Ultimate Guide To Heat Pump Rebates And Tax Credits In Maine: What You Need To Know

What Heat Pumps Are And How They Work

Heat pumps, efficient for heating and cooling, consist of exterior and interior units, offering customizable comfort. They come in hybrid (oil and electricity) or fully electric options, connecting to the grid or solar panels. Around since the 1970s, electric heat pump HVAC systems have surged in popularity as they align with the demand for green, sustainable heating and cooling solutions. 

Programs like Efficiency Maine provide incentives that make meeting the targets set by the state for heat pump installations and a shift to sustainable energy solutions easier.

Efficiency Maine Rebates As Of 2023

At the state level, you can get back up to $8,000 for low-income residents, up to $6,000 for moderate-income customers, and up to $4,000 for all residents. 

There are also $2,000 federal tax credits for partial- and whole-home heat pump systems. 

The average homeowner spends $5,500 to install a heat pump, which can save about $1,000 annually over fossil fuel-burning heaters.

Efficiency Maine Residential Rebates

Rebates Available Regardless Of Income

You can receive up to 40% of the project cost up to a maximum lifetime rebate limit of $4,000 when transitioning to an electric, zero-emission heat pump. 

To be eligible: 

• 
  You must be the owner of the home, which is located in Maine. 
• The heat pump must heat the space throughout the entire heating season.
• Only single-zone heat pumps with one indoor unit each (including ducted indoor units) qualify. 
• You must have a  25C Federal tax credit-eligible heat pump installed.
• Heat pumps must cover at least 80% of the total required capacity of the dwelling at the designated temperature.
• The heat pump(s) must be sized to meet 100% of the home’s peak heating load. 
• You must remove your old primary fossil-fueled heating system, connect it only to a generator, disable (lock power in the off position) it, and disconnect it from thermostats or disconnect it from the panel - basically, put out of commission.
• A state-recognized, licensed HVAC contractor must install the heat pump.



Rebates For Moderate Income Homeowners

You can receive a rebate for up to 60% of the project cost to a maximum lifetime limit of $6000. 

To qualify for a moderate income rebate:

• You must have an Adjusted Gross Income (AGI) of up to $70,000 for individual tax filers or $100,000 for joint filers.

AND

• Be the owner of the home, which is located in Maine. 
• The heat pump must heat the space throughout the entire heating season.
• Only single-zone heat pumps with one indoor unit each (including ducted indoor units) qualify. 
• A 25C Federal tax credit-eligible heat pump must be installed.
• Heat pumps must cover at least 80% of the total required capacity of the dwelling at the designated temperature.
• The heat pump(s) combined with supplemental heat must be sized to meet at least 100% of the home’s peak heating load.
• Your old primary fossil-fueled heating system must be removed, connected only to a generator, disabled (lock power in the off position), thermostats disconnected, or disconnected from the panel - basically, put out of commission.
• The heat pump must be installed by a state-recognized, licensed HVAC contractor.

To see if you qualify, complete the Efficiency Maine eligibility form here.

Efficiency Maine offers rebates to help businesses, industry, and commercial property owners install or retrofit their existing HVAC system with a zero-emission, high-efficiency heat pump system. They have rebates for every situation and every system.

Eligible businesses and organizations include:

Eligible businesses and organizations include: 

• Businesses, for-profit or nonprofit
• Municipalities
• Schools and higher education facilities

• Manufacturing and other industrial facilities
• Other non-residential facilities
• Multifamily buildings with three or more units

Federal Tax Credits For Heat Pump Installations In Maine

Homeowners and residents can receive a federal tax credit of up to $2000 per year if a heat pump with a 75% or greater thermal efficiency rating is installed. Qualifying home improvements include new:

• Electric or hybrid heat pump systems for heating and cooling
• Electric or hybrid heat pump water heaters

The maximum credit you can claim each year is:

• $1,200 for energy property costs and certain energy-efficient home improvements, with limits on doors ($250 per door and $500 total), windows ($600), and home energy audits ($150)
• $2,000 per year for qualified heat pumps, biomass stoves, or biomass boilers

The credit has no lifetime dollar limit. You can claim the maximum annual credit every year that you make eligible improvements until 2033. 

The credit is nonrefundable, so you can only get back what you owe in taxes. You can't apply any excess credit to future tax years.

Who Is Eligible For The Energy Efficient Home Improvement Tax Credit? 

You can claim the energy-efficient home improvement credit for improvements to your main home. Your main home is where you live most of the time.

For the energy efficiency home improvement credit, the home must be:

• Located in the United States
• An existing home that you improve or add onto, not a new home
• In most cases, the home must be your primary residence (where you live most of the year). You can't claim the credit if you're a landlord or other property owner who doesn't live in the home.

Business use of home 

You can't claim the credit if you use a property solely for business purposes.

If you use your home partly for business, the credit for eligible clean energy expenses is as follows:

• Business use up to 20%: full credit.

Business use more than 20%: credit based on share of expenses allocable to nonbusiness use.

Can I get the full tax credit and installation rebates from Efficiency Maine?

The short answer is yes. Generally, the Efficiency Maine heat pump installation rebates are received after you purchase your heat pump so you can claim the full purchase price to qualify for the maximum annual tax credit.



According to the IRS, “state energy efficiency incentives are generally not subtracted from qualified costs unless they qualify as a rebate or purchase-price adjustment under federal income tax law. Many states label energy efficiency incentives as rebates even though they don't qualify under that definition.” See Notice 2013-70, IRB 2013-47 for more information.

New Regulations For Rebate Qualification and Safety Concerns

As of the fall of 2023, there has been a significant change to the qualification requirements for receiving the maximum rebate from Efficiency Maine. You must disable your oil boilers or only connect them to a generator and install a whole versus partial system. 

Before now, many people opted to either heat only partially using an electric heat pump or keep their oil heating systems as backups. However, they have since discovered they can heat their homes with electric heat pumps even on the coldest days. 

Disabling or connecting boilers to a generator has raised some concerns. The Energy Commission believes that disabling boilers without being serviced poses a serious safety risk when started up again. They also have concerns about code compliance and improper disconnections. While no concrete evidence confirms or disputes the Commission’s concerns, Governor Mills and Efficiency Maine continue to seek the advice and counsel of local energy companies to determine whether disconnecting and disabling existing boilers poses a safety risk.

Ready to make the switch to green energy heating?