In 2021, electricity became the dominant fuel source for homes, surpassing gas for the first time. The driving force behind this is the adoption of heat pump technologies. Heat pumps offer highly efficient heating and cooling for your home by moving heat rather than generating it. Heat pump efficiencies can lead to lower energy bills compared to traditional heating and cooling systems.
If a heat pump system sounds like the solution for your home’s heating and cooling needs, we want to help you find resources to help make your plans a reality.
Federal Tax Credits for Heat Pump Systems
Homeowners may qualify for federal tax credits that can significantly reduce the cost of installing a heat pump:
- The Inflation Reduction Act (IRA), signed into law in 2022, includes tax provisions intended to reduce families’ energy bills and facilitate energy-efficient home improvements.
- Through the IRA, the Energy Efficient Home Improvement Credit offers homeowners a tax credit for up to 30% of their project costs, capped at $2,000 per year, to purchase an eligible heat pump.
- While upgrading your heating and cooling system with a heat pump, you may want to explore other energy-efficient upgrades, such as insulation, doors or windows, that qualify for additional tax credits.
Other Funding Sources for Heat Pump Systems
Beyond federal tax credits, consider other resources and programs to help fund your home energy efficiency projects.
- Available starting in early 2025, state-administered IRA rebates can be combined with the federal tax credit to boost your cost savings.
- The manufacturer of your heat pump may also offer rebates and incentives to reduce the installation cost.
- AEP Ohio’s new High Efficiency for Low-income Program (HELP) will provide funds for energy-efficiency home improvement projects.
Maximize Efficiency with a Heat Pump Water Heater
In addition to a heat pump for heating and cooling your home, you may also want to explore the addition of a heat pump water heater. This type of water heater offers many of the same benefits as other heat pump systems and provides added energy efficiency. You can leverage many of the rebates and tax incentives above to help fund the installation of a heat pump water heater.
