Enter your home, your current fuel, and the heat pump tier you are quoting. We stack the HEEHRA rebate and state rebate, then hand you the payback period, annual savings, and 15-year net.
Last reviewed May 2026
Sensible default — modify inputs below to match your situation.
Let's lay it out on the table, man. In 2026 a heat pump is still one of the best energy upgrades available for most American homes, and the payback math has gotten more complicated, not less. The federal 25C tax credit (up to $2,000) expired December 31, 2025 per the One Big Beautiful Bill -- so that piece of the stack is gone for 2026 installs. What remains: HEEHRA income rebates (up to $8,000), state utility rebates, and a favorable electricity-to-fuel ratio in most regions. The math still pencils for many households -- you just need to use the right incentive stack for 2026, not the one from last year.
This is the Rebate Turd. The grumpy little bureaucrat who buries your $8,000 HEEHRA rebate in 40 pages of income verification forms, 3 utility pre-approval letters, and a contractor pre-qualification list that you have to read with one eye while his other hand holds the deadline clock. He does not want you to find it. When you do find it, he wants the application packet to break your spirit before you scan the last page.
Most homeowners never get the rebate because they never find it, or they find it and give up after page 12. Meanwhile the heat pump salesperson quotes a payback of 6 years because their spreadsheet includes every incentive on the planet. The HVAC skeptic on Facebook says payback is never because their spreadsheet includes zero of them. The truth is almost always in the middle, and the middle depends on your fuel, your climate, and your income bracket.
FigureNerd does not play either side. The calculator above lays out every line of the stack, shows what applies to your situation, and spits out a number you can take to a contractor and defend. Pay attention to the qualifying verb: designed to give you an honest number, not a guaranteed one. Real-world payback always moves depending on installer quote and rebate program state.
The Inflation Reduction Act of 2022 created two separate programs that both touch heat pumps. The federal 25C tax credit was terminated by the One Big Beautiful Bill (OBBB, Public Law 119-21, signed July 4, 2025) -- it expired for property placed in service after December 31, 2025. If you installed a heat pump in 2025, you may still claim the credit on your 2025 federal tax return. For 2026 installations, the 25C credit does not apply. HEEHRA and state rebate programs remain available (check your state energy office for current status). Here is the full program overview, for reference:
| Program | What it covers | Max amount (heat pump) | How you get it |
|---|---|---|---|
| 25C federal tax credit (expired Dec 31, 2025) | 30% of installed cost for qualifying heat pump. Only for property placed in service through December 31, 2025. | $2,000 per year (2023-2025 only) | File IRS Form 5695 with your 2025 federal tax return if you installed in 2025. Not available for 2026 installations (terminated by OBBB). |
| HEEHRA rebate (income-based) | Up to 100% of project cost if under 80% AMI, 50% if 80 to 150% AMI | $8,000 per household | State-administered. Point-of-sale or post-install rebate, depends on state rollout. |
| HOMES rebate (performance-based) | Whole-home retrofit that reduces modeled energy use 20 to 35%+ | Up to $4,000 per household (higher for income-qualified) | State-administered. Different from HEEHRA, cannot stack for same measure but can for different measures. |
| State rebate | Varies widely by state + utility | $100 to $3,000+ typical | Utility or state energy office. Often stackable with federal credits. |
The calculator uses 25C + HEEHRA + state rebate. We do not model HOMES because it requires a whole-home energy model that only a BPI-certified auditor can produce. If you are doing a whole-home retrofit and not just a heat pump swap, ask your contractor to run a HOMES model on top of the 25C math.
Here is the thing that keeps tripping up intelligent people in Maine, Minnesota, and Montana. The "heat pumps do not work below freezing" story was true in 1995. It has not been true since about 2015. The difference is a compressor design called variable-speed inverter, which modern cold-climate heat pumps all use.
A 1995 heat pump was single-stage. It ran at 100 percent or 0 percent. Below 30 degrees its capacity fell off a cliff and a resistance heater had to kick in. A 2024 cold-climate heat pump modulates compressor speed from 10 to 100 percent, stays efficient to minus 5 degrees Fahrenheit, and still produces useful heat (at roughly 2.0 COP) down to minus 15. Manufacturers like Mitsubishi, Daikin, LG, Fujitsu, Bosch, and Carrier all ship cold-climate tiers that are rated and tested at minus 15 F.
The current real-world data from Maine and Vermont (two states that have been tracking heat pump adoption for a decade) shows that homes with properly sized cold-climate heat pumps cover 85 to 95 percent of heating load on electric alone, even in the coldest winters. The remaining 5 to 15 percent is handled by a small resistance backup or a retained gas furnace in dual-fuel setups. Homeowners report no comfort difference from their previous gas or oil systems.
