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Inflation Reduction Act Rebates & Tax Credits Available for Efficient Water Heaters

The Inflation Reduction Act provides both opportunities for tax credits and rebates for high efficiency water heaters. Just like the HVAC rebates, some of these rebates will be in the form of “Point-of-Sale”, that means the customer will receive the discount at the time of purchase.

How Much of a Tax Credit & Rebate is Available?

The amounts vary depending on the type of equipment and whether you are eligible for a rebate. No matter your income level, there are incentives either in the form of a tax credit or rebate. We will start by giving an overview of the tax credits available.

Tax Credits for Water Heaters

Rebates are available for high efficiency gas fired tankless, gas-fired storage and for heat pump water heaters. Gas-fired tankless with UEF ≥ .95 are eligible for up to $600 in rebates. Gas-fired storage with UEF ≥ .86 are also eligible for up to $600 in rebates. Heat pump water heaters with UEF ≥2.2 for 120V and UEF ≥3.3 for 240V are eligible for up to $2,000 in rebates.

Up to $2,000 in rebates for High Efficiency water heaters

High Efficiency Water Heaters Tax Credit/Rebate & Efficiency Requirements

  Efficiency Tax Credit
Gas Fired Tankless UEF ≥ .95 Up to $600
Gas Fired Storage UEF ≥ .86 Up to $600
Heat Pump Water Heaters 120V UEF ≥ 2.2 Up to $2,000
Heat Pump Water Heaters 240V UEF ≥ 3.3 Up to $2,000

Tax Rebate for Water Heaters

Unlike the tax credits, the rebate option is only available for heat pump water heaters. This is part of the high-efficiency electric home rebate program. The rebate is valued up to $1,750. Eligibility for this rebate is tied to an individual’s income relative to the Area Median Income. To receive a rebate, you must earn less than 150% of the area median income. The rebate maximum benefit is up to 100% of the cost for low income earners and phases out at 50% for those in the highest income bracket. It is not available to individuals making over 150% of the area median income. For additional details on eligibility visit: Inflation reduction act heat pump

Does My Water Heater Qualify for a Rebate?

In order for a heat pump water heater to qualify for the rebate incentive it must meet or exceed the highest efficiency tier (not including the advance tier) established by the Consortium of Energy Efficiency. This means that it has to exceed Tier 1 Energy Star tier. For additional details you can visit: or ask your local contractors which systems qualify.

Extended Labor Warranties or ESAs help shoulder the burden of the labor costs

Is My Water Heater Eligible for Extended Labor Warranty Coverage?

All major brands will generally offer a 10 year parts warranty on water heaters. Manufacturer’s parts warranties cover the cost of parts associated with repairs of a system. The burden of the labor will fall on the homeowner. However, these systems are eligible for extended labor coverage. Many contractors have extended labor options that they offer to the homeowner which would cover the labor associated with repairing a system. Extended Labor Warranties or ESAs help shoulder the burden of the labor costs associated with repairs.

For more details on Trinity Warranty for contractors visit ESAs designed for Contractors