Michigan Heat Pump Rebates & Incentives Guide

Quick Answer: Michigan Heat Pump Rebates at a Glance

Michigan offers three layers of heat pump incentives:

State level: The Michigan Home Energy Rebates (MIHER) program, administered by the Michigan Department of Environment, Great Lakes, and Energy (EGLE), launched April 23, 2025. It includes two sub-programs: the Home Electrification and Appliance Rebate (HEAR) program and the Home Efficiency Rebate (HER) program, both funded through the federal Inflation Reduction Act.

Federal level: The IRS Energy Efficient Home Improvement Credit (§25C) provides 30% back on qualifying heat pump costs, up to $2,000 per year. Geothermal systems qualify under the Residential Clean Energy Credit (§25D) with no dollar cap.

Utility level: DTE Energy, the Coldwater Board of Public Utilities (CBPU), and the Lansing Board of Water and Light (BWL) each offer their own rebate programs.

Correctly stacking these incentives can offset a substantial portion of installation costs. Apply for utility rebates through your contractor, claim state rebates through EGLE's MIHER portal, and file IRS Form 5695 at tax time.

Michigan State-Specific Heat Pump Rebate Programs

EGLE administers both components of MIHER. The program website is michigan.gov/egle, under the Home Energy Rebate Programs section.

Home Electrification and Appliance Rebate (HEAR) Program

HEAR is a point-of-sale rebate. It provides a discount at the time of purchase or installation, rather than a tax refund. It is funded under IRA §50123 and income-capped at 150% of Area Median Income (AMI).

Based on the April 2025 MIHER press release (Michigan EGLE), identified incentive amounts include:

• Heat pump HVAC systems: up to $8,000
• Heat pump water heaters: up to $1,750
• Electric cooktop or dryer: up to $840

EGLE's program website had not published the full HEAR incentive schedule as of the program's launch. Consult EGLE directly at michigan.gov/egle for current published amounts and eligible equipment specifications.

Income eligibility: Consult EGLE for specific income eligibility tiers and rebate amounts. The program is capped at 150% AMI.

Home Efficiency Rebate (HER) Program

HER is performance-based, funded under IRA §50122. Rebate amounts are tied to modeled or measured whole-home energy savings, not individual equipment purchases. Heat pumps contribute to the energy savings calculation by replacing less efficient fossil fuel systems.

• Households achieving 20% to 34% modeled energy savings: up to $2,000
• Households achieving 35% or more modeled energy savings: up to $4,000
• Low-to-moderate income (LMI) households: multiplier applies, up to $8,000

A qualified energy auditor must model projected savings before installation. Consult EGLE for the list of approved auditors and the current application process (Michigan EGLE, MIHER program website).

Key distinction between HEAR and HER: HEAR targets specific equipment purchases for income-eligible households. HER targets whole-home performance improvements for any income level, with larger benefits for LMI households. You cannot claim both HEAR and HER on the same measure, but you may use one program for a heat pump and the other for separate improvements.

Federal Tax Credits for Heat Pumps in Michigan

These credits apply to all Michigan residents regardless of utility provider or state program participation.

Energy Efficient Home Improvement Credit (§25C)

The IRS §25C credit covers 30% of the cost of qualifying improvements. Claim it on IRS Form 5695 (IRS.gov, §25C guidance). Annual caps apply per category:

The $2,000 cap for heat pumps is a combined annual limit for heat pump HVAC and heat pump water heaters. You can claim this credit every year you make qualifying improvements.

Equipment requirements: The heat pump must meet ENERGY STAR Most Efficient criteria or the Consortium for Energy Efficiency (CEE) Tier standard. Your installer should provide an AHRI certificate confirming the unit qualifies. Air-source systems must meet specific efficiency ratings; consult the ENERGY STAR website or your installer for current thresholds.

Stackability: §25C stacks with MIHER state rebates and utility rebates. If you receive a state rebate excluded from gross income, you may need to reduce your credit basis. Consult a tax professional before filing.

Residential Clean Energy Credit (§25D)

Geothermal (ground-source) heat pumps qualify under §25D rather than §25C (IRS.gov, §25D guidance). The credit is 30% of total installed cost with no dollar cap through 2032. It steps down to 26% in 2033 and 22% in 2034.

For example, a 30% credit on a $20,000 geothermal system equals $6,000 back at tax time.

Claim §25D on IRS Form 5695, the same form used for §25C. You cannot claim both credits on the same piece of equipment.

Local Utility Heat Pump Rebates in Michigan

You must be a customer of the specific utility to qualify. Check your electric bill to confirm your provider before applying.

DTE Energy

DTE's Residential Energy Efficiency Program offers rebates for heat pumps, air conditioning, insulation, lighting, and select appliances to DTE electric service customers (DTE Energy, Residential Energy Efficiency Program, newlook.dteenergy.com).

