Pennsylvania Heat Pump Rebates: Act 129 and State IRA Programs

For a heat pump installed in Pennsylvania in 2026, the money on the table comes from two places: rebates from your electric utility under Act 129, which any customer can claim, and the state’s incoming IRA-funded rebate programs, which can cover up to $8,000 on a heat pump for households earning below 150% of area median income. The federal tax credit that used to add another $2,000 has expired.¹ Pennsylvania heat pump rebates in 2026 are, in practice, a utility rebate for most people and a much larger state rebate for those who income-qualify once the program opens.

Utility Rebates Under Act 129

Pennsylvania’s Act 129 requires the state’s largest electric utilities to run energy efficiency programs, and those programs include rebates on qualifying heat pumps regardless of your income.² The participating utilities are PECO, PPL Electric Utilities, Duquesne Light Company, and FirstEnergy’s Pennsylvania subsidiaries. The Public Utility Commission adopted its Phase V requirements in June 2025, and new utility efficiency plans take effect June 1, 2026.³

Amounts vary by utility, equipment type, and efficiency rating. PPL Electric’s 2026 rebates run from $225 to $475 for an ENERGY STAR air-source heat pump, $225 to $350 for a mini-split heat pump, $400 to $500 for a heat pump water heater, and $500 for a ground-source heat pump.⁴ PECO’s recent rebates have been in the $200 to $300 range for air-source heat pumps, though amounts may shift under the Phase V plans.

These are smaller than the IRA rebates, but they are actually available right now and open to every residential customer of a covered utility. Some utilities offer point-of-sale discounts; others use mail-in forms or online portals. Check your utility’s energy efficiency page for the current rebate amount and the qualifying equipment list before you buy, because both change with each program phase.

The State’s IRA Rebate Programs

The Inflation Reduction Act sent money to states to fund two residential rebate programs. Pennsylvania administers both under the Penn Energy Savers initiative, run by the Department of Environmental Protection.⁵ These are direct rebates, not tax credits, so you don’t need federal tax liability to benefit.

There is a timing problem. As of early 2026, Pennsylvania is still waiting on final U.S. Department of Energy approval to launch the Home Electrification and Appliance Rebate (HEAR) program, and the Home Efficiency Rebate (HER) program will open sometime after that. The DEP submitted its HEAR application in October 2024 and received partial conditional approval in January 2025, but the full launch depends on final DOE sign-off and contractor procurement.⁶ If you are planning an installation, watch the Penn Energy Savers page for the launch announcement before you count on this money.

HEAR Rebate Amounts

Once HEAR launches, the federal maximums are:

Heat pump for space heating and cooling: up to $8,000
Heat pump water heater: up to $1,750
Electrical panel upgrade: up to $4,000
Electrical wiring: up to $2,500
Insulation, air sealing, and ventilation: up to $1,600
Electric stove, cooktop, range, or oven: up to $840
Electric heat pump clothes dryer: up to $840

The combined total is capped at $14,000 per household. Heat pumps must carry ENERGY STAR certification to qualify.⁷ Pennsylvania can narrow eligibility beyond these federal parameters, so the final program details may differ.

HER Rebate Amounts

The Home Efficiency Rebate program rewards whole-home projects that achieve measurable reductions in overall energy use. A project cutting energy consumption by 35% or more can qualify for up to $8,000, and projects in the 20% to 34% range qualify for smaller amounts.⁸ A heat pump replacing an older furnace or boiler often anchors an HER-eligible project.

Who Qualifies

Both HEAR and HER are limited to households earning less than 150% of area median income. Two tiers determine how much of the project the rebate covers:

Below 80% of AMI: up to 100% of project costs, subject to the per-item caps
Between 80% and 150% of AMI: up to 50% of project costs, subject to the per-item caps

Households above 150% of AMI are not eligible.⁶

The DEP plans to verify income with an IRS Form 1040 and W-2 for each household member, plus proof of residence. There’s a shortcut: if anyone in your household receives Medicaid, SNAP, WIC, or Weatherization Assistance Program benefits, you automatically qualify for the below-80% tier without separate income paperwork.⁶ Many eligible households miss this path.

