Colorado Heat Pump Rebates & Tax Credits (2026 Guide)

Colorado heat pump incentives changed more in 2026 than in any year since the Inflation Reduction Act. The federal credit ended, the state credit shrank, Xcel cut its rebates in October, and a new regional rebate arrived in the summer. Many online guides still show 2025 numbers.

This guide covers what a Denver-area homeowner can claim for a heat pump installed in late 2026, how each incentive reaches you, and how they stack. Figures are as of November 2026. Programs change with little notice, so confirm terms before you sign. Still deciding whether a heat pump fits? Start with our heat pump vs. furnace comparison and how heat pumps handle Denver winters.

2026 Colorado heat pump incentives at a glance

"Amount" is the maximum for a typical single-family home. Your amount depends on equipment size, efficiency and eligibility.

Federal incentives in 2026: what ended and what's left

The 25C tax credit ended December 31, 2025

From 2023 through 2025, the 25C credit covered 30% of a qualifying heat pump's cost, up to $2,000 a year. Public Law 119-21, the July 2025 budget law, ended it early. The IRS says the credit "will not be allowed for any property placed in service after December 31, 2025." What counts is the placed-in-service date, not when you signed or paid. Any 2026 quote that subtracts a $2,000 federal credit is out of date.

Geothermal systems used the separate 25D credit. It ended for expenditures made after December 31, 2025, and the IRS treats an expenditure as made when installation is complete.

HEEHRA/HEAR rebates: single-family program closed

The IRA also funded point-of-sale rebates for low- and moderate-income households. Colorado's Home Electrification and Appliance Rebate (HEAR) program opened November 13, 2025. CPR reported it offered up to $14,000 per household. The Colorado Energy Office now says HEAR for single-family homes closed after accepting applications through August 1, 2026. Rebates for manufactured homes and multifamily buildings are listed as "coming soon."

The Colorado heat pump tax credit (contractor point-of-sale credit)

You don't claim this one on your taxes. A contractor registered with the Colorado Energy Office claims it on Department of Revenue form DR 1322 and must pass at least one-third to you at installation, shown on the invoice as "State of Colorado Heat Pump Discount." You file nothing.

Source: Colorado Energy Office, as of November 2026. The 2026 amounts apply to installations on or after January 1, 2026. The office says amounts drop again in tax year 2029.

Requirements that matter to homeowners:

• ENERGY STAR certified, and air-source systems must be an AHRI-matched combination.
• The heat pump must be designed to meet at least 80% of annual heating needs. A small heat pump that mostly serves as an AC won't qualify. A well-designed dual-fuel system can, so ask your contractor to document the design.
• Contractors must stay registered, including quarterly training since April 2026. December 31, 2026 is the last day to register for 2026 installs.

The $333 is a floor. Contractors may pass along more, so it's fair to ask.

Xcel Energy heat pump rebates (Colorado)

For most Denver-metro homes, Xcel is the largest incentive. It's funded through PUC-approved efficiency and Clean Heat programs. After Xcel tripled its gas-customer bonus in 2025, the Colorado Sun reported 10,640 Xcel heat pump rebates worth $57 million that year.

What changed on October 1, 2026

Installers including UniColorado, Zero Homes and Three Crowns Electric report an August 2026 Xcel contractor notice: from October 1, the gas-customer bonus fell from 3x to 2x the standard rebate. Xcel's public pages lagged, so treat these as reported maximums and confirm with Xcel (800-895-4999).

Sources: installer notices cited above. The pre-October amounts are consistent with the City of Broomfield's example of $5,625 for a 2.5-ton cold-climate system (Broomfield).

• Electric-only customers (no Xcel gas) reportedly get the base rate: about $750 per heating ton cold-climate, with no bonus.
• Payment delay. UniColorado reported an October 9 notice that 2026 heat pump applications exceeded Xcel's budget. Applications filed after about October 19 may be paid in January 2027. That's a delay, not a cancellation.
• Replacing electric heat. Broomfield says heat pumps replacing existing electric heat aren't eligible for the bonus rebates.
• Participating contractor files the application. DIY installs reportedly qualify only for mini-splits and heat pump water heaters.
• Whole Home Efficiency adds bonuses for multiple projects (including up to $600 for air sealing and insulation) and requires an Xcel-approved audit.

