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50-State Ranking
ALAlabama$589/yrAKAlaska$936/yrAZArizona$572/yrARArkansas$453/yrCACalifornia$1111/yrCOColorado$603/yrCTConnecticut$1038/yrDEDelaware$605/yrDCDistrict of Columbia$870/yrFLFlorida$584/yrGAGeorgia$530/yrHIHawaii$1459/yrIDIdaho$442/yrILIllinois$600/yrINIndiana$594/yrIAIowa$470/yrKSKansas$524/yrKYKentucky$523/yrLALouisiana$457/yrMEMaine$1127/yrMDMaryland$756/yrMAMassachusetts$1143/yrMIMichigan$716/yrMNMinnesota$549/yrMSMississippi$522/yrMOMissouri$432/yrMTMontana$471/yrNENebraska$431/yrNVNevada$512/yrNHNew Hampshire$965/yrNJNew Jersey$848/yrNMNew Mexico$539/yrNYNew York$1040/yrNCNorth Carolina$501/yrNDNorth Dakota$400/yrOHOhio$645/yrOKOklahoma$463/yrOROregon$537/yrPAPennsylvania$740/yrRIRhode Island$1105/yrSCSouth Carolina$565/yrSDSouth Dakota$498/yrTNTennessee$480/yrTXTexas$575/yrUTUtah$472/yrVTVermont$854/yrVAVirginia$582/yrWAWashington$506/yrWVWest Virginia$541/yrWIWisconsin$667/yrWYWyoming$471/yr
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Sizing guideCapacity, first-hour rating, and temperature-rise fit.Accessories hubInstall extras, code-adjacent parts, and paid-link accessory picks.Rating plate guideFind and decode the label on your water heater.Tax credits & rebatesFederal 25C expired. State HEAR status and active rebate programs.Heat pump vs electric tankAnnual cost comparison using verified model specs.Heat pump vs gas tanklessOperating cost, install complexity, and 10-year ownership compared.Replacement cost guideEquipment, labor, and hidden costs by type. 2026 data.DOE 2029 standardsWhat changes in 2029 and which product classes move first.
Home / Guides / Tax Credits
Guide

Water Heater Tax Credits

The federal 25C tax credit expired December 31, 2025. State rebates and IRA HEAR programs may still apply.
The federal tax credit is expired. This page covers what happened, what still applies, and where to look for savings.

Federal 25C credit: expired

The Energy Efficient Home Improvement Credit under 26 USC 25C provided up to $2,000 (30% of cost) for qualifying heat pump water heaters. It was enacted by the Inflation Reduction Act in August 2022.

The One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) accelerated the credit's termination from December 31, 2032 to December 31, 2025.

If you installed before December 31, 2025: You can still claim the credit on your 2025 tax return (filed in 2026) using IRS Form 5695. Keep receipts, the manufacturer's certification, and the QMID code.

If you install in 2026 or later: No federal tax credit is available for heat pump water heaters.

Sources: IRS.gov, 26 USC 25C

IRA HEAR rebates by state

The IRA Home Electrification and Appliance Rebates (HEAR) are separate from the expired tax credit. They provide up to $1,750 for income-qualified households. Each state administers its own program on its own timeline.

StateHEAR StatusVerified
AlaskaNot launched2026-03-12
AlabamaNot launched2026-03-12
ArkansasNot launched2026-03-12
ArizonaLaunched2026-03-26
CaliforniaLaunched (paused)2026-03-14
ColoradoLaunched2026-03-12
ConnecticutNot launched2026-03-12
District of ColumbiaLaunched2026-03-12
DelawareNot launched2026-03-12
Floridadeclined2026-03-26
GeorgiaLaunched2026-03-26
HawaiiNot launched2026-03-26
IowaNot launched2026-03-12
IdahoNot launched2026-03-12
IllinoisNot launched2026-03-26
IndianaLaunched2026-03-26
KansasNot launched2026-03-12
KentuckyNot launched2026-03-12
LouisianaNot launched2026-03-12
MassachusettsNot verified2026-03-14
MarylandLaunched2026-03-12
MaineLaunched2026-03-12
MichiganLaunched2026-03-26
MinnesotaNot launched2026-03-26
MissouriNot launched2026-03-12
MississippiNot launched2026-03-12
MontanaNot launched2026-03-12
North CarolinaLaunched2026-03-26
North DakotaNot launched2026-03-12
NebraskaNot launched2026-03-12
New HampshireNot launched2026-03-12
New JerseyLaunched2026-03-12
New MexicoLaunched2026-03-12
NevadaLaunched2026-03-26
New YorkLaunched2026-03-12
OhioNot launched2026-03-12
OklahomaNot launched2026-03-12
OregonNot launched2026-03-14
PennsylvaniaNot launched2026-03-12
Rhode IslandLaunched2026-03-12
South CarolinaNot launched2026-03-12
South Dakotadeclined2026-03-26
TennesseeNot launched2026-03-12
TexasNot launched2026-03-12
UtahNot launched2026-03-12
VirginiaNot launched2026-03-12
VermontLaunched2026-03-12
WashingtonLaunched2026-03-12
WisconsinLaunched2026-03-26
West VirginiaNot launched2026-03-12
WyomingNot launched2026-03-12

Source: DOE Home Energy Rebates. Verification dates shown per state.

Active state and utility rebates

These programs are separate from the expired federal tax credit. Amounts and eligibility vary. Verify at the program website before applying.

StateAmountProgram
AlaskaVaries by energy improvement; up to $10,000 for comprehensive upgrades including water heatersAlaska Housing Finance Corporation
Alabama$200Alabama Power
Arkansas$200Entergy Arkansas
Arizona$250-$350Arizona Public Service (APS)
Arizona$250Salt River Project
California$1,000-$3,000 depending on income and programCalifornia Public Utilities Commission / Energy Commission
California$1,000-$2,500BayREN / Association of Bay Area Governments
Colorado$500-$1,000Colorado Energy Office / Xcel Energy / utility partners
Connecticut$750Eversource / United Illuminating (Energize CT)
District of Columbia$500-$1,000DC Sustainable Energy Utility
Delaware$500-$750Energize Delaware / Delaware Sustainable Energy Utility
Florida$150-$300Florida Power & Light (FPL)
Florida$200Duke Energy Florida
Georgia$200Georgia Power
Hawaii$500 (40-54 gal) / $700 (55-82 gal)Hawaii Energy (ratepayer-funded, administered by Leidos)
Iowa$300-$500MidAmerican Energy / Alliant Energy
Idaho$500Idaho Power
Illinois$500-$750ComEd / Ameren Illinois
Indiana$200-$400Various utilities (Duke Energy Indiana, AES Indiana, Indiana Michigan Power)
Kansas$200-$400Evergy

Related guides

Replacement cost guideEquipment, labor, and hidden costs by typeHeat pump vs electric tankAnnual cost comparisonHeat pump vs gas tanklessDifferent fuels, different trade-offs
Sources. IRS.gov, DOE, state energy office websites, DSIRE.Methodology