3 ways heat pumps save you money
Save money on upfront costs, tax credits, and utility bills
Installing a heat pump for home heating and cooling is the biggest way to save money and energy. With tax credits and incentives, plus utility bill savings and lower maintenance costs, installing a heat pump will save you money all year round. Here are three ways the savings add up.
1. Save money with upfront heat pump discounts — up to $8,000
Electrification rebates through the Inflation Reduction Act provide point-of-sale discounts for heat pumps and other ENERGY STAR-certified appliances for low- and moderate-income households. These rebates will start to become available later this year and early next.
The rebate’s upfront discounts will cover up to 100 percent of point-of-sale purchases for low-income households and 50 percent of costs for moderate-income households. For personalized estimates based on your eligibility, location, and income, use Rewiring America’s IRA savings calculator.
2. Receive a 30% tax credit on your heat-pump purchase
Your household can receive a 30 percent tax credit each year, up to $2,000, for the purchase and installation of heat pumps and heat-pump water heaters. So if you install a heat pump water heater this year, and a heat pump next year, you will receive the 30 percent tax credit on each.
There’s also a 30 percent tax credit (up to $600) for an electrical panel upgrade — but only if it’s installed along with another home appliance like a heat pump or heat-pump water heater). So it might be advantageous to do both at once!
3. Save up to $1,000 on your energy bills
The average homeowner will save $370 per year by upgrading to a heat pump. Homeowners switching from inefficient systems that run on fuel oil, propane, or traditional electric resistance (like baseboard heat or electric furnaces) will save closer to $1,000 per year.
Heat pumps cost more upfront (average heat pump installation is $16,000) but with their energy bill savings, a heat pump will often pay off in about 15 years.
See our savings by fuel type chart below.
Note: One factor not captured in the chart above is the potential cost spikes due to fluctuating gas prices.
Heat pumps are the best way to heat and cool your home, lower your electric bill, and get gas out of your home. And this summer, we’re launching a free tool to help you make the switch. Get personalized tips, step-by-step instructions, money savings advice, and more. Home electrification made simple. Check it out.