Federal Heat Pump Rebates Can Save You Thousands of Dollars

If you’re looking to upgrade your home’s heating and cooling system, now is the time to do it. Thanks to new and updated federal rebates for heat pumps, you can save thousands of dollars on installation costs for high-efficiency heating and cooling. 

2023 is the year heat pump federal tax credits go into effect. The 2022 Inflation Reduction Act added point-of-sale rebates for these systems. That means you’ll get money off the installation cost. 

And, it increased the amount you can write off with a tax credit for heat pumps and other energy-efficient HVAC systems — more savings for early next year. 


There’s a lot to consider, and you’ll want to take advantage of it all. That’s where I can help. 

I’ve spent the last decade-plus as a product manager for Peirce Phelps, one of the largest HVAC distributors in the country. In that time, I’ve concentrated on mini splits and heat pumps and worked closely with contractors in our region.

Thanks to feedback from our network of contractors, plus keeping up with industry trends, I understand what information is most important for homeowners. 

In this article, I’ll explain what heat pumps qualify for these rebates. Then, I’ll outline the current offers and how to apply for them. Finally, I’ll go through some other money-saving opportunities to check out. 

If you still have questions or are ready to install a qualified heat pump in your New Jersey, Pennsylvania, or Delaware home, click the button below. 

You’ll get access to our network of certified contractors who have worked in the area for years and are experienced with energy-efficient home improvements. 


Heat Pump Types

First, let’s go over the different kinds of heat pumps. Here are some of the terms you’ll see concerning rebates, incentives and the heat pump tax credit: 

Air-Source Heat Pump

These are the most popular heat pumps for homes in our area. They draw ambient heat from the air around them and use that warmth to heat your home. In the summer, they take the heat from your home and “dump” it into the air outside. 

Geothermal Heat Pump

Also called “Ground-source” heat pumps, these move heat to and from the ground instead of the air. They’re more efficient than air-source, but also more expensive. They require a lot of space, so they’re not as versatile. 

Water-Source Heat Pumps

These work like the others but draw heat from a body of water. They’re rarely used in residential settings. 

Mini Splits 

Mini splits are heating and cooling systems that use refrigerant lines to transfer heat from one place to another. That’s different from using ductwork and vents to move air around your home. These systems use heat pumps, almost always air-source models, to do the job. 

Split Heat Pump

A split heat pump has separate components for heating and air conditioning. That’s like how you’d have a furnace inside and an AC condenser outside. 

Non-Ducted Heat Pump

This is any kind of heat pump that doesn’t use forced-air and ductwork to heat or cool your home. Mini splits fall into this category. 

Packaged Heat Pump

A heat pump with one unit that heats and cools. Air-source packaged heat pumps are the ones you see most often. They’re rectangular boxes with a fan on the side. 

Heat Pumps and Mini Split That Qualify for Rebates

To qualify for federal rebates and tax breaks, you’ll need to install a heat pump that meets certain efficiency requirements. They’re measured by SEER, or Seasonal Energy Efficiency Ratio. 

The higher the SEER rating, the less electricity the heat pump uses to produce heating or cooling. 

Energy Star Certification

ENERGY STAR certification is a program run by the U.S. Environmental Protection Agency (EPA) that helps consumers identify energy-efficient products. You’re probably familiar with the blue-and-white logo you see on appliances these days. 

An Energy Star sticker on an appliance tells you it was independently tested, and it meets those strict EPA energy efficiency guidelines. When you purchase an ENERGY STAR-certified heat pump, you can be confident that it will operate efficiently and save you money on your energy bills. 

Most Energy Star-rated appliances are eligible for energy-efficiency incentives. 

Federal Opportunities for Homeowners

As of January 1, 2023, the federal government offers homeowners two big ways to save money when installing heat pumps or other high-efficiency HVAC equipment. 

Inflation Reduction Act

The Inflation Reduction Act of 2022 includes the High-Efficiency Electric Home Rebate Act, or HEERA. It funds the income-based, point-of-sale rebate program for homeowners installing heat pumps in their homes. 

In other words, you get money off the price of your installation. The amount of that rebate depends on how much you make. 

Anyone with a household income of less than 80 percent of their zip code’s Average Median Income can have 100% of their installation refunded, up to $8,000. So, if you choose a heat pump system that’s less than that amount, including installation, you pay nothing. 

If yours come to, say, $9,000, you’d only pay $1,000. 

Then, anyone making 80 to 150% of their zip code’s AMI gets 50% off up to $8,000. You can find your AMI using this tool. 

How to Apply for It

The HEERA is law, but the funds haven’t rolled out yet. So, let your contractor know you’ll want to take advantage of it. They’ll have the documentation ready for you. And keep all your invoices, model information, and receipts. 

Tax Credits

The Nonbusiness Energy Property Tax Credit provides tax breaks for homeowners who install high-efficiency HVAC appliances. When you file your taxes, you’ll pay less if you owe money. 

While the energy property credit amount dropped yearly since 2020, the credit got bigger again in 2023 thanks to the Inflation Reduction Act. There are still annual limits to how much you can write off each year. But, it’s up to 20% of your purchase and installation cost for efficiency upgrades, up to $2,000.

How to Apply for It

Fill out IRS form 5695 when you’re doing your taxes. You’ll also need proof of purchase and installation invoice. Your HVAC contractor can provide those.  

More Ways to Save

Now that we’ve gone through all the federal opportunities for savings, I want to go into manufacturer and state-level incentives. You can look into these based on where you live and the models you choose. 

If you have specific questions, it’s best to speak with a contractor that’s worked for years in your area. You can find one using our dealer locator. 

Bryant Rebates 

Bryant offers various rebates and incentives throughout the year to homeowners. Depending on the model and when you install it, you could get a discount of a few hundred dollars or more off the installation price. Your HVAC contractor should know what’s available when you sit down to plan your project.

State-Level High-Efficiency Rebates for Homeowners 

Virtually every local utility company in the region offers rebates and incentives for homeowners to install energy-efficient appliances. These include high-efficiency furnaces, air conditioners, HVAC heat pumps, and heat pump water heaters as well. Some are direct through the electric company, while others work through local agencies. Here’s a sample of what’s available in each state.

Ready to take advantage of these excellent money-back opportunities to install a heat pump in your Cherry Hill, NJ home? Use our dealer locator to find a certified contractor anywhere in New Jersey, Maryland, Pennsylvania, or Delaware.