Incentives do not change your monthly bill — but they can slash the upfront cost of switching to a heat pump, which is often the real barrier. Here is how the main 2026 programs fit together. (This is general information, not tax advice — confirm details with your state energy office, utility and a tax professional.)
The federal 25C tax credit
The Energy Efficient Home Improvement Credit (25C) covers 30% of the cost of a qualifying high-efficiency heat pump, capped at $2,000 per year. It is claimed on your federal tax return and resets each year, so a heat pump one year and insulation/windows the next can both earn credit.
| Program | What it covers | 2026 cap |
|---|---|---|
| 25C tax credit | 30% of a qualifying heat pump | $2,000/yr |
| HEAR rebate (income-qualified) | Point-of-sale heat-pump rebate | Up to $8,000 |
| HOMES rebate | Whole-home energy-savings performance | Varies by savings |
| State / utility rebates | Stacks on top, varies widely | $300–$3,000+ |
The IRA rebates: HEAR and HOMES
The Inflation Reduction Act funded two rebate streams administered by state energy offices:
- HEAR (High-Efficiency Electric Home Rebate): up-front rebates for low- and moderate-income households — up to $8,000 toward a heat pump, plus money for panel upgrades and wiring.
- HOMES: rewards measured or modeled whole-home energy savings, technology-neutral.
Because states run these, availability and rules differ — some launched in 2024–2025, others later. Check your state energy office for current status.
Utility and state rebates stack
Many utilities offer their own heat-pump rebates ($300–$3,000+), and several states add incentives on top of the federal money. These usually stack, though the combined total cannot exceed the project cost. Your utility’s website and the DSIRE database are good starting points.
What this means for the running-cost math
Rebates change the payback calculation, not the running cost. Use our calculator and state pages to see what a heat pump would cost to run versus your current system, then layer the incentives on top of the install cost to judge total value. If you are weighing gas specifically, start with is a heat pump cheaper than gas?