DTE's program requires working through a participating contractor. The contractor will assess your home and identify equipment that qualifies for rebates. Consult DTE Energy's program website directly for specific rebate amounts and efficiency requirements, as they vary by equipment type and are updated periodically.

To start, visit DTE's rebate portal or call DTE customer service to find a participating contractor.

Coldwater Board of Public Utilities (CBPU)

CBPU's Residential Energy Efficiency Rebate Program serves Coldwater, Michigan residential electric customers (Coldwater Board of Public Utilities, coldwater.org/232/Energy-Optimization).

Eligible measures include:

• Air-source heat pumps
• Mini-split heat pumps
• ENERGY STAR heat pump water heaters
• High-efficiency central air conditioners
• Pool pumps and smart thermostats

Efficiency requirement: Heat pumps and air conditioners must have a SEER greater than 16 to qualify. Projects must be completed within the program year (January 1 through the program end date). Consult CBPU directly for specific rebate dollar amounts, as the source material does not publish per-unit figures.

Lansing Board of Water and Light (BWL)

BWL offers rebates to residential homeowners and renters who are BWL customers (Lansing Board of Water and Light, lbwl.com/energysavers).

BWL's eligible categories include heating and cooling electrification, which covers heat pump installations. Some rebate amounts vary by equipment efficiency or capacity. Application forms are available through BWL's online portal.

BWL also covers appliance recycling, ENERGY STAR appliances, lighting, and EV charging.

Recent Regulatory Changes Impacting Heat Pumps in Michigan

Three pieces of legislation passed in 2023 and 2024 directly affect heat pump adoption in Michigan.

Public Act 235 of 2023

Enacted in November 2023, Public Act 235 substantially expanded Michigan's renewable energy requirements (DSIRE, Renewable Energy Standard). Targets are now:

• 50% renewable energy by 2030
• 60% renewable energy by 2035
• 80% clean energy by 2035
• 100% clean energy by 2040

As Michigan's grid decarbonizes, heat pumps become progressively cleaner over their operational lifetime. The Michigan Public Service Commission (MPSC) oversees implementation of these standards (MPSC, michigan.gov/mpsc/commission/workgroups/2023-energy-legislation/renewable-energy-standards-and-plans).

Public Act 229 of 2023

Public Act 229, the Clean and Renewable Energy and Energy Waste Reduction Act, amends Michigan's 2008 energy law (Act 295). It sets revised Energy Waste Reduction targets for electric and natural gas providers (DSIRE, Energy Waste Reduction Targets).

A key provision for heat pump owners: utilities' Energy Optimization Plans may now include optional measures for "Efficient Electrification." This allows utilities to count heat pump installations toward their efficiency targets, incentivizing robust rebate programs. The MPSC oversees Energy Optimization Plan filings (MPSC, michigan.gov/mpsc/regulatory/energy-optimization).

H.B. 5028 of 2024 (Solar Access Law)

Enacted in June 2024, H.B. 5028 declares that HOA provisions prohibiting solar energy systems are invalid and unenforceable as contrary to public policy (DSIRE, Solar Access Law). The law explicitly extends the same protections to:

• Air-source heat pumps
• Ground-source heat pumps
• Insulation, reflective roofing, energy-efficient appliances, and EV charging equipment

This law overrides HOA restrictions on heat pump installations.

Comparing Michigan Heat Pump Incentives: A Quick Reference

HEAR and HER cannot be combined on the same measure. §25C stacks with all rebate programs listed. §25D applies only to geothermal and does not combine with §25C on the same unit.

Federal Tax Considerations

Heat pump rebates can provide significant federal tax benefits for both businesses and individuals in Michigan. Key provisions under the Internal Revenue Code (IRC) that may apply include IRC § 25C and IRC § 25D, which offer credits for energy-efficient improvements and residential clean energy investments, respectively.

• IRC § 25C: Provides a credit of 30% of the cost of qualifying heat pumps and heat pump water heaters, with an annual cap of $2,000, separate from the $1,200 general envelope cap.
• IRC § 25D: Offers a 30% uncapped credit for geothermal heat pumps (ground-source), provided the equipment meets the CEE highest-efficiency tier or ENERGY STAR Most Efficient standards.
• Form 5695: Taxpayers must use this form to claim the credits under both IRC § 25C and § 25D.
• Eligibility Requirements: Ensure that the heat pump or water heater meets specific energy efficiency criteria to qualify for the credits.
• State Conformity: While Michigan generally conforms to federal tax provisions, it's advisable to verify any state-specific implications with a CPA.

This is not tax advice — consult a CPA familiar with Heat pump rebates for your specific situation.

