Residential Incentives

Residential Incentives

There are a variety of financial incentives for installing 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 and homeowner income. 

Mass Save Incentives* and HEAT Loan Program 

Beginning in 2023, Massachusetts residential heat pump rebates will only be available for heat pumps that are installed by participating Mass Save Heat Pump Installers: 2022-2024 Plan Presentation  (pg.22).   

If your electricity is supplied by an investor-owned utility such as Eversource or National Grid, you may be eligible for Mass Save incentives: Mass Save Residential Rebates and Incentives. 

Some HVAC installers include an estimate of the Mass Save rebate in their heating/cooling system quotes. Some will submit the rebate request on behalf of their customer, while others do not. To confirm your rebate amount contact Mass Save directly

New air source heat pump energy efficiency standards will go into effect on January 1, 2023. To ease the transition into the new standards Mass Save has decided that if air source heat pumps meet the 2022 requirements they will continue to be eligible for rebates for equipment installed through December 31, 2023: 2023 Air Source Heat Pump Minimum Efficiency Requirement 

The Mass Save HEAT Loan Program provides interest-free loans of up to $25,000 for heating system and weatherization upgrades.

*Mass Save Incentives may be available to natural gas customers, please contact Mass Save directly to learn more. 

Municipal Light Plant (MLP) 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: Massachusetts Clean Energy Center for more information on MLP Communities  To find the MLP in your area: Map of Massachusetts Electricity Providers by Municipality 

Federal Tax Credit

For air source heat pumps (ASHP) and heat pump water heaters, a modest federal tax credit of up to $300 each, and not more than $500 for both, applies retroactively through December 31, 2022. Updates will be applied for 2023 and remain effective through December 31, 2032: EnergyStar.gov Equipment Tax Credits for Primary Residences

For ground source heat pumps (GSHP)** placed in service in 2022 that meet certain performance requirements, there is a tax credit of 30% on the total installation cost retroactively through the new Inflation Reduction Act (IRA): Energy Star Federal Renewable Energy Tax Credits ** For more information on Ground Source Heat Pumps and Alternative Energy Credits please see the Mass.gov link in the Massachusetts section of resources below.

MA Sales Tax Exemption

According to the Mass.gov Guide on Sales and Use Tax under the topic Sales and Use Tax Exempt Items-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.


RESOURCES

Massachusetts 

Massachusetts Energy Rebates & Incentives

Abode Energy Management: List of Massachusetts Municipal Light Plants

Massachusetts Alternative Energy Portfolio Standards (APS)

Mass.gov: Qualifying Ground Source Heat Pumps in the APS

Federal

The Inflation Reduction Act of 2022                              

The Federal Inflation Reduction Act (IRA) of 2022 is the single largest investment in climate and energy in American history, enabling homeowners to access loans, rebates and incentives towards sustainable heat and cooling solutions for their homes, electrical vehicles for transportation and more. There are four sections applicable to homeowners:

Part 2 – Residential Efficiency and Electrification Rebates  

Sec. 50121 Home Energy Performance Based, Whole House Rebates (pg. 217-20) 

Sec. 50122. High-Efficiency Electric Home Rebate Program (pg. 220-25)

Sec. 50123 State-based Home Energy Efficiency Contractor Training Grants (pg. 225)

Part 3 – Building Efficiency and Resilience 

Sec. 50131. Assistance for Latest and Zero Building Energy Code Adoption. (pg. 225-26)

US Inflation Reduction Act 2022 Loan Programs Office (with Video)

Inflation Reduction Act Miniguide (pdf) (pg. 12-13)

ACEEE: Home Energy Upgrade Incentives 2022 

America is All In: All in On Building Decarbonization in the Age of the Inflation Reduction Act

Rewiring America IRA Resources:

What is in the bill? Explains the key programs in the IRA and what they mean for Americans. It includes information on tax deductions and credits for EVs and residential solar and battery storage and more. 

Guide to the Inflation Reduction Act Download a no-cost, easy to read pdf guide of the IRA with glossary of terms, detailed case studies and helpful tips on how to create an electric plan. 

Homeowner IRA Savings Calculator Find out how much money you can get with the IRA by filling out this online calculator.

Guide to Electrify Everything in Your Home is an extensive handbook that helps you create an electric plan for your home for a step-to-step process towards a net-zero future.

Please note: The HeatSmartAlliance aims to provide its members and the public with accurate and up to date information, however we are not responsible for content on webpages outside of our website. Both federal and state incentives may be subject to change. (Last Updated 11.22.2022)