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Guide to Nashville Heat Pump Tax Credits & Rebates

New heat pump tax credits and rebates are available for energy-efficient HVAC equipment, making them an attractive option if you’re considering installing a new heating system. Heat pumps are quiet, eco-friendly, and now come with strong financial incentives.



Inflation Reduction Act Heat Pump Tax Credit

Heat Pump Tax Credits Nashville, TN

Resources for Heat Pump Incentives

In early 2023, the U.S. government passed the Inflation Reduction Act [1], which includes new tax credits and rebates for homeowners who install energy-efficient heat pumps in their homes for space and water heating. With these incentives, installing a heat pump with Hoffmann Brothers is more affordable than ever. We’ll break down all there is to know about the new heat pump incentives.


Under the Inflation Reduction Act of 2022, federal income tax credits for energy efficiency home improvements will be available through 2032.Energy Star

Mitsubishi IRA 25C Tax Credit Qualified Products

Heat Pump Tax Credit 2023

A new tax credit for heat pumps went into effect on January 1st, 2023. Now, when you install an energy-efficient heat pump in your home, you can receive a tax credit of up to 30% of the total cost of the equipment and installation up to $2,000. You can deduct the credit when you file your taxes the year after installation.

Heat Pump Incentives Nashville, TN

Am I Eligible for the Tax Credits for Heat Pumps?

Eligibility for the heat pump tax credit is contingent on the following:

  • The new heat pump must be more energy efficient than your old unit, meaning if you already have a heat pump in the highest efficiency tier, you won’t be eligible for the tax credit. You will be eligible if you’re upgrading from a lower-efficiency heat pump or a furnace.
  • The new heat pump must be in the highest efficiency tier. For split-ducted and packaged systems, it must have a seasonal energy efficiency rating (SEER) of at least 15.2 and a heating seasonal performance factor (HSPF) of at least 8.1. For ductless systems, it must have a SEER of at least 16 and an HSPF of at least 9.5.

You can also receive a tax credit of 30% of the total cost to purchase and install a heat pump water heater, up to $2,000. Additionally, the program provides a tax credit of up to $600 to help cover the costs of any electrical upgrades needed to install a heat pump. This can help offset the cost of electrical upgrades if you’re upgrading from a furnace to a heat pump.

However, homeowners should keep in mind the total limit for an energy-efficiency tax credit in one year is $3,200 per household.


Tax Credits on Furnaces and Air Conditioners

If a heat pump isn’t the right choice for your home, you can still take advantage of new tax credits for installing energy-efficient furnaces and air conditioners.

You could receive the following:

  • A $600 tax credit for installing a gas furnace with an Annual Fuel Utilization Efficiency (AFUE) of 97 or more.
  • A $600 tax credit for installing a packaged air conditioner with a SEER of at least 15.2 and a split-ducted or ductless air conditioner with a SEER of at least 16.

Heat Pump Rebates – How to Qualify

The U.S. Department of Energy has created the High-Efficiency Electrical Home Rebate (HEEHR) program [2] to incentivize home energy improvement projects. The program has set aside $4.5 billion for rebates, including point-of-sale heat pump rebates.

If you’re considering installing a heat pump space heater in your Nashville home, you could receive a rebate of up to $8,000. If you install a heat pump water heater, you could receive up to $1,750. The HEEHR program will likely start in mid-2023 and end in September 2031, but it could end sooner if funding runs out.

Heat Pump Tax Credit 2023 Nashville, TN

Heat Pump Rebates & Household Income

The amount of your rebate depends on your household income as follows:

  • If your household income is less than 80% of the local median income in your area, you’re eligible for a 100% rebate of up to $8,000.
  • If your household income is between 80% and 150% of the local median income in your area, you’re eligible for a 50% rebate up to the same limits. In other words, you would have to spend $16,000 on heat pump installation to claim the capped amount of $8,000.
  • If your household income is above 150% of the local median income in your area, you aren’t eligible to receive a rebate.


Mass Save Heat Pump Rebate

The Mass Save Heat Pump Rebate is available for energy-efficient heat pumps with a SEER of at least 15.2 and a minimum HSPF depending on the type of system you install [3]. Call Hoffmann Brothers Nashville at 615-515-3015 to book an estimate with one of our Project Managers, who can help you determine what model of equipment you need to install to qualify for a rebate.

FAQs About Heat Pump Incentives in Nashville, TN


How do I claim my heat pump tax credit or rebate?

When filing your federal income tax return the year after installation, you can claim your heat pump tax credit. If you use a program like TurboTax, it should guide you through claiming relevant energy tax credits. If you have a tax preparer, let them know you need to claim the credit, and they will fill out the appropriate form.

As for heat pump rebates, the Department of Energy (DOE) is expected to issue guidelines in spring 2023 and begin funding. The DOE and the state of Nashville will likely work together to roll out a program that makes rebates accessible at the point of sale.


What types of heat pumps qualify for the heat pump tax credit?

For ductless systems, your heat pump must have a SEER of at least 16 and an HSPF of at least 9.5. For split-ducted and packaged units, your heat pump must have a SEER of at least 15.2 and an HSPF of at least 8.1.


Install a Heat Pump in Nashville, TN

If you’re thinking about installing a new heating system and want to benefit from the new heat pump tax credit and rebate program, the HVAC experts at Hoffmann Brothers can help you identify a qualifying system that is the best choice for your home. In addition to their financial incentives, heat pumps are quiet, energy efficient, improve indoor air quality, and are perfect for mild climates like Nashville.

Heat Pump Tax Credits

Heat Pump Services from Hoffmann Brothers

Our team has installed countless heat pump systems like geothermal heat pumps, ductless heat pumps, air source heat pumps, and more for local residents and business owners. We pride ourselves in providing five-star customer service and getting the job done right the first time.

Contact Hoffmann Brothers today at 615-515-3015 or request an estimate to get started on your Nashville Heat Pump Services today.