Upgrading your home to be more energy-efficient? Fantastic. The good news: the government wants to help pay for it. The catch? That help might come in different forms—some at tax time, some right at the checkout line. Welcome to the world of tax credits and point-of-sale rebates for heat pumps.
If those sound similar, you’re not alone—but knowing the difference could save you serious money. Let’s break down how each one works, who qualifies, and how MyNewHeatPump.com helps homeowners take full advantage of both.
What Is a Heat Pump Tax Credit?
What Is a Heat Pump Tax Credit?
The 25C Tax Credit—a.k.a. the Energy Efficient Home Improvement Credit—lets you claim 30% of your out-of-pocket cost for a qualifying heat pump system, up to $2,000 per year.
📋 To qualify, you’ll need to:
- Buy a qualifying ENERGY STAR heat pump
- Install it in your primary residence
- Keep your receipts
- Fill out IRS Form 5695 when you file your taxes
Here’s the key detail: You can only claim the credit on what you actually pay out-of-pocket. If rebates or incentives cover 100% of the project, you won’t be eligible for the tax credit, because you didn’t have any out-of-pocket expenses.
💡 For example:
- If your project costs $12,000 and rebates cover $9,000, you can claim 30% of the $3,000 you paid out of pocket (that’s $900 back at tax time).
- But if rebates cover the entire $12,000, you’re not eligible for the credit.
Still confused? Don’t worry—MyNewHeatPump.com helps homeowners combine rebates and tax credits the smart way, so you get the most value with the least stress.
What Are Point-of-Sale Rebates?
Point-of-sale rebates are like instant coupons for big-ticket energy upgrades. These are offered through the IRA’s HEAR (Home Electrification and Appliance Rebates) and HOMES (Home Energy Performance-Based, Whole-House Rebates) programs.
The money flows through your state’s energy office and is applied before you pay, reducing your upfront costs.
💰 The potential savings?
- Up to $8,000 for a new heat pump
- Up to $1,750 for a heat pump water heater
- Up to $840 for an electric stove or heat pump clothes dryer
- And more for insulation, panel upgrades, and wiring
Unlike tax credits, these rebates don’t require waiting until April. If you qualify, the discount shows up right on your invoice.
The Key Differences (And Why They Matter)
| Tax Credit (25C) | Point-of-Sale Rebate (HEAR/HOMES) | |
| 💵 When You Save | Tax season (after installation) | Instantly at checkout or project close |
| 📄 How to Claim | File IRS Form 5695 | Apply through an approved contractor |
| 💸 Income-Based? | No—available to all income levels | Yes—income must fall below program caps |
| 💡 Stackable? | Yes! Combine with rebates | Yes! Can be braided with tax credits |
| 🏠 Max Benefit | Up to $2,000/year for heat pumps | Up to $14,000 total depending on income |
Can I Write Off a Heat Pump?
Yes—but only if it meets certain qualifications. To qualify for the 25C tax credit, your new heat pump must meet Energy Star standards and be installed by a professional.
And if you’re wondering, “Can I still get a rebate too?” the answer is yes. And this is where MyNewHeatPump.com comes in.
Stacking and Braiding Incentives: Where MyNewHeatPump.com Shines
Most homeowners don’t realize that tax credits and rebates aren’t either/or. You can stack them—a tax credit here, a rebate there—and braid together local, utility, and federal programs to make upgrades truly affordable.
But finding those rebates? Managing the paperwork? Timing it all correctly?
That’s what we do. We:
- Find every available rebate in your area
- Match you with qualified contractors who are rebate-approved
- Handle the paperwork (yep, all of it)
- Help you apply for and receive both the rebate and the tax credit
- Make sure your project is code-compliant and eligible for maximum incentives
We’re not just pointing you toward incentives—we’re making them happen.
Who Qualifies for IRA Rebates?
The HEAR and HOMES rebates are income-based. Here’s the short version:
- Low-income households (below 80% of the area median income): Can qualify for up to 100% of the project cost.
- Moderate-income households (80–150% of AMI): Eligible for up to 50–80% of the cost, depending on the program.
- Everyone else: Still qualifies for 25C tax credits and potentially utility rebates.
Pro-Tip: Check out our in-depth eligibility guide for more information.
Want to know what you’re eligible for? We’ll walk you through a simple eligibility questionnaire to help you find out.
How to Claim the 25C Tax Credit
If you’re going the tax credit route, here’s what you’ll need:
- A receipt for your qualified heat pump installation
- IRS Form 5695
- A licensed contractor who installed the equipment (required!)
- Patience until tax season (unless we stacked a rebate upfront)
This is where most homeowners stop. But with MyNewHeatPump.com, you don’t have to go it alone—we walk you through every step.
So… Which Is Better?
Truthfully, the best choice is both. Tax credits and rebates are meant to work together, not compete. When stacked and braided effectively, they can cut thousands off your installation costs—up front and at tax time.
That’s why we built MyNewHeatPump.com—to help homeowners like you navigate this process, maximize your savings, and upgrade to a more efficient, comfortable home without the stress.
Final Thoughts on IRA Rebates & Tax Credits
The Inflation Reduction Act is packed with powerful financial tools to help Americans upgrade their homes. Between the 25C tax credit and IRA rebates, you could save up to $14,000 or more—if you know how to access them.
Want help cutting through the red tape? MyNewHeatPump.com connects the dots, handles the forms, and helps you go from estimate to installation without leaving money on the table.
Unlock Your Rebate & Tax Credit Combo Today at MyNewHeatPump.com
Get the home upgrade savings you deserve—without the confusion. Start your eligibility questionnaire now and see how you can save up to $14,000 in rebates plus tax credits!
