Heat Pump Incentives

Heat pumps are an excellent investment for homeowners, offering environmental benefits, potential advantages for the electrical grid, lower energy bills. These systems operate efficiently and significantly reduce greenhouse gas emissions compared to traditional heating methods. 

Given these benefits, governments are actively encouraging the adoption of heat pumps in homes by offering various incentives to make installation more affordable. Many state and local governments provide subsidies to further help people make the switch.

By taking advantage of tax credits and incentives, homeowners can reduce the upfront cost of installing a heat pump. Below is an overview of various rebates currently available. Be sure to carefully review the specific terms and conditions for each incentive to ensure you follow all guidelines. 

 

Colorado Heat Pump Incentives

Xcel Energy Colorado Rebates

Xcel Energy, a major U.S. utility company, offers rebates for residents installing heat pumps. The rebate varies depending on the type of heating and cooling system. For air-source heat pumps, Xcel provides $2,250 per heating ton at 5°F, with the ton size typically ranging from 2 to 5 tons, depending on the product and temperature requirements. On average, this could be $6,750 for a 3-ton heat pump. For more details, you can check all available rebates here.

Colorado State Tax Credits

Colorado residents can take advantage of state tax credits for heat pumps to make their home heating and cooling systems more efficient and affordable. The available heat pump tax credits are:

• Air Source Heat Pumps: $1,500 credit, with a minimum customer discount of $499.95
• Ground-source, Water-source, or Combined-source Heat Pumps: $3,000 credit, with a minimum customer discount of $999.90
• Water Heaters: $500 credit, with a minimum customer discount of $166.65

For more information on Colorado State Tax Credits for Heat Pumps, visit the official website here.

Maryland Heat Pump Incentives

Utility Rebates Available Through EmPOWER Maryland

There are a variety of rebates available through your utility provider—BGE or Potomac Edison. Your contractor can guide you through the available rebate options and can apply for them on your behalf.
HVAC Installation Rebates:
Receive up to $4,000 off the cost of heat pump equipment, plus up to $3,000 for upgrades needed to prepare your home—such as electrical panel updates or ductwork modifications.
Home Performance with ENERGY STAR® Audit:
You can also choose to have an energy audit to identify air leaks and equipment upgrade needs. Rebates are available for installing weatherization improvements and HVAC equipment. These rebates typically average around $8,000, but in some cases, they can be as high as $15,000.

 

Utility Rebates for Low- and Moderate-Income Families

Significant savings are available through Maryland’s EmPOWER program for households with low or moderate incomes:

Moderate-Income Households:

Qualify for major discounts on HVAC system upgrades, heat pump water heaters, insulation, air sealing, and other weatherization improvements. Check income limits and rebate details here

Low-Income Residents:

May be eligible for free weatherization services and HVAC upgrades through state-funded programs. Learn more about eligibility and available services here

Climate Forward Homes

Howard County has provided funding to nonprofit partner Community Action Council to cover the costs of fuel switching from oil or propane heat to a heat pump for income-qualifying participants. More information is available here 

Civic Works-Howard County Partnership

Civic Works is a nonprofit organization that can provide free Home Performance energy audits to all Howard County residents. They also provide free weatherization services for households earning at or below 85% of the area median income.. For more information and technical assistance, click here. 

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With a wide range of tax credits and rebates available, upgrading to an energy-efficient heat pump has never been more accessible. These incentives simplify the transition to sustainable heating and cooling solutions for homeowners. Since heat pump tax credits and rebates are subject to change, we will regularly update this page to ensure you have the latest information.