Incentives, Rates, & Financing
Substantial financing and incentives are available for heat pump installations. Many of these incentives can be “stacked” to maximize upfront cost savings.
Utility Electric Rates
Many utilities offer special electric rates that lower the cost to operate a heat pump. Visit our cost of heat comparison resource for help estimating your annual energy costs of operating a heat pump with different system configurations, utilities, and rate types.
A special rate that many utilities offer is a “dual fuel” rate. Enrolling in this type of program allows your utility to control your heat pump during times of peak demand, in exchange for a highly reduced electric rate. To enroll, you must have a heat pump serving as the primary source of heat, and a natural gas, propane, or electric thermal storage system as the secondary source of heat.
Most electric cooperatives offer dual fuel rates. Minnesota Power and Otter Tail also offer dual fuel rates, although installing a second meter is required, which can be costly. View our compatible product list to make sure the model of ASHP you select is compatible with your utility's load management control system. Check with your electric utility to learn if they offer dual fuel electric rates.
Xcel Energy offers an electric space heating rate for both all-electric systems and dual fuel systems with a switchover temperature at or below 35 degrees. This is a discount applied to all electric usage from October – May. There is no cost to the customer to enroll in the rate, and no metering equipment needs to be installed. To enroll in this rate:
- Call Xcel Energy Customer Service at 1-800-895-4999
- Let them know that you would like to switch to the Electric Space Heating Rate and have an air source heat pump. They can make the change in their billing system.
- If you experience any difficulties during enrollment, request to speak with an Energy Efficiency Agent to ensure everything gets resolved smoothly.
Utility Rebates
Utility heat pump rebates range from $50 to $2,200, depending on system type and size. Visit our utility rebates database to see what your utility offers.
See rebates by utility providers
Unsure of your utility service provider? Use the interactive map provided by the Minnesota Public Utilities Commission to identify your local utility services.
See rebates by utility providers
Federal Rebate: Home Electrification and Appliance Rebate (HEAR)
New for 2026: The Home Electrification and Appliance Rebate (HEAR) will provide instant rebates to income-qualified households to help install new heat pumps for space heating and cooling. HEAR eligibility and rebate amounts will vary based on an applicant’s total household income. Rebates up to $4,000 for households whose income is between 80%-150% Area Median Income (AMI) and rebates up to $8,000 for households whose income is less than 80% AMI.
Air source heat pump equipment must be ENERGY STAR certified, cold climate rated, and installed by an Approved Contractor.
Additional Resources: MN Department of Commerce: Home Electrification and Appliance Rebate (HEAR) details. This page will be updated as more information becomes available.
Legacy 25C Tax Credit that Ended in 2025: Heat pumps installed between 1/1/2023 and 12/31/2025 may qualify for the Energy Efficient Home Improvement Credit (also known as the 25C tax credit). The amount of credit that can be claimed for a heat pump is equal to 30% of total project costs, up to $2,000. A dual fuel system where a heat pump and furnace are both installed could qualify for $2,600 (qualifying furnaces are eligible for an additional $600 tax credit). Tax credits are subject to federal program availability. Program updates and other information from the IRS can be found here.
State Rebates
Additional Minnesota state rebates will be available for heat pumps. To qualify, customers must:
- Be approved for the HEAR rebate for an air source heat pump,
- Have an energy audit within the last 18 months,
- Perform necessary air sealing and insulation upgrades, and
- Purchase and install heat pump of contractor-recommended capacity.
This program is still under development. Please refer to the MN Department of Commerce webpage for the most current updates.
Additional Resources:
- MN Department of Commerce: Heat Pump Rebate Program details. This page will be updated as more information becomes available.
Rewiring America Incentives Lookup
Use the Rewiring America's household electrification incentives calculator to see which programs you may qualify for!
Looking for incentives across multiple home improvements? The Rewiring America Calculator provides a custom breakdown of rebates and tax credits for appliance and whole-home electrification upgrades.
Local Rebate Match Programs
Several local governments are offering additional funding for heat pump installation to complement utility rebates and funding from the Inflation Reduction Act.
The City of Coon Rapids’ Green Homes Program matches an awarded utility rebate for an air source heat pump.
- 50% utility rebate match available, up to $250
- Visit the City of Coon Rapids’ Green Homes Program page for full details.
The City of Edina’s Community Climate Action Fund matches an awarded utility rebate for a cold climate heat pump.
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50% utility rebate match available to all Edina residents
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100% utility rebate match available to residents who qualify for the environmental justice bonus
Requirements and notes:
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Within 36 months before installation, applicant must have completed a Home Energy Squad “Planner” visit. Home Energy Squad is typically scheduled a few weeks out. If a visit is needed, applicants are encouraged to schedule one as soon as possible.
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Applicant must have been awarded a utility rebate for a qualifying cold climate air source heat pump.
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Applicant must apply for the cost share match for approval, prior to project completion. View the application under Step 3 of the Community Climate Action Fund page.
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Visit the City of Edina’s Community Climate Action Fund page for full details.
The City of Hopkins’ Climate Solutions Fund provides rebates for ENERGY STAR certified cold climate air source heat pump.
- Up to $1,500 rebate available to all residents
- Up to $2,500 rebate available to income-qualified residents
Requirements and notes:
- To be income-qualified, an applicant must earn 80% or less of the area median income (under $48,000 adjusted gross income).
- Visit the City of Hopkins’ Climate Solutions Fund (HCSF) Eligibility/Rebate Amounts page for the full details and application.
- The City of Minneapolis provides a bonus rebate for air source heat pumps. Up to $1,000 rebate available to all residents
- Up to $5,000 rebate available to residents living in a Green Zone
Requirements and notes:
- The equipment must qualify for Xcel Energy’s energy efficiency specification tiers for heat pump and cold climate heat pump rebates.
- The total rebate amount, between the utilities and the City of Minneapolis, cannot exceed the total cost of installing the heat pump.
- Visit Center for Energy and Environment’s bonus rebate page for more information about this and other home energy rebates.
The City of Northfield matches 50% of awarded Xcel Energy heat pump rebates, up to $2,500. Visit the City of Northfield’s Energy Efficiency Rebate page for full details.
The City of St. Louis Park’s Climate Champions for Homes cost-share program matches an awarded utility rebate for a cold climate heat pump.
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50% utility rebate match available to all residents
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100% utility rebate match available to residents who qualify for the environmental justice rate
Requirements and notes:
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Within 36 months before installation, applicant must have completed a Home Energy Squad “Planner” visit.
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Applicant must have been awarded a utility rebate for a qualifying cold climate air source heat pump.
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Applicant must complete the Climate Champions online application for approval, prior to project completion.
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Visit the City of St. Louis Park’s Climate Champions page for how to apply to the cost share application and full details.
Financing
Center for Energy and Environment (CEE) offers financing for energy upgrades, including heat pumps, through several loan programs:
- Statewide Home Improvement Loans
- Secured or Unsecured Home Energy Loans
- Many city-specific programs with lower interest rates, including 0% APR financing
Limited Time Promotions
No promotions available at this time. Check back soon for updates!
Stacking Up the Savings: Your Guide to Heat Pump Incentives
Unlock maximum savings on your heat pump. Download our easy-to-use guide to see how stacked incentives can help you save more!
Air Source Heat Pump Incentives Infographic
Looking for available incentives for your next heat pump project? The CERTs Pay for Your Projects tool makes it easy to search for rebates and funding opportunities for homeowners, businesses, schools, government entities, and nonprofits—helping you identify the support that fits your project.