replacing a gas furnace with a 3-ton cold-climate heat pump:
| Incentive | Amount |
|---|---|
| Installed cost (3-ton cold-climate ASHP) | $10,000 |
| Mass Save rebate | -$3,000 |
| Section 25C federal credit (30%, capped at $2,000) | -$2,000 |
| Net out-of-pocket cost | $5,000 |
That's a 50% reduction from the installed cost before any income-qualified programs. If the household qualifies for HEEHRA, the net cost could approach zero.
Where to Check Your Specific Programs
The fastest way to find every available incentive for your address:
- DSIRE database — dsireusa.org: The DOE's Database of State Incentives for Renewables and Efficiency. Enter your ZIP code and filter by heat pump.
- Your utility's rebate portal — Every major utility posts current rebate amounts online. Search "[your utility name] heat pump rebate."
- ENERGY STAR rebate finder — energystar.gov/rebate-finder: Lists utility rebates by ZIP code.
To estimate how much your electrical costs will change after adding a heat pump, use our EV Charger Cost Calculator — which also models electrical upgrade costs when adding multiple high-draw appliances.
Bottom Line
Between Section 25C (30% federal credit, $2,000 annual cap) and state programs like Mass Save, NY utilities, and California's TECH program, most homeowners can reduce their heat pump installation cost by $3,000–$6,000 in 2026. The Section 25C credit runs through 2032, so there's no urgent deadline — but state programs change annually and should be verified before you sign a contract.
Related Guides
- Heat Pump Buyer's Guide 2026 — Complete guide to system types, efficiency ratings, top brands, and sizing.
- Heat Pump vs Gas Furnace in 2026 — True cost comparison by climate zone — use these incentives to refine the math.
- Best Heat Pumps for Cold Climates 2026 — Mitsubishi H2i, Daikin Aurora, and Bosch IDS Ultra compared for northern U.S. homes.
- Whole-Home Electrification Guide 2026 — Stack heat pump rebates with solar, battery, and EV charger incentives for the maximum package.
Sources
- IRS — Energy Efficient Home Improvement Credit (Form 5695)
- Mass Save — Residential Heat Pump Rebates
- DOE — Home Energy Rebates (HEEHRA) Program Map
- DSIRE — Database of State Incentives for Renewables and Efficiency
- ENERGY STAR — Rebate Finder
- CEE — Residential HVAC Tier Specifications
- Efficiency Maine — Heat Pump Rebate Program
