Should I buy a heat pump now or should I wait?
Deciding the best time to buy a heat pump can be challenging. Some incentives are already here, and some incentives are arriving later. However, not all the details about future incentives have been declared. This post covers what we know now (as of the last update) to help you decide whether to buy a heat pump sooner or later.
What we know now
Available now
- Rebates from most utilities. Some utilities will increase their rebates starting January 2024.
- Tax credits from the federal government
- Rebates from the cities of Coon Rapids, Edina, Hopkins, St. Louis Park, Minneapolis, and Northfield for their residents
Available later
- Rebates from the federal Inflation Reduction Act (IRA)
- Rebates from the State of Minnesota
Many of these incentives can be stacked. For example, someone who buys a heat pump could receive a utility rebate, city cost-share funding, and a federal tax credit. For dollar amounts, qualifications, and other details, please visit our Incentives and Financing page.
When you might want to buy a heat pump sooner
If you need to replace equipment soon. You have more freedom to get the heat pump system you want if you schedule an installation before any current equipment fails. An emergency replacement can be inconvenient, expensive, and force you to choose from whatever equipment the installer has available at the time. The release date for the IRA and state rebates has not been declared, so it may not be worth hoping your current equipment lasts until the rebates are available. There are robust utility rebates and federal tax credits available now to help you purchase a heat pump sooner.
If you have a higher household income. You do not need to wait for the IRA and state rebates if your household income is too high to qualify for them. Most of the IRA and state rebates are targeted at households earning less than 150% of their area median income (AMI). You can download the Minnesota State Energy Office’s AMI lookup table to determine your eligibility. If you would not qualify, utility rebates and tax credits are available now without any income qualifications.
There is a different IRA offering called the Home Efficiency Rebates rebate program (HOMES) that is less well-known but may be open to households with higher incomes. HOMES will award rebates based on how much you improve your home’s energy efficiency. Refer to the HOMES section of the State Energy Office’s rebate page to learn more about this program’s development.
If you do not want to deal with market uncertainty. The IRA and state rebates are unprecedented in the HVAC market and may temporarily disrupt pricing, equipment availability, and contractor availability. Many parties are collaborating to better prepare the market. But if you would prefer to not see how the market adapts, you can take advantage of the robust utility incentives and federal tax credits available now.
Ready for the next step? Contact a member of our Preferred Contractor Network to get a quote for your home. Preferred Contractor Network members are experienced with heat pump technology and have completed our training, provided documentation, and demonstrated a quality installation.
When you might want to buy a heat pump later
If you have a middle or lower household income. It may be worth waiting for the significant IRA and state rebates if your household income is less than 150% of your area median income (AMI). Households earning less than 80% of their AMI are eligible for the maximum rebate amounts. Households earning between 150% and 80% of their AMI are eligible for half of the maximum. You can see how your household income is categorized on the Minnesota State Energy Office’s AMI lookup table.
If you have a newer central AC. Since a heat pump replaces a central AC, it may not make sense to get a heat pump if you have a newer AC. A better time to upgrade to a heat pump is when your AC is failing or older than 15 years. With a newer AC, it may be more worthwhile to see what incentives and opportunities emerge in the future.
If your home has comfort issues or challenges with ice dams. Ice dams and comfort issues may mean your home could use more weatherization before you install a heat pump. The best ways to improve your home’s weatherization are to invest in quality insulation and air sealing. These improvements make your home more comfortable, save energy, and reduce the risk of ice dams. Once your home is properly weatherized, you may be able to save money upfront on a heat pump (by installing a smaller sized unit) and save money ongoing (by having lower heating and cooling bills). Some heat pump incentives may even require that your home is weatherized beforehand to be eligible. Schedule a low-cost energy audit if you want to learn about your home’s current weatherization.
Want to get ready for a heat pump in the meantime? Read our blog post about home energy efficiency and other ways to maximize a heat pump's benefits.
Looking for more guidance?
To learn more about heat pumps, continue exploring News & Case Studies or visit the FAQs page. If you have further questions, contact us at info@mnashp.org.
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