Free Heat Pump: The government heat pump program pays for the cost and installation of a heat pump for eligible homeowners. Heat pumps are an energy-efficient alternative to furnaces and air conditioners that can help lower your utility bills.
And right now, there are great rebates and tax credit programs that can cover much or all of the cost of purchasing and installing a new heat pump system, and this way, you can get a free heat pump for your home.
What is a Heat Pump and How Does it Work?
A heat pump is an all-in-one heating and cooling system. It looks similar to an air conditioner with an outdoor compressor unit and indoor air handlers.
Heat pumps transfer heat rather than convert fuel to heat like a furnace does.
During winter, heat pumps take heat from the outside air and deliver it inside to warm your home.
In summer, the process reverses to cool your house by transferring indoor heat outside.
This makes a heat pump much more energy efficient. You can save 50% of your electricity by switching to a heat pump if you have an electric furnace or electric baseboard heater.
To help the country and individuals move away from fossil fuels, the federal government has introduced tax credits and rebates on heat pump purchases. These incentives can help cover the cost of purchasing and installing energy-saving appliances like heat pumps.
Government Programs that Help Pay for a Heat Pump
Under the Inflation Reduction Act, a rebate or Tax credit can help you pay for your heat pump. Depending on the Size of Your Home, installing a new heat pump system can cost between $3,000 and $ 10,000.
To make this energy upgrade more affordable, federal, state, and utility programs offer generous rebates and tax credits.
Rebates for Heat Pumps
If you meet the household income requirements, you may be eligible for heat pump rebates up to $8,000 for heating and cooling pumps and $1,750 for heat pump water heaters. The rebates vary by state.
If your household income is less than 80% of your state’s median household income, you qualify for 100% of the rebates. If you buy both a heat pump and a heat pump water heater, you can get up to $9,750 back.
If your household income is between 80 and 150% of your state’s median household income, you can get 50% of the rebates, up to $4,875.
If your household income is over 150% of your state’s median household income, you don’t qualify for heat pump rebates.
Tax Credits for Heat Pumps
If you install an energy-efficient heat pump before 2032, you can get a federal tax credit that covers 30% of the cost up to $2,000 for the heat pump and installation. You can receive this tax credit every year, but it’s capped at $2,000 per year.
To get the most incentives, you can plan to make energy-efficient home improvements over several years instead of all at once.
There is no income limit to qualify for the IRA tax credits. You can qualify for the credits as long as you have tax liability. Some states are also planning to provide rebates for lower and middle income homeowners later this year.
To qualify for the IRA tax credit, heat pumps and heat pump hot water heaters must be highly efficient and belong to the Consortium for Energy Efficiency’s highest non-advanced tier.
Total Saving on Heat Pump
Many states like Maine, New York, and others have additional rebate programs that can be combined with the federal incentives. This combination can help cover the upfront cost or even the entire cost of installing a new heat pump system
Home Heating and Cooling (HVAC) Heat Pump:
- 100% rebate (up to $8,000) for low income
- 50% rebate for moderate-income
- 30% tax credit (up to $2,000) for all taxpayer
Hot Water Heat Pump
- 100% rebate (up to $1,750) for low income
- 50% rebate for moderate-income
- 30% tax credit (up to $2,000) for all taxpayer
Electric Panel Upgrade
- 100% rebate (up to $4,000) for low income
- 50% rebate for moderate-income
- 30% tax credit (up to $600) for all taxpayer
Electric Wiring
- 100% rebate (up to $600) for low income
- 50% rebate for moderate-income
How Much Money Do Heat Pumps Save?
Installing a furnace that runs on fossil fuels can cost between $1,500 and $6,500, with an additional $2,500 for installation.
A central air conditioner can cost $2,000, with installation costs ranging from $5,000 to $9,000.
Alternatively, a heat pump can replace both air conditioner and furnace with its dual heating and cooling functions.
When it comes to heat pump installation costs, you can expect to pay between $3,500 and $20,000. The price can vary depending on the size of your home.
After rebates, the average American homeowner pays around $14,000.
Heat pumps are a more efficient option than furnaces, resulting in long-term savings on utility bills.
By switching to a heat pump, homeowners can expect to save anywhere from $100 to $1,300 per year on heating and cooling costs, with an average savings of $667 per year.
Switching from oil or propane furnaces to a heat pump can save even more on annual energy bills.
Heat pumps are efficient systems that can regulate your home’s temperature, heat your water, and even dry your clothes more efficiently than other technologies
Heat pumps can also run on renewable energy like solar, which could result in even greater reductions in climate-harming pollution.
Heat pumps also provide year-round benefits like air conditioning, dehumidification, and air filtration. Modern cold-climate heat pump models work efficiently even when temperatures drop below freezing.
How to Qualify for Free Heat Pumps Through Assistance Programs
To receive the full rebates and free heat pump system, you must meet certain income and eligibility guidelines. Here are some of the main assistance programs available:
- Federal Low Income Home Energy Assistance Program (LIHEAP) – LIHEAP provides federally funded energy assistance grants to low income households. If you qualify for LIHEAP aid, you can get up to $8,000 in heat pump rebates through the Inflation Reduction Act.
- State Weatherization Assistance Program – This program helps low-income families reduce energy bills through energy efficiency upgrades. Receiving weatherization assistance can qualify you for state heat pump rebates.
- State Heat Pump Initiatives – Many states like New York and Maine have heat pump initiatives that offer rebates and incentives on top of the federal ones. Check your local utilities and energy agencies.
- Non-Profit Organizations – Some non-profits, like community action agencies work with state and federal programs to provide energy assistance and weatherization services. They can help you access heat pump rebates.
- Utility Company Rebates – Even if you don’t qualify for low income programs, some utility companies offer their own heat pump rebates that can add to the savings.
How to Apply for Free Heat Pump Programs
Here are the main steps to take advantage of the rebates and get a free heat pump system installed in your home:
- Determine if you meet the income requirements – Income limits vary by program but are generally below 80% of area median income for the full 100% rebates.
- Find a participating contractor – Many rebate programs require you to select from approved contractors who will handle the rebate paperwork.
- Apply for assistance – Contact your local LIHEAP or weatherization office to submit an application. Non-profit agencies can also assist with the process.
- Get a home energy assessment – Most programs will do an inspection to ensure your home is suitable for a heat pump system.
- Install the heat pump – Once approved, your contractor will schedule the installation which is covered by the rebates.
- Maintain eligibility – You may need to provide income verification each year you receive heating bill assistance
Conclusion
Now it is a great time to upgrade your home heating and cooling system to an efficient heat pump. You can take advantage of rebates and tax credits that can help you make this upgrade without having to pay much or anything at all. This will help you save on energy costs while enjoying a more efficient system.
Frequently Asked Questions
Does a heat pump work in cold climates?
A heat pump can absolutely work in cold climates. Today’s cold-climate heat pumps can heat a home efficiently even when the temperature drops below -10 degrees Fahrenheit.
How can i get free heat pump?
If your household earns less than 80% of the median income in your state, you can get 100% of the available rebates. Spend $10,000 on a heat pump and heat pump water heater, and get $9,750 back based on your state’s rebate program. Almost free.
How to Apply for a Heat Pump Rebate or Tax Credit?
Rebate programs could be implemented through utility companies or state-run agencies. You can claim the tax credits on your federal income tax returns by using the IRS Form 5695.