"Per heating ton at 5°F": why it matters

Cold-climate rebates are based on heating capacity at 5°F, not nameplate size. A heat pump loses capacity as outdoor air gets colder. Cold-climate units with variable-speed inverter compressors hold more of it. Installer summaries list Xcel's cold-climate ducted minimums as 15.2 SEER2, 10 EER2, a COP of 1.75 at 5°F, and 70% of rated capacity at 5°F. A COP of 1.75 means 1.75 units of heat per unit of electricity. A gas furnace's AFUE is always below 100%, by comparison. Size from a Manual J adjusted for altitude, never from the rebate.

Power Ahead Colorado: the new $1,500 regional rebate

DRCOG's Power Ahead Colorado is funded by a federal Climate Pollution Reduction Grant. ColoradoBiz reported about $40 million over four years. Per the program overview:

• Up to $1,500 for a qualifying cold-climate air-source heat pump.
• Existing homes and buildings in a DRCOG-participating city or county. New construction is excluded, and CPR reports geothermal is too.
• Purchased and installed on or after June 29, 2026.
• A verified contractor must get pre-approval before work begins. No income limit is listed.

Free Power Ahead energy advisors (844-303-9333) can check which programs apply at your address.

Other Colorado utilities

Not every Front Range home is on Xcel, so check your bill first.

• Longmont Power & Communications (and other Efficiency Works municipal utilities): rebates through Efficiency Works require a participating provider and an application within 45 days. A $2,000 bundling bonus applies to a heat pump plus insulation or air sealing done within six months.
• United Power and CORE Electric Cooperative cover much of the north and south metro. The Colorado Sun counted 255 United Power heat pump rebates in 2025. We couldn't verify either co-op's 2026 amounts from a primary source, so call member services. (The "CORE" program online paying 50% up to $7,500 is the Roaring Fork Valley's Community Office for Resource Efficiency, not the Douglas County co-op.)
• Black Hills Energy (Colorado electric) lists heat pumps on its 2026 rebate application and runs a Beneficial Electrification program with extra help at or below 80% of AMI.

City and county programs

• Denver. Climate Protection Fund rebates started in 2023, and Denver7 reported nearly 2,000 by early 2025. A local installer reports the residential program closed in 2025. We couldn't confirm that on the city's site, so check with the city.
• Boulder County EnergySmart. Since January 1, 2026, it funds only income-qualified rebates (at or below 100% AMI): up to $2,000 a year or 50% of cost after other incentives.
• Golden. Up to $1,000 for a cold-climate heat pump ($2,000 at or below 80% AMI). Homeowners only, while funds last, and all-electric systems only, so gas-connected dual-fuel setups don't qualify.

How to stack Colorado heat pump incentives

Power Ahead says its rebate combines with utility and local rebates, and the state credit applies on top. Example: an Xcel gas-and-electric customer in a DRCOG-participating city replaces a furnace and AC with a 3-ton (at 5°F) cold-climate ducted heat pump in November 2026.

Against Power Ahead's regional cost range of about $18,000–$24,000 for a 3-ton cold-climate system, that leaves roughly $11,700–$17,700 out of pocket (see our Denver installation cost guide). The Xcel line was up to $6,750 before October 1. Electric-only customers get less from Xcel. Golden all-electric projects can add up to $1,000. For dual-fuel, confirm each program's rules for your design first.

Step by step: how to claim Colorado heat pump incentives

1. Identify your programs by utility, city and county.
2. Get a Manual J load calculation. Capacity at 5°F drives both comfort and the Xcel rebate.
3. Choose qualifying equipment: ENERGY STAR, AHRI-matched and cold-climate. Get the AHRI certificate and 5°F data in writing.
4. Confirm the contractor's registrations for the state credit, Xcel, and Power Ahead.
5. Get pre-approval where required, before any work starts.
6. Check the invoice for the state discount line and model numbers that match the AHRI certificate.
7. Get confirmation numbers for every rebate filing, and keep all records.

