(2025 UPDATE) Colorado Heat Pump Rebates

With the current federal and Colorado State incentives and rebates available, now is a great time to swap your furnace (and AC) for a dual-purpose heat pump.

The Federal Inflation Reduction Act (IRA) and state and local programs encourage the adoption of energy-efficient heat pumps.

The Xcel Colorado Rebates are changing for the better in 2025! (Yeah, we know; that’s not what we normally hear.) The Xcel rebates below are updated and take effect on January 1, 2025.

The Federal IRA Tax Credit

Coloradans and all American taxpayers are currently eligible for the heat pump incentives available through the Inflation Reduction Act.

• Any home can claim a 30% tax credit, up to $2,000, to install an air-source heat pump. You claim the tax credit with tax form 5695, the same form you would use for a solar tax credit.

Statewide Tax Incentives

As of January 1, 2024, a law was enacted that makes Energy Star-certified air-source heat pumps eligible for a $1,500 tax credit.

The Colorado Energy Office has guidelines on obtaining the tax credit. Here are a few key guidelines:

• Must be installed by a registered contractor (Independent Power is registered!)
• Registered contractors are required to provide customers with tax credits as a discount on installation costs.
• Registered contractors complete and submit the necessary paperwork to the Department of Revenue for the installed equipment.
• You don’t need to file any paperwork to receive the discount.

Utility Company Incentives

Denver County Rebates

Denver County offers additional rebates that can be combined with utility and state rebates.

UPDATE: As of March 10, 2025, Denver’s heat pump rebate program for residential homes is fully subscribed for 2025. Solar and battery storage rebates for residential homes are fully subscribed as of March 26, 2025. If your application was submitted before March 10 or March 26, respectively, your application will be processed on a first-come, first-served basis, subject to available funds. Denver encourages you to subscribe to their newsletter to stay informed of program changes and get notified if the program reopens. 

• Cold Climate Air Source Heat Pump: 40% of  project cost, up to $1,200
• Must be installed by a registered contractor (Independent Power is registered!)

Boulder County Rebates

Boulder County offers additional rebates that can be stacked on the utility and state rebates.

• 25% of project cost, up to $300
• Must be installed by a registered contractor (Independent Power is registered!)

City Of Boulder Rebates

The City of Boulder offers additional rebates:

• Up to $400 on cold climate heat pumps
• Must be installed by a registered contractor

Town of Erie Rebates

The Town of Erie added additonal rebates in 2024, including heat pumps:

• Up to $400 on cold climate heat pumps
• Check out other rebate offers on the link above

City of Longmont, Ft. Collins, Town of Lyons (and more cities) Rebates

Head to Energy Smart to learn more about rebates available in your city or town. You can also search online with your “Town’s Name” and “Heat Pump Rebates”.

We Can Install Your Heat Pump System In 2025

Federal and State governments can remove programs for a variety of reasons. So, there’s never been a better time to upgrade your old HVAC system! Contact us for a free quote to get a custom design. We’ll help you understand all of the benefits available to you.