Application sequence, gross vs. net cost rules, state-by-state utility programs, and the timing mistakes that leave money on the table
Last updated: April 2026 | Utility programs change frequently — verify current terms with each utility before quoting
HEAR rebates and utility rebates can both apply to the same home electrification project — but only if you understand the sequencing rules and read the fine print on each utility program. Many practitioners leave $1,000–$5,000 in combined savings unrealized because they submit applications in the wrong order, miscount the rebate basis, or miss the utility rebate entirely. This guide covers how to do it right.
For most projects in live HEAR states, a client can combine three distinct incentive streams:
| Incentive | Source | Timing | Income Limit | Typical Amount |
|---|---|---|---|---|
| HEAR rebate | Federal IRA / state program | Point-of-sale | ≤150% AMI | $1,750–$8,000 per measure |
| Utility rebate | IOU or municipal utility | Post-installation (usually) | Varies (often none) | $200–$5,000 per measure |
| 25C tax credit | Federal IRS | At tax filing | None | Up to $2,000/year (heat pumps) |
These are independent programs. There is no federal rule preventing a household from receiving all three on the same project. The challenges are operational, not legal: knowing the correct application sequence, understanding how each program calculates the rebate basis, and meeting each program's documentation requirements.
The most common stacking mistake involves the rebate calculation basis — whether a utility calculates its rebate on gross project cost or net cost after HEAR.
Each of the 12 live HEAR states has major investor-owned utilities (IOUs) with rebate programs. These are the primary utility programs to check before every project.
| State | Key Utilities | Heat Pump Rebate Range | Notes |
|---|---|---|---|
| Massachusetts | Eversource, National Grid, Cape Light Compact | $1,500–$10,500 | Mass Save rebates administered jointly; pre-audit required. One of the richest utility stacking states in the country. |
| New York | Con Edison, National Grid NY, NYSEG, RG&E, Central Hudson | $500–$4,000+ | Con Edison NY-Sun for solar; utility heat pump rebates vary significantly by territory. NYSERDA HEAR is the primary program; utility rebates are secondary stacks. |
| Maryland | BGE, Pepco, Delmarva Power, Potomac Edison | $300–$2,000+ | BGE Smart Energy Savers has heat pump rebates. MEA HEAR + BGE is the most common Maryland stack. Check energysavemd.com for current amounts. |
| Illinois | ComEd (electric), Peoples Gas, North Shore Gas | $200–$1,500 | ComEd energy efficiency rebates apply to heat pumps in their territory. Note: Illinois HEAR is administered separately by ComEd territory and Ameren territory — contractors must enroll in each territory where they work. |
| Michigan | DTE Energy, Consumers Energy | $500–$1,500 | DTE Upgrade Michigan and Consumers Energy rebate programs. Michigan Saves also offers low-interest financing that can fill gaps. MiHER + DTE/Consumers stack is common. |
| Washington | Seattle City Light, Puget Sound Energy, Snohomish PUD | $500–$6,000 | Seattle City Light Clean Heat Program is extremely generous — covers 100% of heat pump costs for LMI households as a standalone program. Stacking with HEAR depends on whether SCL's LMI program and HEAR both apply; check for double-dipping rules. |
| Colorado | Xcel Energy, Black Hills Energy | $200–$1,200 | Xcel Energy's rebates apply to qualifying heat pumps. Note: CO HEAR is currently near exhaustion in the Front Range — new reservations may not be available. Colorado utility rebates remain active independently. |
| North Carolina | Duke Energy NC, Dominion Energy NC, Duke Energy Progress | $200–$1,000 | Duke Energy Smart Saver rebates and Dominion Energy's Home Energy Savings program. Energy Saver NC HEAR stacks with both. Duke Progress and Duke Carolina are separate rebate programs — verify which Duke entity serves your client's location. |
| Georgia | Georgia Power, EMC cooperatives | $200–$800 | Georgia Power's Smart Usage and energy efficiency programs. EMC cooperative rebates vary significantly. GEFA HEAR + Georgia Power is the most common Georgia stack. EMC cooperatives often have their own rebate programs not listed on Georgia Power's site. |
