Financial Incentives for Heating and Cooling Technologies (ASHP & GSHP)

Incentives for Air Source Heat Pumps

Mass Save Heat Pump Rebates

Ductless or Ducted:

Electric Heat (year-round only): $1,250 per ton of capacity

Oil/Propane Heat: $1,250 per ton of capacity (with integrated controls or removal of existing system)

Other (no integrated controls): $250 per ton of capacity when replacing gas heat or without installing integrated controls

Mass Save Heat Pump Rebates additional details and special requirements

Heat Pump systems must meet minimum performance requirements. A full list of approved systems for both ducted and ductless systems is included on the Mass Save website.

To qualify for the full rebate in oil/propane-heated homes, installed equipment must either fully replace existing heating appliances or must include the installation of approved integrated controls. A list of approved integrated controls is included on the Mass Save website.

Larger rebates only apply to heat pumps being installed in place of electric, oil, or propane heating systems with integrated controls if applicable. All other installations of eligible heat pumps receive the standard $250 per ton of capacity rebate.

Once your installer has completed your installation, all you have to do is submit your rebate application and paid invoice online through the Mass Save website or by mail.

0% interest HEAT loans

0% interest HEAT Loan of up to $25,000 over a 7-year term for qualifying homeowners

0% interest HEAT loans additional details and special requirements

In addition to qualifying for the loan:

If you live in a 1-4 unit building, you will need to have completed a Mass Save home energy assessment. Sign up for an energy assessment as soon as possible to make sure you’ll be able to qualify.

If you live in a 5 or more unit condo or apartment complex, you will need to meet the following requirements:

  1. Your unit must be individually metered for electricity and/or gas

  2. An authorized representative of the building (e.g. building owner, condo board member, property manager) will need to enroll your building for a Mass Save Multifamily energy assessment.

Alternative Energy Certificates

The Commonwealth’s Alternative Portfolio Standard awards Alternative Energy Certificates (AECs) to owners of clean heating & cooling technologies. These AECs can be worth around $5-15 each, determined by the price paid by electric utilities at a public auction held every quarter.

You will only be able to receive AECs if your heat pump system is the only or primary source of heat. The number of certificates you’ll receive will be based on two criteria: (1) the square footage of your home; (2) how efficient your home is; and (3) whether your heat pump is the sole source of heat.

After registering your system, you will be awarded AECs equal to 10 years’ worth of the heat your heat pump system is expected to provide. Depending on the number of certificates you receive, this incentive could be worth anywhere from $300 to $3700!

Visit the DOER website for more information on this incentive and eligibility requirements.

Alternative Energy Certificates additional details and special requirements

We strongly encourage you to contract with an AEC aggregator, who can sell your AECs on your behalf for a small fee. A list of potential AEC aggregators can be provided by your installer or found on the DOER website.

If you wish to contract with an aggregator, you will need to provide all information required by your aggregator. That’s it! Once the auction occurs, the aggregator will send you a check based on the auction price.

If you do not wish to contract with an aggregator, you will need to register your system at http://rt.masscec.com. Note that utilities purchasing AECs tend to buy large quantities, and they may not purchase AECs for just your system.

Whole-Home Air Source Heat Pump Pilot

MassCEC’s whole-home pilot program provides rebates starting at $2,500 to homeowners who install air source heat pumps without supplementary or backup heating.

The program also offers a new Blower Door Test Rebate adder (applies to existing buildings only), for an additional $500.

All projects must be designed to serve as the sole source of heating in the building. Existing buildings and new construction (including gut renovation) projects are eligible, but existing homes must currently heat with gas to participate.


Whole-Home Air Source Heat Pump Pilot additional details and special requirements

Applications must be submitted and approved by MassCEC prior to starting project construction. Only 1-4 unit residential buildings are eligible.

In existing buildings, the home must currently heat with gas and the existing central gas system must be removed. In new construction projects, the site may not have any fossil fuel appliances (including domestic hot water, cooking, and dryers).

In both new existing buildings and new construction, non-fossil fuel backup heat may be left in place or installed (e.g. wood or pellet stoves, electric resistance heat), including in areas that are not able to be adequately conditioned by the heat pump. Existing buildings must have completed a home energy assessment within the past 4 years.

