Key takeaways (quick scan)
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Fed 25C: 30% up to $2K by 12/31/25.
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DE IRA: $8K HVAC, $1.75K HPWH (Q2 2025).
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Utility: $550–$2.2K HP, $1.1K–$1.35K HPWH (+25% bonus).
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Other: $300 DEC, $100–$750 towns, $5K geothermal.
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Stack: Save up to ~$12.2K.
Why Delaware heat pump incentives matter in 2025
Energy bills are a big deal for Delaware households, and heat pumps can cut both cooling and heating costs with one system. In 2025, the savings to help you buy one are the strongest they’ve ever been: a federal 30% tax credit, new state rebates launching this year, and utility programs you can use right now. In this guide, you’ll learn what each program pays, who qualifies, and exactly how to apply without missing a step. We’ll also show you how to combine programs legally and what documentation to keep so you don’t leave money on the table. If you’re still comparing equipment, our plain-language resources explain SEER2/HSPF2 ratings and how to right-size a system. For product browsing, explore ducted and ductless options like R-32 heat pump systems
Problem most homeowners face (and why it matters)
The common concern is confusion: What qualifies? Which form? Can I stack rebates? And will my income block state incentives? This matters because incentives change by program type, equipment efficiency, and even county income limits. Some rebates require approved contractors or a home energy assessment before work starts; skipping a step can reduce or void your benefit. Another issue is buying a unit that doesn’t meet ENERGY STAR Most Efficient or local SEER2/HSPF2 thresholds—then the federal credit or utility rebate won’t apply. Finally, residents often don’t realize that IRA rebates are instant discounts while tax credits arrive at tax time, so cash-flow planning is different. The result: the same project can cost thousands more if you choose the wrong order or forget paperwork. This guide solves that by mapping each step and linking to resources you can trust.
Federal 25C tax credit (what it pays and how to claim)
The Energy Efficient Home Improvement Credit (25C) gives you 30% of eligible project costs back, capped at $2,000 per year for qualifying heat pumps installed by December 31, 2025. Both ducted and ductless systems can qualify if they meet ENERGY STAR Most Efficient standards. Key points:
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The home must be your primary residence.
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Keep manufacturer certification, itemized invoices, and installation documentation.
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Claim it using IRS Form 5695 with your tax return; the credit reduces your tax liability.
Expert tip: If you’re planning multiple upgrades (insulation, windows, etc.), sequence projects over two tax years to maximize annual caps. Want to double-check what doesn’t qualify? See our plain-English explainer on HVAC items that aren’t eligible for 2025 tax credits—handy when you’re comparing quotes. (Related reading: What HVAC equipment doesn’t qualify for tax credits in 2025.)
Delaware’s IRA HEAR rebates (point-of-sale, income-based)
Starting Q2 2025, Delaware’s Home Electrification and Appliance Rebates (HEAR) program is expected to provide up to $8,000 for qualifying heat pump HVAC and up to $1,750 for heat-pump water heaters. Low-income households (below 80% Area Median Income) can see up to 100% of project costs covered; moderate-income (80–150% AMI) can receive up to 50%. Approval will use county AMI thresholds, and rebates are taken off the invoice by participating contractors—no waiting months for a check. Practical tips: (1) Verify income early; (2) confirm your contractor is registered for HEAR; and (3) keep your bid and model numbers handy, as programs verify SEER2/HSPF2 ratings and ENERGY STAR status. If you’re considering ductless zones, compare options in our ductless mini-split systems—wall mounted collection to see what fits each room layout.
Delaware’s HER rebates (whole-home efficiency pathway)
The Home Efficiency Rebates (HER) program rewards whole-home upgrades that achieve at least 20% energy savings. Low-income households can receive up to $8,250 or 100% of project cost; moderate-income households typically receive $2,000–$4,000 based on modeled savings. HER requires a home energy audit using DOE-approved software, and work must be completed by participating contractors. Because savings are modeled across the home, combining a heat pump with air sealing and insulation can unlock higher HER tiers. Pro tip from the field: request a Manual J load calculation and a duct evaluation with your audit to avoid oversizing and to identify cheap fixes (like sealing return leaks) that improve comfort and the rebate score. If you’re comparing package options for tight spaces, browse residential packaged heat pumps.
