Vermont Heat Pump Rebates & Incentives: Your Guide to Savings

Quick Answer: Vermont Heat Pump Rebates at a Glance

Vermont residents can combine four types of heat pump incentives:

1. State-level programs: Efficiency Vermont offers rebates for homeowners and landlords on air-source heat pumps, ground-source systems, and heat pump water heaters. Vermont Gas provides low-interest financing for eligible customers (Efficiency Vermont; Vermont Gas).
2. Local utility rebates and credits: These vary by provider. Green Mountain Power, Vermont Electric Cooperative, and Burlington Electric Department offer distinct programs (GMP; VEC; BED).
3. Federal tax credit (IRS §25C): Provides 30% back, up to $2,000 annually, for qualifying heat pumps (Form 5695).
4. IRA rebate programs (HOMES and HEAR): These are state-administered. Confirm Vermont's rollout status with the Vermont Public Service Department.

Most incentives stack. A homeowner can combine an Efficiency Vermont rebate, a utility credit, and the federal §25C credit. HOMES and HEAR cannot be combined on the same measure but stack with §25C.

State-Administered Heat Pump Programs in Vermont

Efficiency Vermont Residential Rebates

Efficiency Vermont is the primary rebate administrator for homeowners statewide. Their Residential Energy Efficiency Rebate Program covers ENERGY STAR-qualified equipment, including heat pump water heaters, air-source heat pumps, and related measures. Eligible equipment lists, specific rebate amounts by make and model, and application forms are on the Efficiency Vermont website (efficiencyvermont.com/rebates). Verify current figures directly on the site.

Income-eligible bonus rebates offer higher amounts for qualifying households. Check the Efficiency Vermont website for current bonus tiers.

Efficiency Vermont Residential Rental Property Rebates

Efficiency Vermont's Residential Rental Property Rebate Program covers energy-efficient equipment installed in rental units (Efficiency Vermont website). Low-income incentives include free weatherization assistance. The current rebate application form is available on the Efficiency Vermont rental rebates page (efficiencyvermont.com/rebates/list?type=rental).

Vermont Gas Residential Energy Efficiency Loan Program

Vermont Gas, in partnership with Green Mountain Credit Union, offers financing for energy efficiency upgrades. Key terms from the Vermont Gas website (vgsvt.com):

• Loan amounts up to $20,000
• Terms of 1 to 5 years at stated rates; longer terms are available, but APR and other terms vary
• Weatherization-only projects: 0% interest rate
• Weatherization projects that include heat pumps: 5.99% APR

Contact Vermont Gas directly to confirm current availability and any income requirements.

Clean Energy Development Fund

The Clean Energy Development Fund (CEDF), administered by the Vermont Public Service Department (publicservice.vermont.gov/renewable_energy/cedf), promotes cost-effective renewable energy and combined heat and power deployment. Consult the Vermont Public Service Department for current CEDF grant opportunities.

Local Utility Heat Pump Incentives Across Vermont

Eligibility for these programs depends on your utility provider.

Green Mountain Power

Green Mountain Power (GMP) offers rebates for a range of energy-efficient technologies, including heat pump water heaters and other heat pump equipment, for its residential customers (greenmountainpower.com/rebates-programs/home-and-yard/). Specific rebate amounts and qualifying product lists are on the GMP website. Check for current figures before purchasing equipment.

Vermont Electric Cooperative

Vermont Electric Cooperative (VEC) offers a $150 one-time bill credit per heat pump unit installed (vermontelectric.coop/energy-transformation-programs). Confirm eligibility and application requirements with VEC.

Burlington Electric Department

Burlington Electric Department (BED) runs a Residential Energy Efficiency Rebate Program covering heat pumps, clothes washers, pool pumps, smart thermostats, dehumidifiers, and lighting (burlingtonelectric.com/rebate-form). All installations are subject to verification by BED. Check product eligibility and current rebate amounts on the BED website before purchasing. BED serves the City of Burlington; customers outside this service area are not eligible.

Eligibility Is Address-Specific

Confirm your utility provider by checking your electric bill or contacting the Vermont Public Service Department.

Federal Tax Credits and Rebates for Vermont Residents

IRS §25C — Energy Efficient Home Improvement Credit

Under §25C:

• Credit amount: 30% of the cost of qualifying equipment and installation
• Annual cap for heat pumps: $2,000 per tax year (air-source, ground-source, and heat pump water heaters all qualify under this cap)
• Other caps in the same year: $600 for electrical panel upgrades, $150 for a home energy audit
• How to claim: IRS Form 5695 (available at irs.gov)
• Equipment requirements: Must meet CEE Tier standards or qualify as ENERGY STAR Most Efficient. Your installer must provide an AHRI certificate for the equipment.

