Heating Incentives & Financing

This page contains information on incentives for heat pumps—air-source and ground-source (aka “geothermal”)—, for wood and pellet stoves, as well as information on financing options.

HEAT PUMPS

Air-source heat pumps:

  • As of April 2020, NYSEG offers a $1,000/10,000 BTU rebate for systems that heat a whole home (or $500 per outdoor unit for supplementary heat).

  • As of January 2023, there is a federal 30% tax credit for air-source heat pumps and heat pump water heaters for up to $2,000. Learn more here.

  • There will likely be additional incentives from the Inflation Reduction Act. Details are being worked out by NYSERDA, and will not likely be known until the end of 2023. In the meantime, check out this IRA calculator from Rewiring America.

Ground-source heat pumps, also known as geothermal, remove heat from underground, and are more efficient than air source heat pumps. 

There are three incentives for geothermal heat pumps which can cover over half the cost of the installation:

  • NYSEG rebate of $1,500/10,000 BTU for geothermal technologies.

  • Federal tax credit of 30% (raised up from 26% in 2022 with the Inflation Reduction Act)

  • State tax credit of 25% (beginning in January 2022; here is the bill; a more legible document will follow once we find one!)

WOOD & WOOD PELLETS

As of 2023, there is a 30% federal tax credit for wood and pellet stoves with a thermal efficiency rating of 75% or higher.

Income-eligible households may be able to get up to $2,500 off the cost of a qualifying stove through these energy efficiency programs:

  • EmPower + Tier I (60% of the state median income) eligible households can get $2,000 towards the purchase of a new pellet stove + $500 if they recycle an existing wood, pellet or coal stove or insert.

  • Empower+ Tier II with Energy Star (80% of area median income) eligible households can get 50% of the cost of the purchase of a new pellet stove up to $2,000 + $500 if they recycle an existing wood, pellet or coal stove or insert.

To access these additional income-eligible incentives, you have to work through a NYSERDA-participating energy efficiency contractor.

FINANCING

In addition to the rebates mentioned above, there are a number of financing options to help pay for energy-related improvements. Contractors and our Community Energy Advisors can provide additional information on these options, but we provide an overview below.

ON-BILL RECOVERY LOAN

This is a NYSERDA loan in which your loan payments are built right into your utility bill. With this loan, your monthly payments may not exceed your estimated average monthly energy cost savings. So your energy savings essentially pay for your work. Loan amounts of $1,500-$25,000 with terms of 5, 10, or 15 years. Rates are 3.49% for low-income households, 4.99% for households with moderate income, and 5.99% or 6.99% for everyone else. Learn more here.

SMART ENERGY LOAN

This other NYSERDA loan is more traditional, with a monthly payment to NYSERDA's loan servicer. Amounts are from $1,500-$25,000 with terms of 5, 10, and 15 years. Rates range from 3.49% for lower income households who pay by auto payment to 7.49% for upper income households who pay by check. More info here.

OTHER FINANCING OPTIONS & LOCAL BANKS

Your contractor may be able to offer you other financing options. And you may also want to consider a loan through a local bank. Home equity loans can often be useful for energy-related improvements. Some banks even offer special loans for energy projects which you can take advantage of.