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Combining Rebates

Final requirements and rules for State and Federal tax incentives are still pending. Information on this page represents the best information currently available. Please consult a tax professional when making plans and determining what equipment is eligible for incentives

Xcel Energy, the Denver Office of Climate Action, Sustainability, and Resilience (CASR), and the federal government offer heat pump rebates and incentives. Xcel Energy and CASR rebates can only be claimed by the installing contractor (not the end consumer). In many cases, only contractors on Xcel Energy's registered partner list can claim these rebates. Remember this as you select a contractor and ask how the contractor will represent the rebates on an installation quote. Claim federal tax credits on your tax return.

If your household has a total income of less than 80% of the Area Median Income, you may qualify for additional Denver and state funding. Ask Denver about their Healthy Homes program, Home Energy Rebates for Income Qualified households and the State Energy Office about the Inflation Reduction Act HOMES rebates (up to 150% Average Median Income).

Funding Available for Heat Pumps Installed in Denver

Technology Type	Xcel Energy Rebate¹	Denver Rebate, up to 40% of project cost	State of Colorado Tax Incentive²	IRA³ Low⁴ Income, up to 100% of project cost	IRA³ Medium⁴ Income, up to 50% of project cost	IRA High³ Income
High Performance ASHP	$1,500	$1,500	12.9%	$8,000	$8,000	30% tax credit, up to $2,000
ccASHP	$2,000	$3,500	12.9%	$8,000,	$8,000	30% tax credit, up to $2,000
High Performance MSHP	$1,500	$1,500	12.9%	$8,000	$8,000	30% tax credit, up to $2,000
ccMSHP	$2,000	$3,500	12.9%	$8,000	$8,000	30% tax credit, up to $2,000
GSHP (replacing electric resistance)	$800/ton, up to $1,500	$3,500	12.9%	$8,000	$8,000	30% tax credit, up to $2,000
GSHP (replacing natural gas)	$900/ton, up to $2,000	$3,500	12.9%	$8,000	$8,000	30% tax credit, up to $2,000

¹Xcel Energy rebates are per heat pump except for GSHPs, which are per ton.

²Only applies to equipment costs. Does not include installation costs. Total state tax incentive includes a tax credit (10%) and sales tax exemption (2.9%) on the equipment price for a total of 12.9% credit for those with enough tax liability.

³Low- and medium-income home rebates will have the IRA funding distributed through the State Energy Office. This funding will be available at the earliest in the summer of 2023. Tax credits are currently available as of January 1, 2023. The information provided here about Air-Source heat pumps that are eligible for the tax credit is the most current available. Currently, eligible equipment must “meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which is in effect as of the beginning of the calendar year.” The eligibility requirements are subject to change based on the final CEE Criteria and the Internal Revenue Service (IRS).

⁴Low Income is below 80% of the area median income (AMI), medium income is between 80% and 150% AMI, and high income is above 150% AMI. You can enter your zip code here to check AMI for your location. Final information from the Department of Energy and the State Energy Office is still pending on the IRA HOMES and HEEHRA programs.

Funding Eligibility Requirements for Heat Pumps

Technology Type	Xcel Energy Eligibility¹	Denver Eligibility²	State of Colorado Eligibility	IRA Tax Credit Eligibility
High Performance ASHP	SEER³ = 15 EER = 11.5 HSPF = 9	SEER = 15 EER = 11.5 HSPF = 9	Requirements are still being finalized. Visit the program website for more information.	Requirements are still being finalized. Visit the program website to learn more.
ccASHP	SEER2 = 18 EER2 = 11.5 HSPF2 = 9.5	SEER2 = 15 EER2 = 10 HSPF2 = 8.1	Requirements are still being finalized. Visit the program website for more information.	Requirements are still being finalized. Visit the program website to learn more.
High Performance MSHP	SEER = 15 EER = 11 HSPF = 9	SEER = 15 EER = 11 HSPF = 9	Requirements are still being finalized. Visit the program website for more information.	Requirements are still being finalized. Visit the program website to learn more.
ccMSHP	SEER2 = 18 EER2 = 11 HSPF2 = 9.5	SEER2 = 16 EER2 = 9 HSPF2 = 9.5	Requirements are still being finalized. Visit the program website for more information.	Requirements are still being finalized. Visit the program website to learn more.
GSHP	EER = 14.1	EER2 = 16	See Note⁴	NA

¹Additional Xcel Energy Requirements for cold climate models: The unit must be listed here and must have a minimum capacity ratio of 70% for 5°F OAT/ 47 °F OAT

²Additional CASR Requirements: all cold climate models must be listed here, have COP ≥ 1.75 @ 5°F, and a minimum capacity ratio of 70% for 5°F OAT/ 47 °F OAT. GSHP must have minimum heating COP ≥ 3.3. All installations must adhere to quality installation standards.

³For more information about the acronyms we've listed here, check out Heat Pumps 101, which includes a helpful glossary.

⁴Additional requirements for ground source heat pump equipment tax credit are available in Colorado SB22-051

Funding Eligibility Items of Note

Funding for cold climate models requires more stringent heating capacity ratios than the IRA tax credits (25C). A minimum capacity ratio of 70% for 5°F OAT/ 47 °F OAT is required to ensure the best performance in Denver's cold climate.
The city and Xcel Energy require cold climate products to be listed on the NEEP website here.
To qualify for all three funding sources, your equipment must adhere to the most stringent efficiency (the highest number for each category (SEER (2)/EER (2)/HSPF (2)), be listed on the NEEP website, and have a minimum capacity ratio of 70% for 5°F/ 47 °F.