Federal Tax Credit for Heat Pumps and Heat Pump Water Heaters
Under the Inflation Reduction Act (IRA), heat pumps and heat pump water heaters (HPWHs) are eligible for a 30% tax credit, beginning in tax year 2023, up to a limit of $2,000 per taxpayer. In addition, home energy efficiency improvements are eligible for a 30% tax credit up to $1,200.
To qualify for the tax credits, HPWHs must be ENERGY STAR-certified, and heat pumps must meet the following minimum efficiency requirements:
For Northern States (including Colorado, Utah, Wyoming):
- Must meet the min. HSPF and SEER ratings as shown below:
Type of HP system |
SEER/SEER2 |
HSPF/HSPF2 |
|---|---|---|
| Ducted | 16.0/15.2 | 9.5/8.1 |
| Ductless | 16.8/16.0 | 10.6/9.5 |
- Must have a capacity ratio of >58% at 17 degrees F, relative to the capacity at 47 degrees F.
- Must have a coefficient of performance (COP) at 5 degrees F of at least 1.75
The Consortium for Energy Efficiency (CEE) has a list of heat pumps that meet these minimum requirements here. Because of the capacity and COP requirements, most heat pumps on the CEE list are also cold-climate heat pumps, and therefore they tend to be more expensive than non-cold climate heat pumps that meet ENERGY STAR’s minimum efficiency criteria.
