Indiana Heat Pump Rebates & Incentives (2026)
Indiana's $182 million Energy Saver Program is fully operational and offers up to $8,000 for a heat pump for income-qualified households. Utility rebates from AES Indiana, Duke Energy, NIPSCO, and others add $275–$3,000 on top. Federal tax credits expired December 31, 2025. This guide covers all major Indiana heat pump incentives available in 2026, including the Indiana Energy Saver Program (HOMES and HEAR), utility rebates from all major providers, and local programs. Here's what's actually available.
Last verified: March 23, 2026
Rates and program availability may change after this date.
Indiana
Open
Indiana Energy Saver Program (HEAR) offers up to $8,000 for heat pumps for households below 150% AMI. HOMES rebates cover up to $4,000 for other homeowners. Utility rebates add $275–$3,000. Federal tax credits expired Dec 31, 2025.
Sources:
Indiana is one of the few states with fully operational IRA rebate programs — making 2026 one of the best times to install a heat pump if you qualify.
The short version
✓ Indiana Energy Saver — HEAR
Up to $8,000 for a heat pump for households below 150% of Area Median Income (AMI). Up to $14,000 total per household. Applied as a point-of-sale discount.
✓ Utility rebates from all major providers
AES Indiana: up to $725. Duke Energy: up to $3,000. NIPSCO: up to $1,000. CenterPoint: up to $450. Rural co-ops: up to $500.
✓ Total potential savings
$2,600–$5,000 (above 150% AMI) to $9,000–$14,000+ (below 80% AMI). Full electrification packages can reach ~$32,000 total incentives.
✗ Federal tax credits expired
Section 25C ($2,000 heat pump credit) and Section 25D (30% geothermal credit) both ended December 31, 2025. No reinstatement legislation has been introduced.
⚠ HEAR only covers fuel-switching — not electric-to-electric replacement
HEAR rebates apply to first-time electric equipment installations only. Replacing an existing electric furnace or heat pump with a new heat pump does not qualify for HEAR. Those homeowners should apply through HOMES instead, which covers all fuel types but at lower rebate amounts.
Federal heat pump tax credits have expired
Section 25C (Energy Efficient Home Improvement Credit) and Section 25D (Residential Clean Energy Credit) both expired on December 31, 2025. The One Big Beautiful Bill Act accelerated their termination from the original 2032 sunset. No heat pump installed after December 31, 2025 qualifies for either credit. Section 25D allows carryforward of unused credit from pre-2026 installations, but Section 25C does not. As of March 2026, no legislation to reinstate these credits has been introduced.
The “placed in service” rule is strict: only the installation completion date matters, not the purchase or payment date. A heat pump purchased in 2025 but installed in 2026 receives no federal credit.
For more details, see our full explainer: Federal heat pump tax credits ended — what to know.
Home Electrification and Appliance Rebates (HEAR)
With federal tax credits expired, the HEAR component of the Indiana Energy Saver Program is now the single largest incentive available to Indiana homeowners. It targets low- and moderate-income households earning less than 150% of Area Median Income (AMI). Administered by the Indiana Office of Energy Development (IOED), HEAR covers first-time installations of electric equipment — meaning it applies when switching from gas, propane, or oil to electric, but not when replacing existing electric equipment.
HEAR rebate amounts by equipment
| Equipment | Below 80% AMI | 80–150% AMI |
|---|---|---|
| Heat pump (HVAC) | 100% of cost, up to $8,000 | 50% of cost, up to $8,000 |
| Heat pump water heater | 100% of cost, up to $1,750 | 50% of cost, up to $1,750 |
| Electrical panel | 100% of cost, up to $4,000 | 50% of cost, up to $4,000 |
| Electric stove / cooktop | 100% of cost, up to $840 | 50% of cost, up to $840 |
| Heat pump clothes dryer | 100% of cost, up to $840 | 50% of cost, up to $840 |
| Wiring upgrades | 100% of cost, up to $2,500 | 50% of cost, up to $2,500 |
| Total household cap | $14,000 | $14,000 |
HEAR rebates are delivered as point-of-sale discounts applied directly to the contractor's invoice. All work must be performed by contractors in the Indiana Energy Saver Program's approved network. Income qualification can be demonstrated through documentation or categorical eligibility via participation in LIHEAP, Medicaid, SNAP, Head Start, SSI, WIC, or other assistance programs.