Available Rebates & Incentives

• Coldwater Board of Public Utilities - Residential Energy Efficiency Rebate Program: Offers cash incentives for installing energy-efficient equipment, including heat pumps. Eligibility is for Coldwater residential electric customers.
• Lansing Board of Water & Light - Residential Energy Efficiency Rebates: Provides rebates for energy-efficient appliances and heating/cooling systems for BWL customers. Eligibility includes homeowners and renters.
• DTE Energy (Electric) - Residential Energy Efficiency Program: Offers various rebates for heat pumps and other energy-saving appliances to DTE electric service customers. Must meet specific program requirements.
• Michigan - Home Electrification and Appliance Rebate (HEAR) Program: A future program providing rebates for energy-efficient home improvements, specifics to be announced.
• Michigan - Home Efficiency Rebate (HER) Program: Designed to provide rebates for whole-home energy improvements based on energy savings and income levels.

Federal Tax Deductions

The IRS offers the Energy Efficient Home Improvement Credit (IRS §25C), providing a 30% credit up to $2,000 per year for qualifying heat pumps and related improvements. Additionally, the HOMES Rebate Program under the IRA offers performance-based rebates for energy efficiency upgrades, while the HEAR program provides rebates specifically for heat pumps. Consult a tax professional for personalized advice and to ensure compliance with current tax regulations.

Frequently Asked Questions

What is the timeline for receiving rebates through the Michigan Home Energy Rebates (MIHER) program?

Rebates are typically processed after the installation is complete, but specific timelines can vary. It's best to check the MIHER portal or contact EGLE directly for the most accurate information.

Are there any income restrictions for the HEAR program in Michigan?

Yes, the HEAR program is capped at 150% of the Area Median Income (AMI). For specific income eligibility tiers and rebate amounts, consult the EGLE website.

Can I stack federal and state rebates for my heat pump installation in Michigan?

Yes, you can stack federal tax credits with state and utility rebates, but ensure you follow the specific application processes for each to maximize your savings.

What are common mistakes applicants make when applying for heat pump rebates in Michigan?

Common mistakes include failing to consult the current rebate amounts and eligibility criteria on the EGLE website, or not using an approved energy auditor for the HER program.

How does Michigan's heat pump rebate program compare to neighboring states?

Michigan offers a robust set of incentives through both state and federal programs, similar to states like Illinois, but may differ in specific rebate amounts and eligibility criteria. It's advisable to check each state's programs for the latest updates.

Next Steps: How to Apply for Michigan Heat Pump Rebates and Who to Contact

Step 1: Confirm Your Utility Provider

Your utility determines which local rebate you can access. Check your electric bill. If you are a DTE, CBPU, or BWL customer, visit their respective portals first to understand current rebate amounts and contractor requirements.

Step 2: Check MIHER Eligibility

Visit michigan.gov/egle and navigate to the Home Energy Rebate Programs page. Determine whether your household income qualifies for HEAR (at or below 150% AMI) and whether you want to pursue HER (requires a pre-installation energy audit). If pursuing HER, schedule your audit before any work begins.

Step 3: Find a Qualified Contractor

For DTE rebates, use a DTE participating contractor. For MIHER, EGLE's program website lists approved contractors. For CBPU and BWL, check their respective portals for contractor requirements. Ask any contractor if they are familiar with current rebate programs and if they will handle the paperwork on your behalf.

Step 4: Gather Documentation

Collect the following:

• Contractor invoice with equipment model numbers and installed costs
• AHRI certificate for the heat pump (required for §25C)
• ENERGY STAR certification documentation
• Proof of purchase (receipts)
• Pre- and post-installation energy audit reports (if pursuing HER)
• Utility account number for utility rebate applications

Step 5: Submit Rebate Applications

Submit utility rebate applications through your contractor or directly via the utility portal, typically within 90 days of installation. Submit MIHER applications through EGLE's portal at michigan.gov/egle. Consult each program directly for timelines and deadlines, as they vary.

Step 6: Claim Federal Tax Credits

File IRS Form 5695 with your federal tax return for the year the equipment was installed. Claim §25C for air-source heat pumps and heat pump water heaters, or §25D for geothermal. Consult a tax professional if combining multiple credits or if state rebates affect your cost basis (IRS.gov, Form 5695 instructions).

Contact Information

• EGLE (MIHER program): michigan.gov/egle, under Materials Management, Energy section
• DTE Energy: newlook.dteenergy.com, residential rebates section; or call DTE customer service
• Coldwater CBPU: coldwater.org/232/Energy-Optimization
• Lansing BWL: lbwl.com/energysavers
• IRS (federal credits): irs.gov, search Form 5695 or Energy Efficient Home Improvement Credit

Program details, rebate amounts, and application windows change. Verify current figures directly with each administrator before committing to equipment purchases.