Federal Investment Tax Credit

This tax credit of $300 is available for homeowners installing certified air source heat pumps meeting specific requirements.

Split systems: HSPF >= 8.5, EER >>= 12.5, SEER >=15

Packaged systems: HSPF >= 8, EER >= 12, SEER >=14

Federal Investment Tax Credit additional details and special requirements

Residents should complete Form 5695 and follow the IRS instructions.

Tax-exempt non-profit and public organizations are not eligible to receive the tax credit.

If the entire credit is not used in one tax year, it can roll over to next.

Note that this federal tax credit expires December 2021. Speak with a tax professional for advice on how best to apply this to your project.

Incentives for Ground Source Heat Pumps

0% interest HEAT loans

0% interest HEAT Loan over a 7-year term for qualifying homeowners . (Up to $25,000 for a single family home, and up to $50,000 for 2-4 unit residences.)

0% interest HEAT loans additional details and special requirements

In addition to qualifying for the loan:

If you live in a 1-4 unit building, you will need to have completed a Mass Save home energy assessment. Sign up for an energy assessment as soon as possible to make sure you’ll be able to qualify.

If you live in a 5 or more unit condo or apartment complex, you will need to meet the following requirements:

  1. Your unit must be individually metered for electricity and/or gas

  2. An authorized representative of the building (e.g. building owner, condo board member, property manager) will need to enroll your building for a Mass Save Multifamily energy assessment.

Bridge Loans through Achieve & WaterFurnace

Now through August 31st, 2020, there is additional financing available through Achieve/WaterFurnace for select WaterFurnace 7 Series configurations. Solarize Plus projects have available a bridge loan with No Payments and No Interest for 12-Months for qualified applicants. This is useful as bridge to receipt of incentives (e.g. Federal tax credit), and can be applied for amounts above the Heat Loan limit.

Federal Investment Tax Credit

This tax credit is worth 26% of the installed cost of your ground source system after rebates (with no maximum). If you don’t have sufficient tax liability, you may be able to claim the credit in future years. Consult a tax professional for more information.

Federal Investment Tax Credit additional details and special requirements

Residents should complete Form 5695 and follow the IRS instructions.

Tax-exempt non-profit and public organizations are not eligible to receive the tax credit.

If the entire credit is not used in one tax year, it can roll over to next.

Note that this federal tax credit steps down to 22% in 2021 and expires December 2021. Speak to a tax professional for advice on how best to apply this to your project.

Alternative Energy Certificates

The Commonwealth’s Alternative Portfolio Standard awards Alternative Energy Certificates (AECs) to owners of clean heating & cooling technologies. These AECs can be worth around $5-15 each, determined by the price paid by electric utilities at a public auction held every quarter.

After registering your system, you will be awarded AECs equal to 10 years’ worth of the heat your heat pump system is expected to provide. Depending on the number of certificates you receive, this incentive could be worth anywhere from $1200, to $9,800 or more!

Visit the DOER website for more information on this incentive and eligibility requirements.

Alternative Energy Certificates additional details and special requirements

The number of certificates you’ll receive will be based on three criteria: (1) the square footage of your home; (2) how efficient your home is. Your home must also use the heat pump system as the only source of heating in your home.

We strongly encourage you to contract with an AEC aggregator, who can sell your AECs on your behalf for a small fee. A list of potential AEC aggregators can be provided by your installer or found on the DOER website.

If you wish to contract with an aggregator, you will need to provide all information required by your aggregator. That’s it! Once the auction occurs, the aggregator will send you a check based on the auction price.

If you do not wish to contract with an aggregator, you will need to register your system at http://rt.masscec.com. Note that utilities purchasing AECs tend to buy large quantities, and they may not purchase AECs for just your system.

Property and Sales Tax Exemption

Ground source heat pumps are exempt from the Massachusetts sales tax (6.25%) under MGL 64H.6(dd).

Property & Sales Tax Exemption additional details and special requirements

For the sales tax exemption, fill out Form ST-12 (Exempt Use Certificate, Section 3) and provide it to your installer. The form can be found here: https://www.mass.gov/files/documents/2017/12/12/dor-sales-use-form-st-12.pdf