$2,000 Tax Credit For Heat Pump Water Heaters Is Going Bye Bye In 90 Days – CleanTechnica

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For those of us thinking about replacing our aging, polluting water heaters with money-saving, planet-protecting heat pumps, now is the time to do it.

Tax credits of up to $2,000 for a heat pump water heater (HPWH) are being phased out after this year thanks to the Republican legislation that passed over the summer. While the phaseout of these tax credits stinks, there is still time to take advantage of them and lower your upfront cost for a HPWH.

The HPWH tax credit is 30% of the installed cost of the unit. We did a survey last year and found that folks were paying an average of around $4,700 for contractor-led HPWH installations ($2,700 for the installation and $2,000 for the equipment). The 30% tax credit for these average households would thus come to $1,410. Not shabby!

This tax credit can be paired with rebates which are quite high in many parts of the country, so make sure to check with your local utility. See our list of top HPWH rebates around the country.

HPWHs are readily available and installed before the end of the year

Get going on your HPWH install today and you can easily get it installed before the end of the year. Unlike solar panels which have long waiting lists and lead times before their tax credit expires, you should be able to easily get a HPWH installed in the next three months.

Whether you decide to DIY your HPWH install or find a contractor that will install one for you, there should be no problem getting one in your home. And remember, a HPWH saves the energy equivalent of what 6 or 7 solar panels produce, so it’s the perfect technology to pair with and maximize your PV.

What model should I buy?

If you’re going the contractor route, it’s probably best to see which brand your contractor is most familiar with and go with that one. If you’re going the DIY route, you’re mostly limited to Rheem (sold at Home Depot) and A. O. Smith (sold at Lowe’s).

What’s exciting is that there are tons of different types of HPWHs currently available and more coming to market all the time.

Below are the major models of HPWHs available (big thanks to Electrify Now for this great resource).

We’ve also written in-depth articles on many of their features (with more to come). See:

Here are a couple other key resources to get you started on your HPWH installation:

Finally, join us for the greatest day of the year to learn everything you want to know about HPWHs — Heat Pump Water Heater Day is October 23, 2025!