HEAT PUMP TAX CREDITS AND REBATES IN MINNEAPOLIS, MINNESOTA
Tax credits and rebates make previously inaccessible home upgrades something Minneapolis area homeowners can leverage to save on a new heat pump or furnace. Newer rebates, like the Inflation Reduction Act of 2022, focus on not only benefiting individuals, but the country as a whole through greener energy consumption.
Let’s dive in to cover which tax credits and rebates you may be eligible for so you can get the new heat pump or furnace you need without spending more than what’s necessary.
WHAT IS THE INFLATION REDUCTION ACT OF 2022?
In August 2022 the Inflation Reduction Act (IRA) was signed into law with the goal of expediting the reduction of greenhouse gas emissions by 40% before the end of 2030. The IRA offers cost-reducing rebate options for homeowners who take specific steps to improve energy efficiency within their homes.
WHICH INCLUDED TAX CREDITS ARE MOST RELEVANT TO SEDGWICK HEATING CUSTOMERS?
There are two tax credits included in the IRA that are relevant to current and future Sedgwick customers. They are the Energy Efficient Home Improvement Tax Credit (25C) and High Efficiency Electric Home Rebate Program (HEEHRP).
Energy Efficient Home Improvement Tax Credit (25C)
This tax credit had originally been slated to expire at the end of 2021, but the IRA extended its life and changed its name to the Energy Efficient Home Improvement Credit.
Originally, the expired version of this credit could cover 10% of the costs of installing certain energy-efficient HVAC upgrades to your home. It had a lifetime limit of $500 with smaller individual limits for specific items like air circulating fans ($50), furnaces and boilers ($150), and a few specific varieties of water heaters, heat pumps, and AC systems ($300).
The new, revived version of this tax credit takes the structure of the old one but improves upon the savings. The 25C tax credit covers 30% of the costs for eligible home improvements up to $1,200 in deductions annually, with the exception of heat pumps, which are covered up to $2,000. Gas furnaces, in comparison, are covered up to $600.
Amendments to previous requirements include:
- The ability to combine individual gas furnace and air conditioner rebates for a total yearly savings of up to $1,200
- Qualifying units must meet or exceed the highest efficiency tier that is not the advanced tier
Additionally, this new, revised Minneapolis tax credit that impacts any new heat pump, furnace or boiler installation will remain in effect until December 31, 2032.
High Efficiency Electric Home Rebate Program (HEEHRP)
The High-Efficiency Electric Home Rebate Act (HEEHRA) offers consumer rebates at point-of-sale for low- and moderate-income homeowners seeking electrical home upgrades. The goal of this rebate is to make energy efficiency more accessible to those that can most benefit from associated utility cost savings.
Available rebates go up to $14,000 per household and include:
HEEHRP provides HVAC rebates up to $14,000 per household, including:
- Up to $8,000 installation rebate for Energy Star rated heat pumps
- Up to $4,000 rebate for an electrical panel upgrade
- Up to $1,600 rebate for new insulation and sealing
- Up to $2,500 for improvements made to home electrical wiring
The rebate amount an individual is eligible for will depend on household income:
- If your household’s income falls below 80% of the median income in your community, 100% of your qualifying product purchase will qualify for the rebate
- If your household’s income is within 80% and 150% of the median income in your community 50% of your qualifying product purchase will qualify for the rebate
- If your household’s income is above 150% of the median income in your community, you will not be eligible for any tax savings through the HEEHRP rebate
ON THE WAY: RESIDENTIAL HEAT PUMP REBATE PROGRAM
The Minnesota Residential Heat Pump Rebate Program has yet to launch this, so there are no rebates available yet. Once launched, this state government-sponsored program will provide eligible applicants with financial means for the purchase and installation of a heat pump in their residence. For more information about the program launch and eligibility, the Minnesota Commerce Department offers this resource.
LOCAL UTILITY REBATES
Utilities Xcel Energy and CenterPoint Energy serve Minnesota homeowners living in the Twin Cities, and each offers heat pump and furnace rebates for qualified purchases. Sedgwick customers are provided with an application form that’s partially filled out and signed, making it easy to maximize savings. Once your installation is finished, you can file your form with your utility.
Check the Xcel or CenterPoint site to reference the latest information for your utility.
NEXT STEPS: CAUTION AND COMMUNICATION
States and utilities are able to modify terms, which impacts how much you can save through tax credits and rebates. As a result, use the information from this guide with caution. On our end, we’ll do our best to make sure this page stays updated with the latest information as it becomes available.
If you have any other questions about this page or Minneapolis heat pump tax credits in general, please contact the team at Sedgwick Heating and we’ll do our best to get you answers.