This nonrefundable credit reduces your tax liability dollar-for-dollar. The credit resets annually, allowing phased installations across tax years to capture additional credits.

The §25C credit stacks with Efficiency Vermont rebates and utility credits. It cannot be combined with IRA HEAR on the same measure but stacks with HOMES.

IRA §50122 — HOMES Rebate Program

The HOMES program offers performance-based rebates of up to $8,000 for households that achieve a modeled energy reduction of 35% or more. It is income-scaled, with LMI households receiving double the standard rebate. This state-administered program began rolling out in most states in 2024–2025 (U.S. Department of Energy). Consult the Vermont Public Service Department for Vermont's current rollout and application status.

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

HEAR provides point-of-sale rebates for income-eligible households at or below 150% of Area Median Income. Key amounts:

• Up to $8,000 for a qualifying heat pump HVAC system
• Up to $1,750 for a heat pump water heater
• Up to $840 for an electric cooktop or dryer

HEAR cannot be combined with HOMES on the same measure but stacks with §25C. Confirm Vermont's current program status with the Vermont Public Service Department.

What's New: Recent Regulatory Changes Affecting

Federal Tax Considerations

Heat pump rebates in Vermont may provide significant federal tax benefits under specific sections of the Internal Revenue Code (IRC). Notably, IRC § 25C and § 25D offer credits for energy-efficient home improvements and residential clean energy installations, 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 CEE highest-efficiency tier or ENERGY STAR Most Efficient standards.
• Form 5695: Taxpayers must claim the credits on Form 5695 to receive the benefits associated with these energy-efficient installations.
• Eligibility: Ensure that the heat pump or water heater qualifies under the specified IRC sections to avoid disallowance of the credit.
• State Conformity: Vermont generally conforms to federal tax credits, but it’s advisable to verify any specific state-level nuances with a local CPA.

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

Available Rebates & Incentives

• Vermont Electric Coop - Heat Pump Bill Credit: Offers a $150 one-time bill credit per heat pump unit installed.
• Green Mountain Power Energy Efficiency Rebates: Provides rebates for various energy-efficient technologies, including heat pump water heaters.
• Vermont Gas - Residential Energy Efficiency Loan Program: Offers financing up to $20,000 for energy efficiency projects, including heat pumps, with varying interest rates.
• Residential Rental Property Rebate Program: Efficiency Vermont provides rebates for energy-efficient equipment in residential rental properties.
• Residential Energy Efficiency Rebate Programs: Offers financial incentives for homeowners to install Energy Star equipment, including heat pumps.
• Burlington Electric Department - Residential Energy Efficiency Rebate Program: Provides rebates for energy-efficient upgrades, including heat pumps and smart thermostats.

Federal Tax Deductions

The IRS offers several tax credits relevant to heat pumps. Under IRS §25C, homeowners can receive a 30% credit up to $2,000 for qualifying heat pumps. Additionally, the IRA provides performance-based rebates through the HOMES and HEAR programs, offering up to $8,000 for heat pump installations, subject to income limits. Consult a tax professional for personalized advice and to ensure compliance with current regulations.

Frequently Asked Questions

What types of heat pump rebates are available in Vermont?

Vermont offers state-level rebates through Efficiency Vermont, local utility rebates, a federal tax credit under IRS §25C, and IRA rebate programs like HOMES and HEAR.

How can I combine different heat pump incentives in Vermont?

Most incentives can be stacked, allowing homeowners to combine an Efficiency Vermont rebate, a utility credit, and the federal §25C credit. However, HOMES and HEAR cannot be combined on the same measure.

Who should I contact for more information about Vermont Gas financing options?

For details on financing for energy efficiency upgrades, including heat pumps, contact Vermont Gas directly or visit their website for current terms and availability.

Are there any income eligibility requirements for Vermont heat pump rebates?

Yes, Efficiency Vermont offers income-eligible bonus rebates that provide higher amounts for qualifying households. Check their website for current bonus tiers.

What is the Clean Energy Development Fund and how can it help with heat pump projects?

The Clean Energy Development Fund, administered by the Vermont Public Service Department, promotes renewable energy deployment. Consult their site for current grant opportunities related to heat pumps.