Every state has its own mix of state-level rebates, utility rebates, and HEEHRA rollout status. The fastest way to find them all in one place is the DOE Energy Savings Hub at energy.gov/save. Enter your ZIP and the site will enumerate federal, state, utility, and city programs that apply.
A quick warning. State rebate pages change. Programs run out of funding mid-year. A program that shows "active" in January may be "paused pending reauthorization" by September. Always verify the program is currently accepting applications before signing a contract. A good installer will know the current status because they see approvals or denials every week.
A few state programs worth knowing by name:
Your state is almost certainly on the list. The calculator default state rebate of $500 is intentionally conservative so you are not disappointed.
Meet the Petersens. Family of four, 1,900 square foot farmhouse in central Maine, built in 1972, insulated to mid-1990s standards. For 30 years the house ran on a fuel oil boiler with baseboard radiators. The boiler was 22 years old, 78 percent efficient on a good day, and burning through 900 gallons of oil a winter. At $5.10 per gallon in January 2026, that was a $4,600 annual heating bill, and the boiler was one cold snap away from needing a $9,000 replacement regardless.
The Petersens got three quotes for ducted cold-climate heat pump systems. The middle quote, from a local contractor who had installed 200 of them, came in at $14,800 for a Mitsubishi cold-climate unit rated at minus 15 degrees F, plus a small resistance backup in the air handler. The contractor confirmed the model was 25C eligible and that Efficiency Maine had the household under the 150 percent AMI threshold based on their 2025 tax return.
Here is the stack they ended up with. 25C federal tax credit: $2,000 (30 percent of install, capped). Efficiency Maine instant rebate: $2,400. HEEHRA rebate: $4,000 (50 percent tier for their income bracket). Utility co-op rebate: $500. Total incentives: $8,900. Net cost after incentives: $5,900 on a $14,800 install.
First winter operating cost. The heat pump covered 93 percent of heating load with electric. Resistance backup kicked in for three of the coldest nights. Total electric bill increase: $1,850 for the winter. Total fuel oil eliminated: $4,600. First-year savings: $2,750. Payback on the $5,900 net: 2.1 years.
The parts that surprised them. One, the HEEHRA paperwork took three hours, not three weeks. The installer had the forms. Two, the comfort level was better than the oil boiler because the system ran all day at low power instead of cycling hard. Three, the cooling function in summer meant they could ditch their two window AC units, which saved another $140 in electric for July and August.
The lesson: Maine replacing oil with a cold-climate heat pump is the highest-payback scenario in the country. The same family in Nebraska replacing an 80 percent gas furnace would have seen a 9 to 12 year payback. The calculator above shows your payback for your specific stack.
Spend 30 minutes on r/heatpumps, r/centralmass, or r/hvacadvice and the same arguments repeat every week. Here is what the community tends to converge on, paraphrased for the FigureNerd voice.
Q: "My contractor says I need a 4-ton heat pump. My old furnace was 60,000 BTU. Is he oversizing?"
Community consensus: probably yes, and this is the single most common installer mistake. Old furnaces were oversized by habit; new heat pumps should be sized to a Manual J load calculation, not to the old furnace's nameplate. Ask for the Manual J. If the contractor cannot produce one, get a different contractor. Oversized heat pumps short-cycle, run loud, and sacrifice efficiency. A properly sized cold-climate heat pump is often 1 to 1.5 tons smaller than the furnace it replaces.
Q: "Is dual-fuel worth it or should I rip the gas furnace out entirely?"
Community consensus: dual-fuel makes sense if your existing gas furnace is under 10 years old and your electricity rate is over $0.22 per kWh. In that case, running the heat pump above 25 degrees F and the gas furnace below gives you the best of both. If your furnace is over 15 years old or your electricity rate is under $0.15 per kWh, skip dual-fuel and go with a full cold-climate heat pump. Simpler, cheaper, and the backup resistance is enough for 3 to 5 days a year of extreme cold.
Q: "Installer won't help with the HEEHRA paperwork. Should I find a new installer?"
Community consensus: yes. HEEHRA is state-administered and the forms are not complicated once you have done one, but an installer who refuses to help is either unfamiliar with the program or does not want the rebate tracked (which is a red flag). Find an installer listed on your state energy office's qualified contractor list. The list exists precisely so homeowners can find installers who do the paperwork correctly.
The heat pump is one of the few energy upgrades where the math genuinely works in your favor once you find the rebates. Three quotes, one hour on energy.gov, and a contractor who knows the state paperwork. Three pieces. Your Rebate Turd loses every time you take them in order.
We show our math so you can trust the number. Here is the order of operations the calculator runs.