⚠ Common mistake: HEAR does not cover electric-to-electric replacements
If your home already has an electric furnace, electric baseboard, or an older heat pump, replacing it with a new heat pump does not qualify for HEAR. HEAR only covers switching from gas, propane, or oil to electric equipment. Electric-to-electric replacements should apply through HOMES instead.
Home Efficiency Rebates (HOMES)
The HOMES component funds whole-home retrofits achieving a minimum 20% predicted energy savings. Unlike HEAR, HOMES is open to all Indiana residents regardless of income and covers both fuel-switching and electric-to-electric replacements. Eligible upgrades include ENERGY STAR-certified HVAC systems, water heaters, insulation, air sealing, duct sealing, appliances, and lighting.
HOMES rebate amounts by income and savings
| Income level | 20–34% energy savings | 35%+ energy savings |
|---|---|---|
| Below 80% AMI | 100% of cost, up to $12,000 | 100% of cost, up to $18,000 |
| 80% AMI and above | 50% of cost, up to $2,000 | 50% of cost, up to $4,000 |
HOMES rebates are available retroactively for retrofits completed between August 16, 2022 and the program launch date. Like HEAR, rebates are delivered as point-of-sale discounts through approved contractors.
HOMES and HEAR can work together on the same project
The two programs cannot fund the same measure, but they can fund different measures within a single project. For example, you could use HEAR for the heat pump installation and HOMES for insulation and air sealing in the same home. This is how income-qualified households reach the highest total incentive amounts.
Indiana utility heat pump rebates
All major Indiana electric utilities run active rebate programs that stack with the Indiana Energy Saver Program. Rebate amounts, efficiency requirements, and application processes vary by provider.
AES Indiana (Indianapolis metro)
AES Indiana's Home Improvement Rebates program offers tiered instant discounts through its Quality Contractor Network. Rebates cover equipment installed through December 31, 2026.
| Equipment | Rebate | Requirement |
|---|---|---|
| Ducted ASHP — Tier 1 | $275 | SEER2 15.2 / EER2 > 9.975 |
| Ducted ASHP — Tier 2 | $375 | SEER2 16.15 |
| Ducted ASHP — Tier 3 | $575 | SEER2 ≥ 17.1 |
| Mini-split heat pump | $100–$725 | Tiered by SEER2 / HSPF2 |
| Heat pump water heater | $600 | ENERGY STAR certified |
Duke Energy Indiana (central and southern Indiana)
Duke Energy's Smart $aver program offers the most generous utility conversion rebates in Indiana. A free Home Energy Check is required within 24 months before installation. Rebates are paid via prepaid Mastercard.
| Equipment | Rebate | Notes |
|---|---|---|
| Standard HP replacement | $500–$1,000 | Tiered by SEER2 |
| Dual-fuel conversion | Up to $3,000 | Expanded conversion rebate |
| Cold-climate / ducted mini-split | Up to $2,500 | Conversion rebate |
| Geothermal | Up to $2,300 | Conversion rebate |
| HPWH (50 gal) | $500 | UEF ≥ 3.3 |
| HPWH (80 gal) | $800 | UEF ≥ 3.3 |
NIPSCO (northern Indiana)
NIPSCO's 2026 program covers equipment purchased January 1–November 30, 2026. Applications must be postmarked within 60 days of installation. AHRI certificates are required. Funds are first-come, first-served.