The Expired Federal Tax Credit

The Section 25C Energy Efficient Home Improvement Credit gave a 30% credit on qualified heat pump installations, capped at $2,000 per year, for property placed in service between January 1, 2023, and December 31, 2025.⁹ For installations in 2026 or later, the credit is gone. The related credit for electrical panel upgrades expired on the same date.¹

If you installed a qualifying heat pump in 2025 and haven’t filed yet, you can still claim the credit on your 2025 return using IRS Form 5695. The credit is nonrefundable, so it only offsets taxes you actually owe, and any excess doesn’t carry forward.¹⁰

Panel and Wiring Upgrades

Many older Pennsylvania homes need a bigger electrical panel or new wiring before a heat pump can be installed, especially if the existing panel is 100 amps or less. Panel work alone can add $2,000 to $4,000 to the project.

Under HEAR, panel upgrades qualify for up to $4,000 and wiring upgrades for up to $2,500, subject to the same income tiers as the heat pump rebate itself.⁷ With the 25C credit’s $600 panel-upgrade component now expired, HEAR is the only federal channel for panel money in 2026.

Combining Rebates

Act 129 utility rebates operate independently from the IRA-funded programs, so a homeowner can receive both a HEAR rebate and a utility rebate on the same installation. The main limitation is that total rebates generally cannot exceed the actual project cost.

If you installed in 2025, the arithmetic can work out well: you can claim the 25C credit on your 2025 return and still apply for HEAR once Pennsylvania launches the program, since the credit and the rebate come from separate funding streams. Keep every receipt and manufacturer document from a 2025 installation so both options stay open.

Documentation to Keep

For the state IRA rebates, Pennsylvania plans to require:

Income verification: IRS Form 1040 and W-2s for every household member, or proof of participation in Medicaid, SNAP, WIC, or WAP
Proof of residence, such as a recent utility bill matching the installation address
An installer invoice showing the installation date, indoor and outdoor model numbers, and total project cost
ENERGY STAR certification for the heat pump

⁶

Utility rebate forms differ by provider but ask for similar information: model numbers, efficiency ratings, installation date, and contractor details. PPL and PECO publish qualifying equipment lists on their program sites, so confirm your model is listed before you buy.

For a 2025 installation claimed under 25C, you also need the manufacturer’s written certification that the equipment meets the CEE highest efficiency tier, plus, starting with 2025 installations, the qualified manufacturer identification number (a four-character alphanumeric code) for each qualifying item.⁹ You don’t submit these with the return, but you need them if the IRS asks.

A Note on Taxes

Whether IRA rebates count as taxable income can affect your bottom line. The IRS addressed the tax treatment of Home Energy Rebates payments in Announcement 2024-19.⁹ Utility rebates have historically been treated as purchase price adjustments rather than income, but IRA rebates are structured differently, and treatment can depend on your circumstances. Consult a tax professional once you receive rebate funds.

What to Do Now

If you installed a qualifying heat pump in 2025, file Form 5695 with your 2025 return to claim the 25C credit. If you’re planning an installation in 2026, do two things: check the DEP’s Inflation Reduction Act page for the Penn Energy Savers launch status, and call your electric utility (or check its efficiency program page) for current Act 129 rebate amounts and qualifying equipment. Phase V utility plans take effect June 1, 2026, and rebate structures may shift then.³ Households above 150% of area median income won’t qualify for the state IRA rebates; for those homeowners, the utility rebate is the only incentive on offer.

1
Office of the Law Revision Counsel. 26 USC 25C – Energy Efficient Home Improvement Credit
2
Pennsylvania Public Utility Commission. Act 129
3
Pennsylvania Public Utility Commission. Energy Efficiency and Conservation (EEC) Program
4
PPL Electric Savings. Rebates Overview – PPL Electric Savings
5
Department of Environmental Protection. Inflation Reduction Act
6
Pennsylvania Department of Environmental Protection. Home Energy Rebates
7
ENERGY STAR. Home Electrification and Appliances Rebate Program
8
U.S. Department of Energy. Home Upgrades
9
Internal Revenue Service. Energy Efficient Home Improvement Credit
10
ENERGY STAR. Federal Tax Credits for Energy Efficiency