Utah Heat Pump Rebates & Tax Credits: Your Guide

Quick Answer: Your Utah Heat Pump Savings at a Glance

Utah residents installing a heat pump can combine three layers of incentives:

1. Federal IRS §25C credit: 30% of installation costs, capped at $2,000 annually for qualifying heat pumps. Claim on IRS Form 5695. This credit resets each year, allowing phased installations to capture the credit multiple times.
2. Utah Renewable Energy Systems Tax Credit: A state income tax credit for residential and commercial systems. Specific percentages and caps are not published in the provided source material; consult the Utah State Tax Commission or energy.utah.gov for current figures. Systems must be placed in service by December 31, 2027 (Utah H.B. 264, 2025).
3. Dominion Energy ThermWise rebates: Cash rebates for residential customers installing dual-fuel heat pumps and for commercial customers upgrading HVAC equipment. Current dollar amounts vary by equipment efficiency; check thermwise.com/rebates and thermwise.com/business-rebates for live figures.

These three incentives can be stacked on the same installation. The federal credit does not reduce eligibility for state credits or utility rebates.

Federal Tax Credits for Heat Pump Installation in Utah

The federal Energy Efficient Home Improvement Credit under IRS §25C, expanded by the Inflation Reduction Act, offers a significant incentive for Utah homeowners.

What the Credit Covers

The credit equals 30% of the cost of qualifying equipment and installation labor, subject to annual caps:

The $2,000 cap for heat pumps is separate from the $600 cap for panel upgrades and the $150 cap for audits. A homeowner installing a heat pump, upgrading their panel, and getting an audit in the same tax year can claim up to $2,750 total from §25C in that year.

Qualifying Equipment

To qualify, heat pumps must meet specific efficiency standards:

• Air-source heat pumps: Must meet the Consortium for Energy Efficiency (CEE) highest efficiency tier in effect at the start of the year, or be ENERGY STAR Most Efficient certified.
• Ground-source (geothermal) heat pumps: Must meet ENERGY STAR requirements.
• Heat pump water heaters: Must meet CEE highest efficiency tier or ENERGY STAR Most Efficient.

Your installer should provide an AHRI (Air-Conditioning, Heating, and Refrigeration Institute) certificate confirming the equipment rating. Retain this with your tax records.

How to Claim It

File IRS Form 5695 (Residential Energy Credits) with your federal return for the tax year the equipment was placed in service. The credit is nonrefundable, meaning it reduces your tax liability to zero but does not generate a refund. Because the credit resets annually, you can claim it again in a subsequent year for additional qualifying improvements.

This credit stacks with Utah state tax credits and Dominion Energy rebates. Receiving a utility rebate may reduce your cost basis for the credit calculation; confirm with your tax preparer how to handle rebate amounts received in the same tax year (IRS Publication 5695 instructions address this).

Utah State Tax Credits and Exemptions for Heat Pumps

Renewable Energy Systems Tax Credit (Personal)

Utah offers a personal income tax credit for residential renewable energy systems, administered by the Utah State Energy Program and the Utah State Tax Commission. The exact credit percentage and dollar cap are not published in the available source material. For current figures, consult:

• energy.utah.gov (Renewable Energy Systems Tax Credit page)
• Utah State Tax Commission directly

The system must be placed in service by December 31, 2027, per Utah H.B. 264 (2025). Do not assume this program will be extended.

Renewable Energy Systems Tax Credit (Corporate)

The corporate version of this credit applies to businesses installing qualifying renewable energy systems in Utah. The same December 31, 2027, deadline applies. Additionally, S.B. 192 (2025) requires commercial systems to be paired with an energy storage system capable of storing at least six hours of the system's expected peak daily generation. This material change affects project economics for commercial heat pump installations. Consult energy.utah.gov or the Utah State Tax Commission for current credit rates and caps.

Alternative Energy Sales Tax Exemption

Utah exempts the purchase or lease of equipment used to generate electricity from alternative resources from state sales tax (Utah State Tax Commission, Alternative Energy Sales Tax Exemption). Eligible resources explicitly include geothermal energy. The exemption applies to purchases made on or after July 1, 2004, and before June 30, 2027.

The applicability of this exemption to heat pumps requires careful analysis:

• Ground-source (geothermal) heat pumps that generate electricity or are part of an alternative energy production facility may qualify under the geothermal category. However, the exemption language is tied to "equipment used to generate electricity from alternative resources" at an "alternative energy production facility," which may not cover a standard residential ground-source heat pump used for space conditioning.
• Air-source heat pumps are unlikely to qualify under this exemption as written.