| Equipment | Rebate | Requirement |
|---|---|---|
| Ducted ASHP — Tier 1 | $800 | 15.2–16.1 SEER2 |
| Ducted ASHP — Tier 2 | $900 | 16.2–17.0 SEER2 |
| Ducted ASHP — Tier 3 | $1,000 | 17.1+ SEER2 |
| Ductless mini-split | $60 | 17.1+ SEER2, 8.6+ HSPF2 |
| Heat pump water heater | $750 | ENERGY STAR, UEF ≥ 2.0 |
Indiana Michigan Power (Fort Wayne and northeast Indiana)
I&M uses a Midstream distributor incentive model, meaning discounts are applied at point of purchase through participating distributors and contractors rather than as mail-in rebates. Specific dollar amounts are not publicly listed. Contact participating distributors or call 833-599-0845 through ElectricIdeas.com for current incentive levels.
CenterPoint Energy Indiana (Evansville and southern Indiana)
CenterPoint's 2026 rebate program, administered by CLEAResult, offers direct rebates for heat pump water heaters at $500 and heat pump pool heaters at $350–$800 based on COP rating. For ducted and ductless air-source heat pumps, CenterPoint uses a Midstream program providing instant savings through participating dealers. Ducted ASHP rebates range from $150–$350 by SEER2 tier, and ductless heat pump rebates range from $150–$450. Applications must be submitted within 60 days of installation.
Indiana rural electric cooperatives
Many Indiana REMCs offer standardized heat pump rebates coordinated through Hoosier Energy and Wabash Valley Power Alliance. Confirmed active for 2026 at cooperatives including South Central Indiana REMC, WIN Energy REMC, Harrison REMC, and Southern Indiana Power. Common rebate amounts: $300–$500 for ducted air-source heat pumps, $300–$500 for mini-splits (SEER2 ≥ 17.3), $2,000 for geothermal, and $500 for heat pump water heaters (UEF ≥ 0.90). Harrison REMC offers an additional $200 dual-fuel bonus. Applications are due by December 15, 2026.
City of Bloomington — Green Home Improvement Program
The Bloomington Green Home Improvement Program (BGHIP) provides rebates equal to 25% of project cost (up to category-specific maximums) for heat pumps, heat pump water heaters, insulation, solar, and other efficiency upgrades. Income-qualified households receive higher percentages. BGHIP explicitly allows stacking with Indiana Energy Saver rebates and utility rebates, provided the combined total does not exceed project cost. No other Indiana city currently operates a comparable program.
How Indiana heat pump incentives stack
Indiana's stacking rules are relatively permissive. IRA rebates (HOMES and HEAR) can stack with utility rebates. HOMES and HEAR cannot fund the same measure but can fund different measures within one project. The combined total across all programs cannot exceed the project's total cost. There are no Indiana state tax credits to layer in.
Above 150% AMI — Ducted cold-climate heat pump ($15,000 installed)
- HOMES rebate (35%+ energy savings): $4,000
- Duke Energy conversion rebate: $2,500
- Federal tax credit: $0 (expired)
Realistic maximum: ~$6,500
80–150% AMI — Ducted ASHP + HPWH ($18,000 installed)
- HEAR heat pump rebate (50% of cost): $4,000
- HEAR HPWH rebate (50% of cost): $875
- NIPSCO ducted ASHP rebate: $1,000
- NIPSCO HPWH rebate: $750
Realistic maximum: ~$6,625
Below 80% AMI — Full electrification package ($25,000 project)
- HEAR heat pump (100% of cost): $8,000
- HEAR HPWH (100% of cost): $1,750
- HEAR electrical panel (100% of cost): $4,000
- HOMES insulation + air sealing (100% of cost, 35%+ savings): up to $18,000
- Utility rebate (e.g., NIPSCO): $1,000
Realistic maximum: capped at project cost (~$25,000)
What you'll actually pay
For a typical $12,000–$15,000 ducted heat pump installation: above 150% AMI homeowners should expect $8,500–$12,400 out of pocket after HOMES + utility rebates. Homeowners at 80–150% AMI can bring that down to $5,000–$9,000 with HEAR. Below 80% AMI, out-of-pocket costs can be $0 for qualifying projects.
