Residential Rebates and Incentives

There are a variety of financial incentives for installing a heat pumps for heating/cooling and water heating, including rebates, tax credits and interest-free loans. The details depend on several factors, including who supplies your electricity.

Mass Save Rebates for Utility Customers (Eversource, National Grid)

If your electricity is supplied by an investor-owned utility such as Eversource or National Grid, you may be eligible for a Mass Save rebate: see Mass Save Residential Rebates and Incentives. Some HVAC installers include an estimate of the Mass Save rebate in their heating/cooling system installation proposal and submit the rebate request on behalf of their customer, while others do not. Either way, it’s advisable to confirm the rebate amount by contacting Mass Save directly. The Mass Save HEAT Loan Program provides interest-free loans of up to $50,000 for heating system and weatherization upgrades.

Municipal Light Plant Customers

If your electricity is supplied by a municipal light plant (MLP), check with the MLP to learn about available incentives. Some MLPs provide incentives that are comparable to MassSave rebates.

Federal Tax Credit

For air source heat pumps (ASHP) and heat pump water heaters, a modest lifetime tax credit of up to $300 each, and not more than $500 for both, expired on December 31, 2021. As of mid-2022, this credit has not been renewed. See EnergyStar.gov Equipment Tax Credits for Primary Residences for more information on the former credit.

For ground source heat pumps (GSHP) placed in service in 2022 that meet certain performance requirements, there is a tax credit of 26% on the total installation cost. This credit is due to reduce to 22% for calendar 2023. See EnergyStar.gov Renewable Energy Tax Credits for more information on the performance requirements, but note that the site’s information on the tax credit percent for 2022 and 2023 is out of date.

MA Sales Tax Exemption

According to the Mass.gov Guide on Sales and Use Tax under the topic Sales and Use Tax Exempt Items, subheading 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. As a matter of practice, Massachusetts-based HVAC installers generally do not include Massachusetts sales tax in their quotes.