Heat pumps are by far the most energy-efficient way to heat and cool your home and heat your water. Generous utility incentives for installing and operating heat pumps are available and, in combination, may cover almost half your initial costs (see example below). Incentives include cash rebates, interest-free loans and discounted electricity rates.
Commonwealth of Massachusetts and Local Programs
Mass Save® Incentives
Massachusetts law requires investor-owned utilities (National Grid, Eversource, Berkshire Gas, Cape Light Compact, Liberty, and Until) to use a portion of the rates you pay to fund the Mass Save program, which can help you make your home more energy efficient. Under this program, you can qualify for residential heat pump rebates of up to $8,500 for air-source heat pumps (ASHPs) and $13,500 for ground-source heat pumps (GSHPs). Additional incentives are available for income-qualified households.
To qualify for residential heat pump rebates, equipment must be installed by companies that are part of the Mass Save Heat Pump Installer Network (HPIN). For your convenience, many of these installers will include an estimate of the Mass Save rebates in their quotes, and some will submit the rebate request on your behalf. However, you should always independently confirm your rebate amount by contacting Mass Save directly before you commit to an installation.
To ensure that you are getting equipment suited to New England’s cold climate and that it qualifies for a Mass Save rebate, ask your contractor to confirm that your heat pump is listed on the Mass Save Heat Pump Qualified Products List.
Municipal Light Plant (MLP) Customers
To qualify for Mass Save rebates, your electricity or natural gas must be supplied by an investor-owned utility. If you live in a town served by a municipal lighting plant (MLP) and do not heat with natural gas, you should visit your MLP’s website or contact them to learn about rebates they may offer. Some MLPs provide incentives that are comparable to MassSave rebates. To find the MLP in your area, see the Massachusetts Clean Energy Center’s map of Massachusetts Electricity Providers by Municipality
MA Sales Tax Exemption
According to the Mass.gov guide on Sales and Use Tax, sub-section Tax Exempt Items & Sales, under the topic Home & Household Items: "Equipment directly related to solar, wind-powered or heat-pump systems (if the system is used as a primary or auxiliary power system for heating or supplying a taxpayer’s principal residence in Massachusetts)” is exempt from Massachusetts sales tax. In our experience, most Massachusetts HVAC installers do not charge sales tax, which is consistent with this exemption.
Financing Assistance
The Mass Save HEAT Loan Program provides 0% interest loans of up to $25,000 for weatherization services, heat pumps, and electric panel upgrades.
The Energy Saver Home Loan Program is offered through the Massachusetts Community Climate Bank and helps underserved low- and moderate-income homeowners develop a plan to cut their energy use by 20% and reduce or eliminate their reliance on fossil fuels.
Alternative Energy Certificates (AECs)
Your Air-Source or Geothermal Heat Pump could qualify for AECs from the Department of Energy Resources. The concept is similar to earning Renewable Energy Credits from solar photovoltaic panels, which generate electricity from sunlight instead of from burning fossil fuels. Heat pumps can earn AECs because they extract about two-thirds or more of the heat they supply from outdoor air or the ground instead of from burning fossil fuels. Learn more here
Federal Tax Credits
Tax credits are subtracted from taxes you owe. Federal tax credits for heat pumps are available for systems installed during the 2025 tax year, i.e. by December 31, 2025. No tax credits will be available for systems installed after that date. Federal tax credits are based on the cost after state or local rebates, if any. Check with your tax preparer on available credits. See IRS FAQ's on Clean Energy Credits (this document has not been updated for the new expiration date of these credits)
- ASHPs may qualify for a credit of 30% or a maximum of $2,000.
- HPWHs may qualify for a tax credit of 30% or a maximum of $2,000. This credit and the ASHP credit have a combined maximum of $2,000 in a single tax year.
- GSHPs may qualify for a tax credit of 30% of total installation cost with no maximum.
| Air-Source Heat Pump Example Illustrating Incentives Impact | |
|---|---|
| Qualifying whole-home ASHP (MA sales tax = $0) | $25,000 |
| Less Mass Save® whole-home ASHP rebate | -$8,500 |
| Net Cost after rebates and tax credit | $16,500 |
| If financed by a 0% interest HEAT loan over 5 years | |
| Annual Cost | $3,300 |
| Monthly Payment | $275 |
Resources
- Massachusetts Energy Rebates & Incentives
- Municipal Light Plants supported by Abode Energy Management
- Massachusetts Alternative Energy Portfolio Standards (APS)
- Mass.gov: Qualifying Ground Source Heat Pumps in the APS
Note: The HeatSmart Alliance aims to provide its members and the public with accurate and up-to-date information, however, we are not responsible for content outside of our website. Both federal and state incentives are subject to change. (Last updated 9/17/2024)
