Heat Pump ROI: Cost, Incentives, and Payback by State

Heat Pump ROI in 2026: Why Your State Matters More Than Ever

The return on investment for a heat pump varies dramatically by state — from under 1 year in Rhode Island to nearly 10 years in Texas. The difference comes down to three factors: state rebate generosity, local fuel costs, and electricity rates. In 2026, with the residential federal tax credit eliminated (Section 25D expired in December 2025), state and utility rebates are the only incentive reducing your upfront cost. That makes choosing the right state programs and understanding your local economics more important than ever.

We've analyzed the numbers for every state where we operate, using current 2026 energy prices, verified rebate amounts, and real installation costs from our project data. Here's the complete picture.

All States Compared: Heat Pump ROI at a Glance

Why Some States Have 1-Year Payback and Others Take 10

The spread between Rhode Island's 0.9-year payback and Texas's 10-year payback is enormous. Three factors explain virtually all of the variance:

Rebate Stacking: Maximize Your Return

In many states, you can stack multiple rebate and incentive programs to reduce your net cost further. Important note for 2026: the residential federal tax credit (Section 25D) expired in December 2025 under the One Big Beautiful Bill Act. There is no federal tax credit for homeowner heat pump purchases in 2026. All incentives are now state and utility level. Here's what's available to stack:

• State utility rebate — The primary rebate in every state (Mass Save, Energize CT, etc.). This is your largest incentive.
• Income-qualified enhanced rebates — Most states offer 2-3x the standard rebate for households under 150% of area median income (AMI). In Massachusetts, income-qualified households can receive up to $16,000 vs. the standard $8,500.
• HEAR rebates (pending) — The Home Efficiency & Electrification Rebates from the Inflation Reduction Act are still being rolled out. Some states (NH, PA) have not yet launched them. When available, these add $2,000-$8,000 for income-eligible households and can be stacked with state utility rebates in most cases.
• Municipal incentives — Some towns and cities offer additional rebates. Cambridge, MA offers an extra $1,000 for heat pumps. Check with your local energy committee.
• Utility-specific offers — Some utilities run seasonal promotions or have their own rebate programs separate from the state program. Eversource and National Grid occasionally offer bill credits for heat pump adoption.

Decision Framework: Is a Heat Pump Worth It in Your State?

Even in the "evaluate carefully" tier, heat pumps save money over their 15-20 year lifespan. Pennsylvania homeowners see $10,750 in net savings over 15 years, and Texas homeowners see $4,750. The question isn't whether a heat pump saves money — it's whether the payback timeline fits your financial goals. If you plan to stay in your home 7+ years, a heat pump is a positive investment in every state we serve.

Utility Rate Impact: The Hidden Variable

Electricity rates determine your ongoing operating cost, and they vary significantly even within states. In Massachusetts, Eversource customers on the South Shore pay $0.31-$0.34/kWh while National Grid customers in western MA pay $0.28-$0.31/kWh. That 10-15% rate difference translates to $100-$150/year in operating cost difference for the same heat pump system.

Time-of-use (TOU) rates can further improve economics. If your utility offers TOU pricing, you can run the heat pump harder during off-peak hours (overnight, when heating demand is highest anyway) and benefit from rates 30-50% lower than peak pricing. In Connecticut, Eversource's TOU rate drops to $0.12/kWh during off-peak hours vs. $0.42/kWh during peak — running the heat pump on this schedule can reduce annual electricity costs by 25%.

Solar panel owners get the best deal of all. If you have a net-metered solar system generating surplus credits in summer, those credits offset your winter heat pump electricity at full retail rate. Some Massachusetts homeowners with 10kW solar arrays effectively heat their homes for $200-$400/year in net electricity cost — less than one-tenth of their former oil bill.

Detailed State Breakdowns

Click on any state below for a complete breakdown including local rebate claim steps, utility-specific programs, income-qualified enhanced rebates, and a customized savings calculator for your specific situation.

How We Calculate ROI

Our ROI calculations are based on real-world project data and current energy prices, not theoretical models. Here's our methodology:

• Install cost — Average installed price for a whole-home cold-climate heat pump system (2.5-3 ton, ducted or multi-zone ductless) from our 2025-2026 project database. Includes equipment, labor, permits, and line-hide covers.
• Rebates — Current verified state program amounts for standard-tier (not income-eligible) applicants. We update these quarterly as programs change. Income-eligible households often qualify for 1.5-3x these amounts.
• Annual savings — Calculated as: (current annual fuel cost) minus (annual heat pump electricity cost). Current fuel cost uses today's prices for the state's predominant heating fuel. Heat pump electricity cost assumes COP of 2.5-3.0 depending on climate zone and uses current utility rates.
• Payback — Net cost divided by annual savings. This is the simple payback without accounting for fuel price inflation or electricity rate changes. Historically, fuel prices rise faster than electricity rates, so actual payback tends to be shorter than calculated.
• 10-year and 15-year savings — (Annual savings multiplied by years) minus net cost. Assumes constant energy prices. Real savings are typically 10-20% higher due to fossil fuel price escalation.

All figures assume the homeowner pays cash. Financed installations add interest cost but allow immediate savings from day one (monthly loan payment is typically less than the monthly fuel savings it replaces).