Tax Credits & Utility Rebates
Federal Tax Credits
Energy Efficient Home Improvement Credit
Beginning January 1, 2023, the amount of the credit is equal to 30% of the sum of amounts paid by the taxpayer for certain qualified expenditures, including (1) qualified energy efficiency improvements installed during the year, (2) residential energy property expenditures during the year, and (3) home energy audits during the year. There are limits on the allowable annual credit and on the amount of credit for certain types of qualified expenditures (see Q 1 and 2 below). The credit is allowed for qualifying property placed in service on or after January 1, 2023, and before January 1, 2033.
Heat pumps qualify for a tax rebate of 30% of the project cost, with a $2,000 annual cap. Note, this is a tax credit and does not provide a benefit if you are retired and/or do not have income. The tax credit applies to air source heat pumps (a regular heat pump) and heat pump water heaters.
The rebate for other household items has a lower annual cap. This rebate covers 30% of costs, up to $600 for each item. Below is a list of qualifying items.
- Central air conditioners
- Natural gas, propane, or oil water heaters
- Natural gas, propane, or oil furnaces and hot water boilers
- Improvements to or replacements of panelboards, sub-panelboards, branch circuits, or feeders that are
installed along with building envelope components or other energy property listed in these FAQs and
enable its installation and use.
Tax Credit Requirements
All items must meet minimum efficiency standards. While the vast majority of items we sell and install meet the criteria, it’s important to verify the specific model number. Our quote should indicate whether your equipment meets the standard. The AHRI website maintains the current list of approved equipment. Click on the blue boxes on the right side to download a list of model numbers.
Converting from natural gas furnace to a heat pump?
- $2,400 rebate when you switch to a qualifying ducted or ductless heat pump system.
- $4,000 back when you switch to a qualifying ducted cold-climate heat pump system.
Do I qualify? Equipment requirements
- You must be a PSE gas and PSE electricity (dual fuel) customer who currently heats with natural gas.
- Customers with pre-existing heat pumps are not eligible.
- Existing gas furnaces must be removed and fully replaced by the new heat pump system to qualify. Dual fuel systems or systems with natural gas backup heat do not qualify for this incentive.
- Heat pumps must be installed to comply with all federal, state, and local code requirements.
Customers must install an AHRI Certified® heat pump system that qualifies for the IRA Tax Credit, meeting CEE specifications.
- Qualifying equipment models can be found here. Cold Climate eligible heat pumps are designated under the “Cold Climate?” column and are consistent with ENERGY STAR® v6.1 Energy-Efficiency Criteria for Certified Cold Climate Heat Pumps.
- If your system is not listed on the qualifying products list, it may be eligible for an incentive if it meets the requirements listed below as tested and rated by AHRI per current CEE US Department of Energy test procedures.
- You will need an electronic image of your paid installation invoice and a purchase receipt for your installed equipment. These documents must include an installation date, installation address, brand, model number(s) of all rebated equipment (include the heat pump, air handler and/or coil model number on the invoice), and the amount paid.
- Your rebate application must be submitted within 60 days of installation.
- Only one rebate will be issued per qualified single-family residence.
- You must have an online PSE account to apply online.
- Rebates are only available on new, qualifying equipment. Rebates cannot exceed the pre-tax purchase price of any rebated equipment. Equipment that is replaced under warranty will not be eligible for a second rebate.
- Equipment must be installed on or after June 19, 2023.
PSE Customer Map
Minimum efficiency requirements for cold climate heat pumps