| Indiana | AES Indiana, Duke Energy Indiana, Indiana Michigan Power | $150–$800 | AES Indiana and Duke Indiana have modest heat pump rebates. Indiana Energy Saver (HEAR) + AES/Duke is the primary stack. Duke Indiana and Duke Energy NC are separate entities — confirm you're checking the right territory. |
| Wisconsin | WE Energies, Alliant Energy, Madison Gas & Electric | $200–$1,200 | Focus on Energy (WE Energies-administered) is Wisconsin's primary utility rebate program — and Focus on Energy also administers Wisconsin HEAR. This means the same program administrator handles both, which simplifies stacking but also means you need to check that Focus on Energy's program doesn't restrict double-claiming. |
| Arizona | APS (Arizona Public Service), SRP, TEP | $200–$600 | APS Cool Home program has heat pump rebates. AZ HEAR is in a soft launch with mail-in processing. APS + HEAR is the primary stack; SRP and TEP have separate rebate programs for their territories. |
Most do — there's no federal prohibition. But read the utility's terms of service for the specific rebate program. A few utility programs include language like "this rebate may not be combined with other government-funded programs." This is rare but worth checking, especially for utility programs in states with newer HEAR implementations.
This is the key variable. "Gross cost" = the full installed price before any rebates are applied. "Net cost" = the homeowner's actual out-of-pocket after HEAR. If the utility uses net cost and HEAR covers most of the project, the utility rebate may be very small or zero. If the utility uses gross cost (most do), the utility rebate is calculated on the full project price and the client receives both.
The prohibition is specifically against claiming the same dollar twice from the same or related program. HEAR and utility rebates are separate programs, so there is no double-claiming. However: some state energy efficiency programs are co-funded by utilities and state funds — check whether your state's HEAR administrator has any relationship with the utility program before stacking. In Wisconsin, for example, Focus on Energy administers both — confirm their stacking rules explicitly.
For 2025 projects: utility rebates generally did NOT reduce the 25C tax credit basis in the same way HEAR rebates did. The 25C basis reduction rules applied to amounts received under IRA Section 50121 (HEAR) specifically — standard utility rebates from investor-owned utilities were not subject to this rule.
Utility rebates over $300 are still generally taxable income (the utility reports them to the IRS on Form 1099-MISC). Clients receiving large utility rebates in 2026 should confirm tax treatment with a tax professional — especially in Massachusetts and New York where rebates can be substantial.
Utility programs change their rebate amounts frequently, and new stacking guidance comes out whenever a state launches or updates its HEAR program. The IRA Practitioner Brief covers utility + HEAR + 25C interactions in every issue. Issue #9 is a deep dive on utility stacking — paid, $29/month.
Client profile: 4-person household, Boston metro, 75% AMI (~$110,000 income threshold for 80% AMI). Installing a $14,000 ducted heat pump. Note: The 25C credit row below applied to 2025 installs only — not available for 2026 projects.
| Incentive | Calculation | Amount |
|---|---|---|
| HEAR rebate (≤80% AMI) | 100% of cost, up to $8,000 | $8,000 |
| Mass Save utility rebate | Calculated on gross cost ($14,000) — approximately $2,000 for qualifying cold-climate HP | $2,000 |
| 25C tax credit | 30% × net cost ($4,000 remaining after HEAR) = $1,200, but capped at $2,000 — takes $1,200 | $1,200 |
| Total incentives | $11,200 (80% of project cost) | |
| Client out-of-pocket | $14,000 − $8,000 HEAR − $2,000 utility − $1,200 25C | $2,800 |
The key: the Mass Save rebate was submitted using the gross project cost ($14,000), not the net cost after HEAR. If it had been calculated on net cost, the Mass Save rebate would have been zero (most programs have minimums). Getting the application sequence right here was worth $2,000.