Ohio Heat Pump Rebates & Tax Credits: Your 2024 Guide

Ohio homeowners can combine federal tax credits of up to $2,000 annually with utility rebates from cooperatives like Butler Rural, Firelands, and Consolidated Electric.

Quick Answer: Ohio Heat Pump Rebates at a Glance

Ohio homeowners can access three layers of incentives, following specific stacking rules.

Federal Tax Credit (IRS §25C): This credit offers 30% of equipment and installation costs, capped at $2,000 per year for qualifying heat pumps. It directly reduces your federal income tax bill, dollar for dollar, not a deduction. File it using IRS Form 5695.

Federal IRA Rebates: Two programs stem from the Inflation Reduction Act. The HOMES Rebate Program (IRA §50122) provides up to $8,000 based on whole-home energy savings. The High-Efficiency Electric Home Rebate (HEAR) Program (IRA §50123) offers up to $8,000 for a heat pump HVAC system and $1,750 for a heat pump water heater. These are income-capped at 150% of the area median income. Both are federally funded but state-administered. Check with the Ohio Department of Development for current program status, as launch dates vary.

Ohio Utility Rebates: Consolidated Electric Cooperative, Firelands Electric Cooperative, and Butler Rural Electric Cooperative each offer their own rebate programs for members. Butler Rural also provides a low-interest loan up to $25,000 at 4.5%.

Stackability in plain terms: The §25C tax credit can be used with both HOMES and HEAR rebates. However, HOMES and HEAR cannot both apply to the same equipment, so choose the program that offers the greater benefit for your situation.

Federal Incentives for Ohio Homeowners: Tax Credits & IRA Rebates

Energy Efficient Home Improvement Credit (IRS §25C)

This credit covers 30% of the cost for qualifying heat pump equipment and installation. The annual cap for heat pumps is $2,000 per tax year.

Eligible equipment under §25C includes:

• Air-source heat pumps meeting CEE Tier or ENERGY STAR Most Efficient designation.
• Ground-source (geothermal) heat pumps meeting CEE Tier or ENERGY STAR Most Efficient designation.
• Heat pump water heaters meeting CEE Tier or ENERGY STAR Most Efficient designation.

Your installer must provide an AHRI (Air-Conditioning, Heating, and Refrigeration Institute) certificate confirming the equipment meets the efficiency threshold. Keep this certificate with your tax records. The credit is non-refundable, meaning it reduces your tax liability to zero but does not result in a refund if the credit exceeds your tax owed.

Separate from the heat pump cap, §25C also offers a $150 credit for a home energy audit and a $600 credit for electrical panel upgrades, each with its own annual sub-limits.

HOMES Rebate Program (IRA §50122)

This is a performance-based program. The rebate amount depends on the modeled or measured energy savings achieved after the upgrade, not solely on the equipment installed.

Consult the Ohio Department of Development for specific low-to-moderate income (LMI) definitions and thresholds. The state administers this program. For Ohio's current enrollment status and application portal, contact the Ohio Department of Development directly, as federal funds were allocated to states on a rolling basis through 2024 and 2025.

High-Efficiency Electric Home Rebate (HEAR) Program (IRA §50123)

HEAR functions as a point-of-sale rebate, meaning the discount is ideally applied to your invoice at the time of purchase, rather than being issued as a later refund. Income eligibility is restricted to those at or below 150% of the area median income for your county.

Like HOMES, HEAR is state-administered. Contact the Ohio Department of Development for Ohio's current launch status and lists of participating contractors.

Stacking Federal Incentives

The §25C tax credit can be combined with either the HOMES or HEAR rebate for the same project. However, you cannot claim both HOMES and HEAR rebates for the same piece of equipment.

Ohio Utility-Specific Heat Pump Rebate Programs

Ohio's electric cooperatives offer rebate programs for their members. To qualify for any of these programs, you must be a current residential member of that specific cooperative.

Consolidated Electric Cooperative

Consolidated Electric Cooperative, serving parts of central and western Ohio, provides residential rebates for heat pumps, geothermal heat pumps, water heaters, Level 2 EV chargers, ENERGY STAR refrigerators, and smart thermostats (Consolidated Electric Cooperative, Residential Rebate Program).

