All posts

Guides

What tax credits can you get for installing a heat pump?

Not all heat pumps are the same – learn how much you can get when installing your own system

Vicky Volvovski
March 4, 2023

There are two separate federal tax credits for different types of heat pumps:

  • 25C tax incentive: 30% (max $2,000) for air source and hydronic heat pumps
  • 25D tax incentive: 30% (uncapped) for geothermal heat pumps

Air source and hydronic heat pumps

To qualify for the 25C tax credit, the heat pump you install must meet the following requirements:

System Type ENERGY STAR
certification
SEER2  rating EER2  rating HSPF  rating
Ducted systems Required -- -- --
Mini-splits or ductless systems -- >= 16 >= 12 >= 9

If you live in a cold climate and choose to install a heat pump designed specifically for cold climates, it must meet the following requirements:

System Type SEER2  rating EER2  rating HSPF  rating
Ducted systems -- > 10 --
Mini-splits or ductless systems >= 16 >= 9 >= 9.5

Geothermal heat pumps

To qualify for the 25D tax credit, the heat pump you install must meet the following requirements:

  • It must use the ground or ground water as a thermal energy source (to heat) or as a  thermal energy sink (to cool) a home
  • It must be ENERGY STAR certified

Definitions

ENERGY STAR certification: ENERGY STAR® is the government-backed symbol for energy efficiency, providing simple, credible, and unbiased information that consumers and businesses rely on to make well-informed decisions.

SEER2 rating: SEER stands for Seasonal Energy Efficiency Ratio. The higher the SEER rating, the more energy efficient the equipment is. 

EER2 rating: EER stands for Energy Efficiency Ratio. The higher the EER rating, the more energy efficient the equipment is.

HSPF rating: HSPF stands for Heating Seasonal Performance Factor. It rates the efficient operation of the heating portion of the heat pump. As the HSPF increases, the unit functions at a more efficient level. 

Start reducing your company's emissions today

Join Canopy

News, advice, and more reasons you'll love our newsletter

Thank you for subscribing!
Oops! Something went wrong while submitting the form.

More from Canopy

All posts