Consult the Utah State Tax Commission before assuming this exemption applies to your specific installation. The agency can issue a ruling on your specific equipment configuration.

Utility-Specific Heat Pump Rebates from Dominion Energy

Dominion Energy serves natural gas customers across Utah and operates its ThermWise energy efficiency rebate program for both residential and commercial accounts.

Residential Rebates (ThermWise)

Dominion Energy's residential program provides rebates for customers who install qualifying efficient heating equipment. Confirmed eligible equipment categories include:

• Dual-fuel heat pumps
• Water heaters (including heat pump water heaters)
• Programmable thermostats
• Boilers

Rebate dollar amounts are not fixed in the source material and vary based on equipment efficiency level. Current rebate amounts, program guidelines, eligibility requirements, and application forms are available at thermwise.com/rebates.

To receive a rebate, you will generally need to:

1. Confirm you are a Dominion Energy natural gas customer in Utah.
2. Select equipment that meets the program's efficiency thresholds (check the program site before purchasing).
3. Submit a rebate application with proof of purchase and installation.

Commercial Rebates (ThermWise Business)

Dominion Energy's commercial program covers business customers installing energy-efficient equipment across several categories, including HVAC and water heating. Rebate amounts for commercial HVAC equipment vary by efficiency level; a higher-efficiency unit earns a larger rebate. Details, applications, and current rebate schedules are at thermwise.com/business-rebates.

Commercial customers should verify eligibility before equipment selection, as efficiency thresholds can change between program cycles.

Recent Changes in Utah Heat Pump Incentives (2023-2025)

Two bills passed in the 2025 Utah legislative session made significant changes to the state tax credit program.

H.B. 264 (2025): Expiration Date Added

Before H.B. 264, Utah's Renewable Energy Systems Tax Credit had no stated end date. H.B. 264 established a hard expiration: systems must be placed in service by December 31, 2027, to qualify. This provides contractors and homeowners roughly two years to complete installations under the current credit structure. After 2027, the credit expires unless the legislature acts to extend or replace it.

Source: Utah Legislature, H.B. 264 (2025 General Session).

S.B. 192 (2025): Energy Storage Requirement for Commercial Systems

S.B. 192 amended the tax credit to require that commercial renewable energy systems be paired with energy storage capable of storing at least six hours of the system's expected peak daily generation. This requirement applies to commercial installations and substantially raises the capital cost of qualifying for the credit on the commercial side. Residential installations are not subject to this storage pairing requirement under the current bill language.

Source: Utah Legislature, S.B. 192 (2025 General Session).

Other Recent Developments

The HOMES Rebate Program (IRA §50122) and HEAR program (IRA §50123) are federal programs administered at the state level. As of this writing, Utah's rollout status for these programs should be confirmed with the Utah State Energy Program, as implementation timelines vary by state. If Utah has launched either program, low-to-moderate income households could access up to $8,000 in additional rebates for heat pump HVAC systems, stackable with the §25C credit. Contact the Utah State Energy Program for current status.

Comparing Utah Heat Pump Incentives: A Quick Reference Table

Federal Tax Considerations

Heat pump rebates for businesses and individuals in Utah may offer significant federal tax benefits under the Internal Revenue Code (IRC). Specifically, IRC § 25C and § 25D provide credits for energy-efficient heat pumps, which can help offset installation costs.

• IRC § 25C: Offers a 30% tax credit on 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: Provides a 30% uncapped credit for geothermal heat pumps (ground-source), encouraging the adoption of renewable energy solutions.
• Efficiency Standards: To qualify for these credits, equipment must meet the CEE highest-efficiency tier or be ENERGY STAR Most Efficient.
• Form 5695: Tax credits for heat pumps are claimed using Form 5695, which must be accurately completed to ensure eligibility.
• Consultation Recommended: Tax implications can vary, and it's essential to consult a CPA or tax attorney to navigate specific situations and ensure compliance.

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

Available Rebates & Incentives

• Renewable Energy Systems Tax Credit (Personal): Offers a tax credit for residential renewable energy systems, including heat pumps, if placed in service by December 31, 2027.
• Renewable Energy Systems Tax Credit (Corporate): Provides a tax credit for commercial renewable energy systems, including heat pumps, with a deadline of December 31, 2027 for eligibility.
• Alternative Energy Sales Tax Exemption: Exempts the purchase or lease of equipment for alternative energy generation, including heat pumps, from state sales tax until June 30, 2027.
• Dominion Energy - Residential Energy Efficiency Rebate Programs: Offers rebates for residential customers installing energy-efficient heating equipment, including heat pumps.
• Dominion Energy - Commercial Energy Efficiency Rebate Program: Provides rebates for businesses installing energy-efficient HVAC systems, which may include heat pumps.