Utility rebates you can use today (Energize Delaware)
For Delmarva Power and City of Dover customers, Energize Delaware offers:
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Tier 1 heat pumps (≥16 SEER2, ≥7.8 HSPF2): $800–$1,200
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Tier 2 heat pumps (≥17 SEER2, ≥8.2 HSPF2): $1,600–$2,200
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Mini-splits: $550–$1,700 (by tier)
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Heat-pump water heaters (HPWH): $1,100–$1,350
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Limited-time bonus: +25% through September 30, 2025
Requirements include a $50–$100 home energy assessment (reduced for low-income), approved contractors, and a cap of 50% of installed cost. Practical order of operations: book the assessment, reserve the rebate before installation, and submit final paperwork promptly. If you need a quick ballpark on equipment and accessories, see our line sets and common HVAC accessories, then save your receipts for rebate documentation.
DEC, municipal programs & geothermal grants
Delaware Electric Cooperative (DEC) members can receive $300 for ENERGY STAR heat-pump water heaters installed by December 31, 2025 (apply within 60 days of purchase). In Efficiency Smart towns (Clayton, Lewes, Middletown, Milford, New Castle, Newark, Seaford, Smyrna), common incentives include $100–$750 for air-source heat pumps and $300 for HPWHs, plus $100 for smart thermostats. For homes on Delmarva Power considering ground-source, the Delaware Green Energy Program offers geothermal grants of $800/ton for the first two tons and $700/ton thereafter, max $5,000, with minimum EER > 18 and COP > 3.6. If you’re space-limited or prefer an all-in-one cabinet, compare package units or through-the-wall options like TTW heat pumps for small additions and accessory apartments.
Step-by-step application roadmap (no missed steps)
Follow this sequence to avoid delays:
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Audit & pre-check: Schedule the utility home energy assessment (if required) and verify IRA income eligibility. Save a folder for quotes, model numbers, AHRI certs, and receipts.
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Pick qualifying equipment: Confirm ENERGY STAR Most Efficient models and local SEER2/HSPF2 targets. If you’re still learning ratings, our plain-English SEER2 guide is a quick read. (Related reading: SEER2 ratings explained.)
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Choose a participating contractor: For programs that require it, select from the approved list and reserve your rebate before work begins.
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Install to spec: Ask for Manual J sizing, proper refrigerant charge, and duct sealing notes on the invoice.
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File & track:
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Utility rebates: Contractor or homeowner submits; expect processing in 6–8 weeks.
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IRA (HEAR/HER): Discount is taken at checkout by a registered contractor.
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Federal 25C: File IRS Form 5695 with your tax return.
Need help comparing bids? Our Help Center and quick Quote by Photo page can make it simpler.
Stacking incentives, timing, and a simple savings example
Most Delaware homeowners can stack the federal 25C credit with state/utility rebates. A typical scenario for a qualifying system: $2,000 (25C) + up to $8,000 (HEAR, income-based) + up to $2,200 (Energize Delaware) = up to ~$12,200 off. Keep timing straight: 25C comes at tax time; IRA rebates are instant; utility rebates arrive after paperwork clears. Watch deadlines: Sept 30, 2025 for the Energize Delaware 25% bonus, Dec 31, 2025 for 25C and DEC HPWH installations, and IRA funding is slated through Sept 30, 2031 (but local budgets are finite). For cash flow, explore 0%-style promos or standard terms on our HVAC financing page. If you’re still comparing technology choices, this brief explainer on stacking tax credits and rebates answers common “can I combine X with Y?” questions. (Related reading: Can you stack tax credits and rebates for heat pumps?
FAQs (quick answers)
How do I know if my model qualifies for the 25C credit?
Check the manufacturer’s ENERGY STAR Most Efficient certificate and keep it with your invoice. Your contractor should include the AHRI reference for the matched system.
Can I get both HEAR and HER?
You can’t apply both to the same equipment. Many households choose HEAR for point-of-sale HVAC discounts or HER for a whole-home plan with insulation and air sealing.
What if my income is above the HEAR/HER limits?
You may still get 25C and utility rebates. Only the IRA programs are income-restricted.
Do mini-splits qualify?
Yes—ductless mini-splits can qualify if they meet the program’s efficiency and ENERGY STAR requirements. See options in our ductless mini-split collection.
When should I schedule the energy assessment?
Early. Some rebates require a reservation and an assessment before installation. Book first, then install.
Can I replace my water heater now and my HVAC later?
Yes, but keep receipts and certifications for each project. File Form 5695 for 25C items and let your contractor handle point-of-sale IRA rebates when they’re available.
What documents should I save?
Itemized invoices, model numbers, manufacturer/ENERGY STAR certificates, permit/inspection records, and any rebate reservation emails.
