Federal 25C credit, IRA/HEEHRA income-qualified rebates, and PECO utility rebates. What you qualify for and how to claim it.
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Pennsylvania homeowners who install a qualifying heat pump in 2026 can access federal tax credits and, depending on income, substantial rebates through the Inflation Reduction Act. Combined with PECO utility rebates, total savings can meaningfully offset the cost of a new system.
The 25C credit is available to any homeowner who installs a qualifying heat pump. It covers 30% of the installed cost, up to $2,600 per year. This is a nonrefundable tax credit, meaning it reduces your federal income tax liability dollar-for-dollar, but you won't receive a refund if it exceeds what you owe.
McCorry handles equipment warranty registration after installation and can provide the documentation you need (model numbers, efficiency certifications, receipts). Share those with your tax preparer.
The High-Efficiency Electric Home Rebate Act (HEEHRA), funded through the Inflation Reduction Act, provides point-of-sale or mail-in rebates for heat pump installation. These are separate from the 25C tax credit and are based on household income relative to Area Median Income (AMI).
| Household Income (% of Area Median) | Rebate Available |
|---|---|
| At or below 80% AMI | Up to $10,500 (100% of costs) |
| 80%–150% AMI | Up to $5,200 (50% of costs) |
| Above 150% AMI | Not eligible for HEEHRA rebates |
For reference, 80% AMI in the Philadelphia metro area is approximately $92,500 for a family of four (2026 HUD data). Pennsylvania's HEEHRA program rollout has been ongoing through the PA Department of Environmental Protection. Check the current status before assuming availability.
PECO offers rebates for qualifying heat pump installations through their Smart Ideas energy efficiency program. PECO serves Philadelphia, Montgomery County, Bucks County, Chester County, and Delaware County, covering most of McCorry's service area.
Rebate amounts vary by equipment type and efficiency level, and change annually. Current PECO rebates for central heat pumps and mini-splits are typically $125–$650 per unit depending on efficiency tier. Call PECO at 1-800-494-4000 or visit their website to get current figures before your purchase.
Pennsylvania does not currently offer a state income tax credit for heat pumps. However, the PA DEP administers several energy efficiency programs funded by federal dollars. PENNVEST and the Keystone Home Energy Loan Program (HELP) offer low-interest loans for energy efficiency upgrades including heat pumps.
You can combine the 25C federal tax credit with HEEHRA rebates and PECO rebates in the same year. The 25C credit applies to your out-of-pocket cost after rebates. Example: $15,500 system, $3,900 PECO/HEEHRA rebates = $11,500 net cost. 25C credit = 30% of $11,500 = $2,600 (capped). Total savings: $6,500.
| Savings Source | Maximum Amount | Requirements |
|---|---|---|
| Federal 25C Tax Credit | $2,600 | ENERGY STAR, any income |
| HEEHRA Rebate | $10,500 | Income-qualified, <80% AMI |
| PECO Smart Ideas | $125–$650 | PECO customer, qualifying equipment |
| Combined (max scenario) | ~$13,500 | Income-qualified PECO customer |
The federal 25C Energy Efficient Home Improvement Credit covers 30% of the cost of a qualifying heat pump, up to $2,600 per year. This is a tax credit, not a deduction, so it directly reduces your federal tax bill dollar-for-dollar.
To qualify for the 25C credit, the heat pump must be ENERGY STAR certified and meet SEER2 and HSPF2 efficiency thresholds. For split systems in Climate Zone 4 (Philadelphia's zone), minimum requirements are typically SEER2 15.2 and HSPF2 7.8. Mitsubishi and Fujitsu mini-split systems commonly exceed these thresholds.
The High-Efficiency Electric Home Rebate Act (HEEHRA), part of the Inflation Reduction Act, provides income-qualified rebates of up to $10,500 for heat pump installation. Households at 80% or below area median income qualify for 100% of costs up to the cap; households at 80–150% AMI qualify for 50%. Pennsylvania's program rollout is ongoing.
PECO's Smart Ideas program offers rebates for qualifying heat pump installations in their service territory. Rebate amounts change annually. Check PECO's website or ask McCorry about current rebate availability for your equipment.
McCorry handles equipment warranty registration and provides documentation you need (model numbers, efficiency ratings, installation receipts). The homeowner files IRS Form 5695 to claim the 25C credit on their federal return.
Tax credit information based on IRS guidance for the 25C credit. Rebate program details subject to change. Verify current Pennsylvania HEEHRA program status with the PA Department of Environmental Protection. PECO rebate amounts change annually. Consult a tax professional for personalized advice.
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