Our rebate assistance service can help you sort out which programs fit your home.

Common pitfalls that cost Colorado homeowners rebates

• Counting the federal credit, which ended for 2026 installs.
• Using 2025 Xcel numbers ($2,250/ton) for an install after October 1, 2026.
• Starting work before Power Ahead pre-approval.
• Hiring an unregistered contractor, which means no state discount and no Xcel filing.
• Buying standard, non-cold-climate equipment. It earns a smaller rebate, doesn't qualify for Power Ahead, and relies on backup heat more.
• Mismatched model numbers between the invoice and the AHRI certificate.
• Expecting the gas bonus when replacing electric heat.

Is chasing rebates the right reason to switch?

Rebates shouldn't pick your system. A cold-climate heat pump makes the most sense when your AC needs replacing anyway, or when you heat with propane or electric resistance. In some homes a high-efficiency furnace or a dual-fuel system is the better fit. Examples are a large, leaky home with undersized ducts, or a home that would need a costly panel upgrade. New furnaces also face Colorado's ultra-low-NOx rules.

MrFixer Heating & Cooling, based in Castle Pines, installs heat pumps, mini-splits, furnaces and dual-fuel systems across the Denver metro. We offer free in-home estimates and financing. Call (720) 466-7983 or request an estimate.

Frequently asked questions

Is there still a federal tax credit for heat pumps in 2026?

No. The 2025 federal budget law (Public Law 119-21) ended the 25C Energy Efficient Home Improvement Credit for property placed in service after December 31, 2025, per the IRS. A heat pump installed in 2026 gets no federal tax credit. Systems installed and running by December 31, 2025 could still be claimed on a 2025 return.

How much is the Colorado heat pump tax credit in 2026?

For installations on or after January 1, 2026, the credit is $1,000 for air-source heat pumps, $2,000 for ground- or water-source systems, and $250 for heat pump water heaters. A registered contractor claims it and must pass at least one-third ($333, $667 or $83) to you as a discount on the invoice. You don't file anything.

What are Xcel Energy's heat pump rebates after October 1, 2026?

Installer notices report that for Xcel gas customers, cold-climate heat pumps now earn up to about $1,500 per heating ton at 5°F, standard heat pumps up to $600 per cooling ton, and heat pump water heaters up to $1,500. Before October 1 those figures were $2,250, $900 and $2,250. Electric-only customers get a lower base rate. Confirm current amounts with Xcel or a participating contractor.

Can I combine Xcel, Power Ahead Colorado and the state tax credit?

Yes. Power Ahead says its rebate can be combined with utility and local government rebates. The state credit is a contractor discount that applies on top. For a 3-ton cold-climate system in a participating Denver-area city, that's up to about $6,333 in total ($4,500 + $1,500 + $333) at November 2026 rates.

Is the HEAR income-qualified heat pump rebate still available in Colorado?

Not for single-family homes. The Colorado Energy Office says HEAR applications for single-family homes were accepted from November 13, 2025 to August 1, 2026 and are no longer available. Rebates for manufactured homes and multifamily buildings are listed as coming soon.

Do I need a specific contractor to get Colorado heat pump rebates?

Usually, yes. The state credit only flows through a contractor registered with the Colorado Energy Office. Xcel's ducted heat pump rebates are filed by a participating contractor. Power Ahead requires a verified contractor to get pre-approval before work starts. Ask each contractor which registrations they hold.

Does a dual-fuel heat pump qualify for Colorado incentives?

It depends on the program. The state credit requires the heat pump to be designed to meet at least 80% of annual heating needs, so a heat pump that carries most of the season can qualify. Golden's city rebate excludes systems connected to gas. Confirm Xcel and Power Ahead eligibility for your specific design before you sign.