The source material does not list specific rebate dollar amounts. For current figures, call Consolidated directly at 800-421-5863 or visit their rebate page at consolidated.coop. Rebate amounts and eligible equipment tiers can change annually, so confirm details before purchasing equipment.

Firelands Electric Cooperative

Firelands Electric Cooperative (FEC), which serves the north-central Ohio Lake Erie region, operates a Residential Energy Efficiency Rebate Program covering (Firelands Electric Cooperative, Residential Energy Efficiency Rebate Program):

• Geothermal and heat pump systems
• Heat pump water heaters
• Level 2 EV chargers
• Smart thermostats
• Weatherization measures
• PeakBuster air conditioning incentives

The source material does not specify rebate amounts for heat pumps. Visit firelandsec.com/member-programs or contact FEC directly for current figures and application forms. To qualify, you must receive electric service from FEC.

Butler Rural Electric Cooperative

Butler Rural Electric Cooperative offers a detailed rebate structure (Butler Rural Electric Cooperative, Residential Rebate Program):

Additional rebates are available for smart thermostats and water heaters. Visit butlerrural.coop/geothermal-rebates for more information.

Federal Tax Considerations

Heat pump installations can provide significant federal tax benefits under the Internal Revenue Code (IRC). Specifically, IRC § 25C and § 25D outline credits available for energy-efficient improvements, including heat pumps.

• IRC § 25C: Offers a credit of 30% of the cost of qualifying heat pumps and heat pump water heaters, with a maximum annual cap of $2,000, separate from the $1,200 general envelope cap.
• IRC § 25D: Provides a 30% uncapped credit for geothermal heat pumps (ground-source), encouraging the adoption of renewable energy technologies.
• Efficiency Standards: Equipment must meet the Consortium for Energy Efficiency (CEE) highest-efficiency tier or be recognized as ENERGY STAR Most Efficient to qualify for these credits.
• Form Requirement: Tax credits for heat pumps are claimed on IRS Form 5695, which must be submitted with your tax return.
• State Conformity: While federal tax credits apply, verify with a local CPA if Ohio conforms to these federal provisions for state tax purposes.

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

Available Rebates & Incentives

• Consolidated Electric Cooperative - Residential Rebate Program: Offers rebates for residential customers installing heat pumps and other energy-efficient appliances.
• Firelands Electric Cooperative - Residential Energy Efficiency Rebate Program: Provides rebates on energy-efficient equipment, including heat pumps, for residential customers.
• Butler Rural Electric Cooperative - Residential Rebate Program: Rebates available for geothermal and electric heat pumps, with specific amounts for new installations and replacements.
• Butler Rural Electric Cooperative - Energy Efficiency Improvement Loan Program: Low-interest loans for energy efficiency improvements, including heat pumps, up to $25,000.

Federal Tax Deductions

The IRS offers several tax credits for heat pump installations under §25C, providing a 30% credit up to $2,000 for qualifying heat pumps. Additionally, the IRA includes the HOMES Rebate Program and the HEAR program, which offer performance-based rebates for energy-efficient home upgrades. Consult a tax professional for personalized advice and to ensure compliance with all requirements.

Frequently Asked Questions

What is the maximum rebate I can receive for a heat pump in Ohio?

You can receive up to $2,000 from the federal tax credit, and potentially up to $8,000 from the HOMES or HEAR programs, depending on your income and energy savings.

How do I apply for the HOMES and HEAR rebates in Ohio?

You should contact the Ohio Department of Development for the current enrollment status and application portal, as these programs are state-administered.

Can I combine the federal tax credit with Ohio utility rebates?

Yes, you can stack the federal tax credit with utility rebates, but be aware that you cannot use both HOMES and HEAR rebates for the same equipment.

Are there any income restrictions for the HOMES and HEAR rebate programs?

Yes, both programs have income caps set at 150% of the area median income, so eligibility will depend on your household income.

What documentation do I need to keep for claiming the federal tax credit?

You must retain an AHRI certificate from your installer confirming your heat pump meets efficiency requirements, along with any other relevant tax records.