Federal Inflation Reduction Act (IRA) tax credits and rebates
Under the Inflation Reduction Act Section 25C (Energy Efficient Home Improvement Credit), US homeowners can claim a federal tax credit of 30% of heat pump project costs, up to a maximum credit of $2,000 per year.
Additionally, low- and moderate-income households may qualify for state-administered HOMES and HEEHRA rebates of up to $8,000 for point-of-sale heat pump installations.
Ducted heat pumps vs Ductless mini-split systems
Central ducted heat pumps utilize your home existing supply and return ductwork, costing $7,000 to $16,000 installed. They provide seamless whole-home central heating and air conditioning from a single outdoor condenser unit.
Ductless mini-splits are ideal for homes without ductwork (or room additions), costing $3,500 to $5,000 per zone. They provide independent room-by-room temperature control and deliver exceptional energy efficiency (SEER2 up to 28+).
Worked example: 3-ton central ducted heat pump replacement
Replacing an old gas furnace and central AC with a 3-ton high-efficiency inverter cold-climate heat pump in the Midwest.
Total equipment and contractor installation cost is $12,500. Applying the maximum federal IRA Section 25C tax credit of $2,000 reduces the net investment to $10,500. Because modern heat pumps heat and cool in one system, you replace both your furnace and air conditioner with a single unit.
Inputs for the US heat pump cost calculator
Heat pump configuration
Central ducted air-source, ductless multi-zone mini-split, or ground-source geothermal.
Tonnage / home capacity
2-ton (small home), 3-ton (medium home), 4-ton, or 5-ton (large home).
Ductwork modification
Allowance for duct sealing, plenums, or new branch lines.
Electrical service panel upgrade
Allowance for upgrading your breaker panel to 200 amps if required for electric heat strips.
Federal 25C tax credit
Calculate the 30% federal tax credit up to the statutory $2,000 limit.
CALCULATOR QUESTIONS
US heat pump cost calculator ($2,000 tax credit) questions
What is the federal tax credit for heat pumps in 2026?
The Inflation Reduction Act Section 25C provides a 30% tax credit on the total purchase and installation cost of qualifying heat pumps, capped at $2,000 annually.
Do heat pumps work in cold US northern climates?
Yes. Modern "cold-climate" heat pumps (ccASHP) use advanced inverter compressors and hyper-heating technology to deliver 100% heating capacity down to 5°F and operate efficiently down to -15°F.
What size heat pump do I need for my house?
Heat pump sizing is measured in tons (1 ton = 12,000 BTU/hr). Most 1,500 to 2,500 sq ft homes require a 3-ton to 4-ton system, though an HVAC contractor should perform a Manual J load calculation.
How much does a ductless mini-split cost per room?
Installing a single-zone mini-split typically costs $3,500 to $5,000. Multi-zone systems for an entire home (3 to 5 indoor heads) range from $10,000 to $20,000.
Can a heat pump replace both my furnace and air conditioner?
Yes. A heat pump acts as an air conditioner in the summer and reverses its refrigerant cycle in the winter to provide heating, replacing both units with one system.