Where we simplify. We do not model variable electricity rates (time-of-use), seasonal fuel price swings, inflation on fuel over the 15-year window, cooling savings (air conditioning becomes essentially free), resale premium from an electric home, or the cost of electrical panel upgrades some installs require. For specific installer-level accuracy, have your HVAC contractor run a Manual J load calculation plus a DOE-approved energy model.
FigureNerd does not sell heat pumps and we do not want you to install one that does not pay back. Here is where the math usually says "not yet."
Most heat pump installs pay back in 6 to 12 years when you stack any state rebate and the HEEHRA rebate if your income qualifies. Note: the federal 25C tax credit (worth up to $2,000) expired December 31, 2025 -- it does not apply to 2026 installations. The exact payback depends on three inputs that swing the math hard: your climate zone, your current fuel (replacing fuel oil or propane pays back fastest, replacing cheap natural gas pays back slowest), and your electricity rate. A household replacing electric baseboard in a mixed climate can see 4 to 6 year payback. A household replacing a 95 percent efficient gas furnace in a low-rate region can see 12 to 18 year payback.
The IRA 25C Energy Efficient Home Improvement Credit expired December 31, 2025 per the One Big Beautiful Bill (OBBB, Public Law 119-21, signed July 4, 2025). It is not available for heat pumps installed in 2026 or later. While it was active (tax years 2023 through 2025), it covered 30 percent of the installed cost of a qualifying heat pump, capped at $2,000 per taxpayer per year. If you installed a qualifying heat pump in 2025, you may still claim the credit on your 2025 federal tax return (IRS Form 5695). For current incentives, check energystar.gov/rebate-finder.
Yes. Modern cold-climate heat pumps (CCHPs) are rated to operate efficiently down to minus 15 degrees Fahrenheit and will still produce heat (at reduced efficiency) below minus 20. The old rule that heat pumps quit below freezing was true for 1990s-era equipment and is not true for 2020-and-later inverter-driven cold-climate models. Maine, Vermont, and Minnesota are now among the fastest-growing heat pump adoption states precisely because the cold-climate tier works. A properly sized CCHP paired with a small resistance backup (or a retained gas furnace in a dual-fuel setup) handles even the coldest US climate zones.
Installed cost for a whole-home heat pump system ranges from $8,000 to $16,000, depending on climate tier and home size. Standard air-source heat pumps for mixed and hot climates run $8,000 to $11,000 installed. Cold-climate heat pumps run $11,000 to $16,000 installed because the inverter compressors and freeze-rated refrigerant lines cost more. Dual-fuel hybrid systems (heat pump plus retained gas furnace as backup) run $13,000 to $18,000 installed. Ductless mini-split systems start lower, around $4,000 to $7,000 per zone, but add up fast for whole-home coverage.
It depends on three things: the ratio of your electricity rate to your gas rate, the efficiency of your existing gas furnace, and your climate. As a rough rule: in regions where electricity is under $0.14 per kWh and natural gas is over $1.50 per therm, a modern heat pump typically operates cheaper than a gas furnace year over year. In regions with very cheap gas (under $1.00 per therm) and high electricity rates (over $0.22 per kWh), a 95 percent efficient gas furnace can still be cheaper to operate. For propane and fuel oil, heat pumps almost always win on operating cost. For electric baseboard resistance, a heat pump cuts operating cost by 50 to 70 percent.
HEEHRA (now officially called HEAR -- Home Electrification and Appliance Rebates) is a federal rebate program from the 2022 Inflation Reduction Act. It provides up to $8,000 per household toward a heat pump for households under 150 percent of area median income (AMI). Households under 80 percent AMI may have 100 percent of project cost covered up to $8,000. Households between 80 and 150 percent AMI may get 50 percent covered. Households above 150 percent AMI do not qualify for HEEHRA. HEEHRA survived the 2025 One Big Beautiful Bill intact -- only the 25C and 25D tax credits were terminated by that legislation, not the rebate programs.
Availability depends entirely on your state. As of early 2026, approximately 23 states have active programs accepting applications, including Nevada, New Mexico, and New York. Delaware is in active launch phase. Texas, Wyoming, and North Dakota are funded but have not yet launched. Florida and South Dakota declined their federal allocation entirely -- residents of those states have no access to HEEHRA or HOMES rebates. Check your state energy office or energystar.gov/hear for current status before assuming the rebate is available to you.
Disclaimer. This article is for educational purposes only and does not constitute engineering, tax, or financial advice. Heat pump payback varies significantly by specific home construction, climate, utility rates, installer workmanship, and program availability. Rebate programs change. Eligibility rules change. Always verify current program status with your state energy office and get at least three installer quotes before committing. Consult a qualified HVAC contractor for a Manual J load calculation and a licensed tax professional for eligibility on federal tax credits.