Electricity costs, tax credits and heat pump questions, answered

The Energy Efficient Home Improvement Credit (25C), which covered qualified heat pumps, water heaters, exterior doors, windows and insulation, is not allowed for property placed in service after December 31, 2025. ENERGY STAR's heat pump page still describes a credit through 2032; the IRS's later guidance ends it after 2025.

If you lease solar or sign a power purchase agreement, the Department of Energy notes you are not entitled to the tax benefits, because you do not own the system.

If you signed and paid before October 1, 2025, the IRS says you can still claim the credit when you take delivery, even after that date.

States and utilities still run their own EV and charger programs; see the rebate question below.

We use the federal minimum heating rating for new split-system heat pumps (HSPF2 7.5, about 2.2 units of heat per unit of electricity over a season) and the 80% minimum furnace efficiency; a heat pump rated higher than the minimum costs less to run than shown. Gas price is EIA's 2025 residential average; household heating use is from EIA's 2020 Residential Energy Consumption Survey.

ENERGY STAR lists lower energy bills from switching from electric resistance, propane and oil to a heat pump, and says a heat pump added to an existing furnace (dual fuel) lets you use each system based on costs. Your state's prices change the answer, which the Go Electric planner works out.

ENERGY STAR says many new certified heat pumps excel even in the coldest climates thanks to advanced compressors and refrigerants, and that a system that is too big or too small will struggle to keep you comfortable.

EIA's figure is the average revenue per kWh across all residential customers, so it includes fixed charges spread over usage. Every state's figure is on its state page.

Compare this month's kWh with the same month last year on your bill. If use jumped, look at heating, cooling and anything new; if the kWh are flat but the bill rose, it is the price.

The Go Electric planner shows what each switch, from a heat pump to an EV, would change on your bills in your state.

Federal credits for homeowners have ended (see above), so state and utility programs are most of what is left. They change often; check the program's own page for current amounts and deadlines before you buy.