Is There a Federal Tax Credit for Heat Pumps?

hvac on yellow and white wall

Think heat pumps are too expensive? Think again! Heat pumps are not only one of the most energy efficient types of HVAC systems; they’re also more affordable than ever, thanks to new federal incentives for heat pump installation. 

The heat pump tax credit is available now for heat pump and ductless heat pump installation! The tax credit is worth 30% of your heat pump installation costs, up to $2,000! 

Keep reading to learn more about the heat pump tax credit and how Neeeco can help you save on your heat pump installation. 

What Is the Heat Pump Tax Credit for 2023? 

The heat pump tax credit is part of a larger tax credit, known as the Energy Efficient Home Improvement Tax Credit or the 25C tax credit. It’s been in place for many years but was recently revamped by the Inflation Reduction Act. 

The Inflation Reduction Act heat pump tax credit is worth 30% of your total heat pump costs, up to $2,000. To claim the tax credit in a given tax year, you must install your heat pump during that year. So, to claim the credit on your 2023 tax return, you must install your heat pump HVAC system before December 31, 2023. 

Don’t miss out on savings! Start your heat pump installation with Neeeco today! 

How Does the Heat Pump Tax Credit Work? 

The heat pump tax credit is a dollar-for-dollar tax credit that reduces what you owe when you file your federal tax return. It’s worth 30% of your total heat pump or ductless mini split heat pump installation costs, up to $2,000.  

For example, let’s say you owe $3,000 in federal taxes. You install a heat pump and receive the maximum credit of $2,000. You can subtract your credit amount from what you owe, bringing your total down to $1,000. 

How to Claim the Heat Pump Tax Credit 

Claiming the heat pump credit is simple. You don’t have to apply for the credit—you simply claim it when you file your taxes. 

  1. Step One: Complete IRS Form 5695 (skip down to Part Two: Energy Efficient Home Improvement Credit). 
  2. Step Two: Add your tax credit information to your usual Form 1040. 
  3. Step Three: Make sure you attach Form 5695 when you file. 

Disclaimer: You should always consult a tax professional for tax guidance. We do not assume any liability for your tax situation. 

Save More with Mass Save Heat Pump Rebates! 

If you live in Massachusetts, you’re eligible for additional heat pump incentives through Mass Save. The Sponsors of Mass Save offer generous rebates for heat pump heating and cooling systems. With Mass Save rebates, you can get up to $10,000 back on your heat pump installation!* Mass Save rebates can be combined with federal tax credits for maximum savings. 

Neeeco is a local energy efficiency expert committed to helping Massachusetts residents save energy and money. We’re here to answer all your questions about heat pump rebates and incentives. To learn more, schedule your no-cost Mass Save Home Energy Assessment today. 

*Some restrictions apply. Offers are subject to change or cancellation. Visit for full details.

Save on heat pump installation! Call (781) 309-7540 or schedule a no-cost Mass Save Home Energy Assessment to learn more.