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Short answer: The federal tax credit for heat pump water heaters (30%, up to $2,000) ended for units installed after Dec 31, 2025. In 2026 the main sources are your state's HEAR rebate, up to $1,750 for income-eligible households where the program is open, and utility rebates, which many electric companies offer for ENERGY STAR heat pump water heaters. Some utilities pay instant discounts at the store.
See what applies at your address. Enter your ZIP and the finder shows your state's rebate status and your local utility rebate lookups.
Find rebates by ZIP codeWhere heat pump water heater money comes from now
| Source | Status (as of Oct 13, 2026) | Amount |
|---|---|---|
| Federal 25C credit | Ended for installs after Dec 31, 2025 | Was 30%, up to $2,000 |
| HEAR (state-run) | Open in some states | Up to $1,750, income limits apply |
| Electric utility rebate | Common | Set by the utility. Check yours. |
| Retail instant discounts | Some utilities and states | Varies |
Sources: IRS, Rewiring America (HEAR caps), ENERGY STAR.
Why utilities like these water heaters
A heat pump water heater, sometimes called a hybrid water heater, moves heat from the surrounding air into the tank instead of making heat with an element. ENERGY STAR certifies models that meet its efficiency bar, and most utility rebates require an ENERGY STAR model. Because water heating is a big share of a home's electric use, many utilities pay to get these installed. Some pay more when you replace an electric resistance tank, and some also cover gas-to-electric switches.
HEAR: up to $1,750
Under HEAR, a heat pump water heater is capped at $1,750. Low-income households (under 80% of area median income) can get up to 100% of the cost covered, and moderate-income households (80% to 150%) up to 50%. If the install needs a new circuit, HEAR's electric wiring category (up to $2,500) may help. All of it counts toward the $14,000 household limit, and your state can set lower amounts. See which states are open in our HOMES and HEAR rebates by state table.
Utility rebates: how to find yours
- Search the ENERGY STAR Rebate Finder with your ZIP and select water heaters.
- Check your electric company's rebate page. Many list a qualifying model list and a form.
- Some utilities offer the discount at the register at home improvement stores. Look for "instant rebate" on the shelf tag.
- Our rebate finder links straight to these lookups for your ZIP.
More on how utility programs work is in our guide to finding energy efficiency rebates from your utility.
Before you buy: will one fit?
| Question | Why it matters |
|---|---|
| Is there enough space and air? | The unit pulls heat from the room. Manufacturers list a minimum room size or venting option. |
| Is the room warm enough? | Garages and basements work, but very cold spaces lower efficiency. Check the model's operating range. |
| Is there a 240-volt circuit? | Most full-size units need one. 120-volt plug-in models exist for gas replacements without new wiring. |
| Where will condensate drain? | These units make water as they run, so they need a drain or pump. |
| Is the tank big enough? | Sizing up helps when the unit runs in heat pump-only mode. |
Steps to get paid
- Check eligibility and pre-approval rules for HEAR and your utility.
- Get quotes from water heater installers or plumbers who are enrolled in the programs. Ask for the exact model number.
- Confirm the model is ENERGY STAR certified and on your utility's list.
- Submit the rebate with the invoice, model and serial numbers, often within 60 to 90 days of install (check your program's deadline).
Doing a heat pump for heating at the same time? Read heat pump rebates in 2026. If you installed in 2025, the old credit still applies on your 2025 return; our 25C credit explainer covers how to claim it.
Frequently asked questions
Is there still a tax credit for heat pump water heaters?
No, not for new installs. The 25C credit (30%, up to $2,000) covers heat pump water heaters installed by Dec 31, 2025 only. If yours went in during 2025, claim it on your 2025 return with Form 5695.
Is it worth getting a heat pump water heater?
Often, if you have electric resistance water heating, a suitable space and a rebate. They use much less electricity than standard electric tanks. The payback depends on your rates, hot water use and the rebates you get, so ask for an estimate.
How do you qualify for a heat pump water heater rebate?
For utility rebates, you usually need to be that utility's customer and buy an ENERGY STAR model on its list. For HEAR, your household income must be under 150% of area median income and your state's program must be open.
Can I install it myself and still get a rebate?
Some utility rebates allow DIY installs. HEAR and many utility programs require a registered contractor. Read your program's terms before you buy.
Sources
- IRS: OBBB energy credit FAQs
- ENERGY STAR: Heat pump water heaters
- ENERGY STAR Rebate Finder
- Rewiring America: Electrification rebates
- U.S. DOE: Home Energy Rebates
Amounts and statuses were checked Oct 13, 2026. Programs change often, so confirm with the program before you sign a contract. Where we couldn't verify a figure, we say so instead of guessing.
