If you’re planning to replace your HVAC system this year, switching to a heat pump is one of the smartest decisions you can make. Heat pumps provide year-round comfort, reduce energy costs, and can qualify you for significant rebates and tax credits. Incentives vary across Maryland, Washington, D.C., and Virginia, so understanding what’s available in your area can help you maximize your savings and shorten your payback period.
Federal Incentives
The Energy Efficient Home Improvement Credit (Section 25C) allows homeowners to claim 30 percent of the total cost of a qualifying heat pump installation, up to $2,000. To qualify, the system must meet ENERGY STAR efficiency standards. These federal credits apply nationwide, including in Maryland, D.C., and Virginia, and remain available through December 31, 2025.
A smart way to maximize savings is to apply any state or utility rebates first, then use the federal tax credit for the remaining balance. Make sure your contractor provides a detailed invoice and model information for your tax filing.
Maryland Incentives
Maryland offers some of the most comprehensive rebate programs in the region through EmPOWER Maryland and utility partnerships.
The Home Performance with ENERGY STAR (HPwES) program provides rebates up to $15,000 when upgrading from oil, propane, or natural gas to an electric heat pump, and up to $10,000 for insulation, or air sealing improvements. These programs are available to customers of major utilities such as BGE, Pepco, and Delmarva Power. More details can be found on Edge Go Green’s incentive summary.
The Maryland Energy Administration (MEA) also offers a Geothermal Rebate Program providing up to $3,000 for qualifying geothermal systems. Applications are first-come, first-served and funding is limited.
Homeowners may also qualify for the Maryland Residential Clean Energy Tax Credit, which covers 30 percent of eligible project costs for systems like solar and geothermal installations.
At the county level, Montgomery County is preparing to roll out HEEHR and HOMES rebate programs that could offer up to $8,000 for qualifying heat pump installations and up to $14,000 for whole-home efficiency upgrades.
Washington, D.C. Incentives
Homeowners and businesses in the District can take advantage of rebates through the DC Sustainable Energy Utility (DCSEU). The DCSEU offers incentives for electric heat pumps, central air systems, and other efficiency measures. Many of these rebates require pre-approval before purchase, so it’s important to confirm eligibility with your contractor before beginning installation.
DCSEU’s programs focus on electrification rather than gas-powered systems and often pair with income-based assistance for qualifying residents. Details on active offers are available on the DCSEU website.
Virginia Incentives
Virginia is in the process of implementing rebate programs funded by the Inflation Reduction Act (IRA), which will include Home Efficiency Rebates and High-Efficiency Electric Home Rebates for heat pumps and other electrification projects. These programs are expected to launch soon and will be administered by the Virginia Department of Energy.
Virginia homeowners can also access state tax credits worth 30 percent of costs up to $2,000 for qualifying heat pumps and heat pump water heaters, as outlined on
For utility-based programs, Dominion Energy Virginia offers rebates of up to $400 for energy-efficient heat pump water heaters. The Take Charge Virginia initiative provides additional incentives for ENERGY STAR-certified central air and heat pump units. Once finalized, the High Efficiency Electric Home Rebate Act (HEEHRA) will provide up to 100 percent coverage of installation costs for low-income households and up to 50 percent for moderate-income homes.
Example: Maryland Homeowner Savings Scenario
| Upgrade | Cost | Rebate / Incentive | Net Cost | Notes |
High-efficiency heat pump | $18,000 | $15,000 | $3,000 | Eligible for 30% federal tax credit ($900) |
Insulation and air sealing | $5,000 | Up to $5,000 | $0 | Improves comfort and efficiency |
Annual energy savings | — | — | — | $600–$900 per year depending on energy rates |
In this example, the homeowner’s total out-of-pocket expense could be reduced to about $2,100, with a payback period of five to seven years, depending on energy use and local utility rates.
Key Takeaways
- Apply early, since many programs have limited funds or close once budgets are met.
- Confirm that your contractor installs ENERGY STAR qualified systems that meet current SEER2 and HSPF2 ratings.
- Keep all documentation, including invoices, model numbers, and rebate approval forms.
- Combine state, utility, and federal incentives strategically for maximum benefit.
- The federal Section 25C credit expires December 31, 2025.
Get Expert Help from Your Local B&B Team
These incentives can make upgrading to a high-efficiency heat pump surprisingly affordable, but every homeowner’s eligibility is different. For personalized help identifying which programs you qualify for, contact your local B&B Air Conditioning & Heating Service location. Our technicians can confirm eligibility, recommend qualifying systems, and manage the rebate paperwork so you receive the full incentive value.