Federal Tax Deductions

The IRS offers the Energy Efficient Home Improvement Credit (§25C), which provides a 30% credit up to $2,000 per year for qualifying heat pumps. Additionally, the HOMES Rebate Program and HEAR (High-Efficiency Electric Home Rebate) provide performance-based rebates for energy-efficient home improvements, including heat pumps. Consult a tax professional for personalized advice and to ensure compliance with current tax laws.

Frequently Asked Questions

What is the maximum federal tax credit I can receive for installing a heat pump in Utah?

You can receive a maximum federal tax credit of 30% of installation costs, capped at $2,000 per year for qualifying heat pumps under IRS §25C.

Are there any specific deadlines for claiming the Utah Renewable Energy Systems Tax Credit?

Yes, to qualify for the Utah Renewable Energy Systems Tax Credit, your heat pump system must be placed in service by December 31, 2027.

Who can I contact for more information about the Dominion Energy ThermWise rebates?

For more information on the Dominion Energy ThermWise rebates, you can visit thermwise.com/rebates or thermwise.com/business-rebates.

What are some common mistakes to avoid when applying for heat pump rebates and tax credits in Utah?

Common mistakes include failing to ensure that your heat pump meets the required efficiency standards, not retaining the necessary AHRI certificate, and misunderstanding how utility rebates may affect your tax credit calculations.

How do Utah's heat pump incentives compare to those in neighboring states?

Utah has unique incentives, including the state tax credit and Dominion Energy rebates, but neighboring states may offer different programs or higher caps, so it's advisable to research each state's offerings for a comprehensive comparison.

Next Steps: Maximize Your Utah Heat Pump Savings

Step 1: Get a Home Energy Audit

A qualified energy auditor can identify the right heat pump size and type for your home. The audit itself qualifies for a $150 federal tax credit under IRS §25C. This step also positions you for the HOMES Rebate Program if Utah has launched it, as that program is performance-based.

Step 2: Select Qualifying Equipment Before Purchase

Before purchasing any equipment:

• Confirm the heat pump is ENERGY STAR Most Efficient or meets CEE highest efficiency tier (required for §25C).
• Check thermwise.com/rebates or thermwise.com/business-rebates for Dominion Energy's current efficiency thresholds and rebate amounts.
• Ask your contractor for the AHRI certificate number for the specific model.

Step 3: Apply for Utility Rebates Promptly

Dominion Energy ThermWise rebates typically require a pre-approval or post-installation application within a specific window. Do not delay applying. Visit thermwise.com/rebates (residential) or thermwise.com/business-rebates (commercial) and download the current application form before your installation date.

Step 4: Claim the Federal Credit at Tax Time

File IRS Form 5695 with your federal return for the tax year the system was placed in service. Retain:

• Itemized contractor invoice showing equipment and labor costs separately
• AHRI certificate from the manufacturer
• ENERGY STAR certification documentation
• Proof of payment

If you received a Dominion Energy rebate, your tax preparer needs to know the amount, as it may reduce your cost basis for the §25C calculation.

Step 5: Claim the Utah State Tax Credit

File the appropriate Utah state tax credit form with the Utah State Tax Commission. The Utah State Energy Program (energy.utah.gov) publishes the required forms and instructions. Confirm current credit rates and caps directly with the agency, as the source material does not specify exact figures.

Step 6: Verify the Sales Tax Exemption (Commercial and Ground-Source Installations)

If you are installing a ground-source heat pump or are a commercial customer, ask the Utah State Tax Commission whether your specific equipment and use case qualifies for the Alternative Energy Sales Tax Exemption. Obtain the determination in writing before purchase.

Key Contacts

• IRS (Form 5695 questions): irs.gov or 1-800-829-1040
• Utah State Tax Commission: tax.utah.gov
• Utah State Energy Program: energy.utah.gov
• Dominion Energy ThermWise (Residential): thermwise.com/rebates
• Dominion Energy ThermWise (Commercial): thermwise.com/business-rebates

The 2027 deadline on Utah's state tax credit is a firm cutoff. If you are planning a heat pump installation, the window to capture both the state credit and the federal credit together closes at the end of 2027. Commercial customers also need to factor in the energy storage pairing requirement from S.B. 192 (2025) when budgeting their projects.