Inflation Reduction Act: Heat Pump Water Heater tax credit

Rebate Overview

Overview

The Inflation Reduction Act offers a tax credit for installing a heat pump water heater. This credit covers 30% of the project cost, up to $2,000. You can claim this credit each year for eligible installations.

Benefits

Upgrading to a heat pump water heater can make your home more comfortable and energy-efficient. It also helps reduce pollution from gas appliances, benefiting the environment.

More Information

• The heat pump water heater must be installed in your primary residence.
• The credit applies to both the equipment and installation costs.
• To claim the credit, include the project expense on Part II of Form 5695 when filing your taxes.
• Ensure the heat pump water heater meets ENERGY STAR standards.
• The credit is available for installations completed in 2025 and claimed on your 2025 tax return.
• Upgrades completed in 2025, and tax credits claimed for those projects on 2025 tax returns (which are filed in early 2026) should be safe.

Details

• Expiration date: December 31, 2032
• Incentive type: Tax Credit
• Amount: $ 2,000
• Maximum Amount: $ 2,000
• Maximum Percent: 30%
• Category: Water Heater Heat Pump
• Link: More details

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