Indiana has no state income tax credit for heat pumps. The Indiana Energy Independence Fund (PowerSave Indiana) offers below-market financing to cover remaining out-of-pocket costs.
Is a heat pump worth it in Indiana in 2026?
For most Indiana homeowners, the answer is yes — but it depends on your current heating system and income level.
It's usually worth it if:
You heat with propane or electric resistance (highest per-BTU fuel costs, strongest payback). You qualify for HEAR rebates (below 150% AMI), which can cover most or all of the upfront cost. Or you can access utility conversion incentives like Duke Energy's $3,000 rebate. In these cases, a heat pump can reduce both upfront cost and long-term energy bills — sometimes bringing total out-of-pocket cost close to $0.
It's situational if:
You already have natural gas heating and are above 150% AMI. The economics work but take longer to pay back. A dual-fuel setup (heat pump + gas furnace backup) is often the most practical option in this scenario — you reduce heating costs during mild weather while keeping gas as backup for the coldest days. Most Indiana utilities support this configuration through their rebate programs.
It may not be worth it if:
You are replacing an existing electric heat pump that still works. You don't qualify for HEAR and have limited utility rebates in your area. These projects rely mostly on HOMES or utility incentives, which are smaller and require energy modeling to qualify.
Bottom line
Indiana is one of the stronger states for heat pump incentives in 2026 — especially for income-qualified households switching from gas or propane. But the economics vary significantly depending on your home, heating system, and income level. The table above in “What you'll actually pay” gives you the real numbers.
Indiana Weatherization Assistance Program
The Indiana Weatherization Assistance Program (WAP) is administered by the Indiana Housing and Community Development Authority (IHCDA) and provides free energy audits, air sealing, insulation, and furnace inspection to households earning at or below 200% of the Federal Poverty Level. Services are entirely free. Demand typically exceeds capacity, creating wait lists prioritized by energy burden and vulnerability.
Apply through your county's Local Service Provider. Contact IHCDA at iwx@ihcda.in.gov for provider referrals. Weatherization services can complement Indiana Energy Saver rebates — completing WAP improvements first may help your home reach the 35% energy savings threshold needed for maximum HOMES rebates.
Indiana climate and heat pump performance
Indiana spans IECC Climate Zone 5A (central and northern counties) and Climate Zone 4A (southern counties). Cold-climate heat pump selection is a genuine engineering concern throughout the state, not just a marketing label. Similar cold-climate considerations apply in neighboring Michigan and Wisconsin.
ASHRAE design temperatures
| City | Climate zone | 99% design temp | Cold-climate HP needed? |
|---|---|---|---|
| Fort Wayne | 5A | 1–2°F | Yes — essential |
| Indianapolis | 5A | 5°F | Yes — essential |
| Evansville | 4A | 8–10°F | Recommended |
✓ Best candidates for a heat pump in Indiana
Propane-heated rural homes (highest per-BTU fuel cost, often served by co-ops with $500 rebates). Gas-heated homes considering dual-fuel configurations (keep existing furnace as backup). Homes with ductwork already in place. Households below 150% AMI that qualify for HEAR's $8,000 heat pump rebate.
Natural gas heats approximately 65% of Indiana homes, electricity heats 26%, and propane serves about 7% — concentrated in rural areas. Indiana's residential electricity rate of roughly 17.3 cents per kWh (slightly below the national average) makes heat pump operating economics favorable compared to both propane and, increasingly, natural gas. For gas-heated homes, dual-fuel configurations pairing a cold-climate heat pump with the existing gas furnace as backup offer a pragmatic transition strategy that most Indiana utilities support through their rebate programs.
