With the federal tax credits gone, the state-run home energy rebates are the main federal-funded support left for many households. They are often confused with each other, so here is how the two programs differ.
Who runs them
The money comes from the Inflation Reduction Act of 2022 and is sent by the US Department of Energy to each state. Your state energy office (or a partner agency) designs and runs the program, so you apply through your state, not the IRS. Each state launched on its own timeline, and some programs have been open, waitlisted or not yet launched at different times.
HEAR: Home Electrification and Appliance Rebates
HEAR pays for specific electrification upgrades and is income-based. Households at or below 80% of area median income (AMI) can receive up to 100% of eligible project costs. Households between 80% and 150% of AMI can receive up to 50%. Above 150% of AMI, HEAR does not apply. Typical per-item caps are:
- Heat pump for space heating and cooling: up to $8,000
- Heat pump water heater: up to $1,750
- Electrical panel upgrade: up to $4,000
- Insulation, air sealing and ventilation: up to $1,600
- Electrical wiring: up to $2,500
- Electric stove, cooktop, range, oven or heat pump dryer: up to $840
There is also an overall cap per household (commonly cited as $14,000), and states can set their own details within the federal rules.
HOMES: whole-home performance rebates
HOMES rewards projects that cut a home’s modeled or measured energy use. The bigger the savings, the bigger the rebate, and low- and moderate-income households receive larger amounts. Depending on the state, rebates range from a few thousand dollars up to about $8,000. HOMES is generally open to all income levels, though the amounts for higher-income households are smaller.
How to find your income tier
Eligibility is based on area median income for your county and household size. HUD publishes these figures every year, and most state programs link to them or provide their own lookup tool.
Before you buy anything
- Confirm your state’s program is open and has funds. Some states have run out of money or used waitlists.
- Check whether you must apply or get approval before the work starts.
- Use a contractor your state approves, since many programs apply the rebate through participating contractors.
- Ask whether the rebate can be combined with your utility’s rebate.
Frequently asked questions
Do I have to owe taxes to get the rebate? No. These are rebates or point-of-sale discounts, not tax credits.
Are the amounts guaranteed? No. Amounts and rules are set by each state, so treat the figures above as federal maximums and confirm the actual numbers with your state program.
A simple example (illustration only)
Suppose a household earns under 80% of area median income and replaces an old furnace with a heat pump costing $14,000. HEAR could cover up to the $8,000 cap for the heat pump, leaving the household to pay the rest, subject to the state’s rules. A household between 80% and 150% of AMI can receive up to 50% of the cost, again capped at $8,000, so the same project might see a rebate of up to $7,000. These are examples of how the formula works, not promises of any particular payout.
Why availability differs so much
Each state submitted its own plan to the Department of Energy and chose how to deliver the money. Some began with pilots in certain regions or for particular income groups. Others used waitlists or paused when money ran out. This is why two neighbours in different states can have very different experiences, and why a rebate you read about online may not be open to you yet.
Tips to improve your chances
- Gather proof of income and household size before applying, since most programs verify them.
- Ask contractors whether they are registered with your state’s program before you sign.
- Get a home energy assessment if you are interested in HOMES, since the rebate depends on measured or modeled savings.
- Check your utility for rebates that cover costs HEAR does not, such as certain panel or wiring work.
More questions
Can renters apply? Many states allow renters with landlord permission, and some programs have separate rules for rental properties. Check your state’s page.
Is the rebate taxable? Rules for tax treatment can depend on the program and your situation, so ask a tax professional.