Heat pump incentives in Minnesota changed a lot in the past year. The federal tax credits many homeowners counted on have ended. The state's new rebate programs are still waiting to launch. Utility rebates remain the main incentive you can use today. This guide covers what we could confirm from official sources as of October 15, 2026. Programs change, so confirm your eligibility with each program before you buy.
Federal tax credits: ended after 2025
Two federal tax credits used to cover heat pumps. Both were shortened by Public Law 119-21, signed July 4, 2025. According to the IRS FAQs on the 2025 changes to Sections 25C and 25D:
| Section 25C | Section 25D | |
|---|---|---|
| Credit | Energy Efficient Home Improvement Credit | Residential Clean Energy Credit |
| Covered | Air-source heat pumps | Geothermal heat pumps |
| Not allowed for | Any property placed in service after December 31, 2025 | Any expenditures made after December 31, 2025 |
For 25D, the IRS treats an expenditure as made when the original installation is completed, so paying a deposit in 2025 does not qualify a 2026 installation.
If your heat pump was installed and in service during 2025, you may still claim the credit on your 2025 tax return. Talk to a tax professional about your situation. For any installation in 2026, these federal credits are not available.
Minnesota state rebates: not launched yet
Minnesota plans to offer federally funded home energy rebates (the HEAR and HOMES programs) under the name Save Energy Minnesota, along with a separate state Residential Heat Pump Rebate. As of an October 2026 update on the Minnesota Department of Commerce's Save Energy Minnesota page, the state says:
- Save Energy Minnesota has not launched yet.
- The state is waiting for formal approval from the U.S. Department of Energy.
- There is no estimated launch date.
This timing matters. The Department of Commerce says federal guidelines do not allow retroactive rebates for items purchased before the program launches. Its heat pump rebate page also says you must be approved through HEAR before you buy the heat pump. If you buy now, you should not expect to receive these state rebates later. Planned eligibility is tied to household income, and the planned heat pump rebate calls for an ENERGY STAR certified cold-climate unit installed by an approved contractor.
Xcel Energy rebates
Xcel Energy provides both electric and natural gas service in Saint Paul. Its Minnesota 2024–2026 residential rebate summary lists these heat pump rebates:
- Ducted air-source heat pump: $1,600 if you get gas, or both gas and electricity, from Xcel. $1,100 if you get only electricity from Xcel. The unit must meet 15.2 SEER2, 9.6 EER2 and 7.8 HSPF2, with a Quality Installation.
- Cold-climate ducted air-source heat pump: $2,000 for gas or combined customers, or $1,500 for electric-only customers. The model must be listed on ashp.neep.org with a COP of 1.75 or higher at 5°F.
- Ductless mini-split heat pump: $1,600, or $2,000 for a cold-climate mini-split.
- Ground-source (geothermal) heat pump: $500 per heating ton, with a quality installation requirement.
- Heat pump water heater: $400, or $500 if eligible for Demand Management.
- A bonus when you complete qualifying insulation and air sealing and then install a qualifying heat pump within two years.
If you replace your furnace at the same time and Xcel supplies your gas, the summary also lists furnace rebates of $200 to $400 for models rated 95% to 97% AFUE.
Xcel's Minnesota HVAC rebate application asks for your contractor's Xcel Energy contractor ID, says mini-split heat pumps need a backup heat source, and says applications must be postmarked by September 30 of the year after installation. You need a dated invoice or receipt showing the manufacturer, model and serial number. Proposals and estimates are not accepted. An AHRI certificate is highly recommended. Xcel states programs may be cancelled or modified with 30 days' notice. The current rebate summary covers 2024–2026, and terms for 2027 installations had not been published when we checked. For questions, call Xcel at 800-895-4999. If another utility serves your home, check its programs.
How to protect your rebate before you buy
- Identify your utilities. Check your bills to see who supplies your electricity and your gas. Rebates depend on it.
- Read the current terms. Download the rebate form and terms for the year you plan to install, not last year's version.
- Confirm the equipment qualifies. Ask for the AHRI certificate number and confirm the model meets each program's efficiency requirements.
- Ask about contractor requirements. Confirm your contractor is registered with the utility program if required.
- Keep the final invoice. Utilities require a dated invoice with model numbers. Estimates and proposals are not accepted.
- Watch the deadlines. Note the install-by and submit-by dates, especially for year-end installations.
- Do not count on state rebates for a purchase made now. Check the Department of Commerce page for launch news.
When to call a professional
Talk to a heating contractor once you know which utilities serve your home and when you want to install. A contractor can confirm which models meet current rebate requirements and provide the invoice details the utility asks for. Krinkie's can walk you through heat pump installation and the paperwork. Always confirm your eligibility directly with each program before you buy.
Common questions
Is there a federal tax credit for heat pumps in 2026?
No. The IRS says the 25C credit is not allowed for property placed in service after December 31, 2025, and the 25D credit is not allowed for expenditures made after that date.
Can I get the Minnesota HEAR heat pump rebate now?
Not as of October 2026. The Minnesota Department of Commerce says Save Energy Minnesota has not launched and federal rules do not allow retroactive rebates for purchases made before launch.
Do I need to be an Xcel Energy customer to get its heat pump rebate?
Yes. Xcel's rebates are for its Minnesota customers, and the amount depends on whether Xcel supplies your electricity, your gas, or both. If another utility serves your home, check its programs.
Sources
- IRS — FAQs for modification of Sections 25C, 25D and others under Public Law 119-21
- Minnesota Department of Commerce — Save Energy Minnesota
- Minnesota Department of Commerce — Residential Heat Pump Rebate Program
- Xcel Energy — Minnesota 2024–2026 Residential Rebate Summary
- Xcel Energy — Minnesota Residential HVAC Rebate Application