Clean energy continues to gain traction in the fight against climate change, and it's an ideal time for homeowners to capitalize on available incentives and rebates when upgrading their household systems.
With the growing emphasis on reducing the use of fossil fuels, government programs, and utility companies are offering financial incentives to install energy-efficient water heaters, HVAC systems, and smart thermostats. These upgrades not only lower energy consumption and reduce monthly bills but also improve home comfort and increase market value.
While most states have statewide programs as well as local programs, three states where homeowners are most incentivized to switch are Massachusetts, New York and California.
If you live in Massachusetts, you can get rebates on all your heating and cooling updates through Mass Save®. Max Veggeberg, CEO and Founder of Tetra shared insights to help guide residents and provide information on the program. "Mass Save provides rebates for energy-efficient upgrades like heat pumps, with amounts ranging from $1,250 to $16,000." He adds, "Some municipalities in Massachusetts have different utility providers have their own separate heat pump program."
Here’s a breakdown of the rebates available to you through Mass Save®:
Gas Heating & Water Heaters
- Up to $2,750 for heating
- Up to $700 for water heaters
Oil Heating & Water Heaters
- Up to $800 for heating
- Up to $100 for water heaters
Air-Sourced Heat Pump Rebates
- Up to $10,000 per home for whole home
- $1,250 per ton up to $10,000 for partial home
- Up to $16,000 for income-eligible applicants
Electric Heat Pump Water Heaters
- Up to $600 rebate
Smart & Programmable Thermostats
- Up to $100 or price-discount and no-cost installation
"There are specific contractor, system, and home eligibility requirements to be eligible for the rebates, and some homeowners have reported waiting months or years for their Mass Save rebate check," notes Veggeberg. "That’s why we recommend working with Tetra, they do all the paperwork, ensure you have the right system installed and provide instant rebates - no waiting months for a check in the mail."
Not in Massachusetts? You're Still Eligible For These Federal Rebates
"The only rebates/credits available nationwide are federal tax credits for income taxes, depending on the home renovation projects completed and the model of heat pump installed," notes Veggeberg. Available tax credits will allow savings of up to $3,200 annually.
- Federal 25D Geothermal Heating and Cooling Tax Credit: This incentive covers 30% of the cost of eligible geothermal heating and cooling systems. It applies to various residential energy-saving upgrades, including heat pumps, solar panels, and solar water heaters. On average, this credit is worth $7,200 for qualifying candidates.
- Federal 25C Energy Efficient Home Improvement Tax Credit: This provides a tax credit for eligible heat pumps up to 30% of project costs, capped at $2,000. Heat pumps are just one of the home energy improvements that may qualify for the 25C Energy Efficient Home Improvement Credit. Projects like energy-efficient doors, insulation, and heat pump water heaters may qualify as well.
- Federal 25C Weatherization Tax Credits: This provides a tax credit for homeowners who make weatherization projects or other energy upgrades to improve home energy efficiency. This includes up to $2,000 for heat pumps, $600 for installations like electrical panels, and $1,200 for other weatherization projects.
Veggeberg encourages residents to look around for energy-saving opportunities related to their own energy assessment. "Other rebates and incentives are available state by state, with specific incentives varying by municipality, in partnership with local energy providers." See the map at Energy.gov for more information on eligible states, or consult with an energy specialist in your area. (The previous link was redirected in March 2025. We recommend consulting with an expert in your area for assistance.)
