Tax Credit for Heat Pumps and Heat Pump Hot Water Heaters

Annual Limits on Energy Efficient Home Improvement Tax Credits
In addition to limits on the amount of credit you can claim for any particular equipment installation or home improvement, there are annual aggregate limits. The overall total limit for an efficiency tax credit in one year is $3,200. This breaks down to a total limit of $1,200 for any combination of home envelope improvements (windows/doors/skylights, insulation, electrical) plus furnaces, boilers and central air conditioners. Any combination of heat pumps, heat pump water heaters and biomass stoves/boilers are subject to an annual total limit of $2,000. (Note: ENERGY STAR certified geothermal heat pumps are eligible for a separate tax credit and not counted against these limits.)

Some utilities and local governments offer rebates, incentives, and other financial assistance for home efficiency improvements. Check with your utility or use the Energy Star or Switch is On websites to find local program offerings. Some may have income qualifications. Information on contractors available on the Switch in On website. This IRS website provides more detail and links to tax forms.