Considering adding battery storage to complement a heat pump system? See our guide: Are home batteries worth it in 2026?
Common mistakes Indiana homeowners make
⚠ Assuming HEAR covers all replacements
HEAR only covers fuel-switching (gas/propane/oil to electric). Replacing an existing electric system with a new heat pump does not qualify. Use HOMES instead.
⚠ Not using an approved contractor
Both HEAR and HOMES rebates require work by contractors in the Indiana Energy Saver Program's approved network. Using an unapproved contractor means no point-of-sale discount and no rebate.
⚠ Missing utility deadlines
NIPSCO's program closes November 30, 2026 — not December 31. Most utility programs are first-come, first-served. Submitting applications within 60 days of installation is required by NIPSCO and CenterPoint.
⚠ Not stacking HOMES + HEAR correctly
The two programs cannot fund the same measure, but they can fund different measures in one project. The highest totals come from using HEAR for the heat pump and HOMES for insulation and air sealing. Many homeowners miss this and leave thousands on the table.
How to apply for Indiana heat pump rebates
Check your income eligibility
Determine whether your household falls below 80% AMI, 80–150% AMI, or above 150% AMI. This determines whether you qualify for HEAR, HOMES, or both. Use the income calculator at IndianaEnergySaver.com.
Find an approved Indiana Energy Saver contractor
All HEAR and HOMES rebates must be processed through contractors in the program's approved network. Search the contractor directory at IndianaEnergySaver.com.
Get a quote with point-of-sale rebate applied
Your contractor will apply the IRA rebate directly to your invoice as a discount. You do not need to wait for reimbursement.
Apply for your utility rebate separately
Utility rebates (AES Indiana, Duke Energy, NIPSCO, CenterPoint) require separate applications. Check your utility's website for deadlines and required documentation like AHRI certificates.
Apply early — funds are limited
Both IRA programs and most utility programs are first-come, first-served with fixed funding pools. Apply through IndianaEnergySaver.com or call 855-446-7283.
What to watch in Indiana
IRA funding runway
Indiana's $182 million allocation is being disbursed on a first-come, first-served basis. Approximately 1,400 applications were processed by late 2025. IOED targets full disbursement within three years, but if uptake accelerates, funds could be exhausted sooner. Early application is strongly recommended.
Federal credit reinstatement unlikely
No legislation to restore Section 25C or 25D credits has been introduced as of March 2026. The current political environment makes reinstatement before 2029 unlikely. Planning around state and utility incentives only is the safest approach.
Utility program year-end deadlines
NIPSCO's program closes November 30, 2026. Most other utility programs run through December 31, 2026 but are subject to fund exhaustion. Verify current availability with your utility before scheduling installation.
Indiana Energy Independence Fund expansion
The IEIF's PowerSave Indiana financing program is expanding statewide from its initial northeast Indiana launch. This below-market financing option can cover remaining out-of-pocket costs after rebates are applied, with no minimum credit score requirement.
Frequently asked questions
What heat pump rebates are available in Indiana in 2026?
Indiana’s main incentive is the Indiana Energy Saver Program, which combines HEAR rebates (up to $8,000 for a heat pump for households below 150% AMI) and HOMES rebates (up to $4,000 for homeowners above 150% AMI achieving 35%+ energy savings). All major Indiana utilities also offer rebates ranging from $275 to $3,000. Federal Section 25C and 25D tax credits expired December 31, 2025 and are no longer available.
Can I stack Indiana Energy Saver rebates with utility rebates?
Yes. IRA rebates from the Indiana Energy Saver Program (HOMES and HEAR) can stack with utility rebates from AES Indiana, Duke Energy, NIPSCO, CenterPoint, or your rural electric cooperative. HOMES and HEAR cannot fund the same measure within a single home, but can cover different measures in the same project. The combined total across all programs cannot exceed the project’s total cost.
Do I need a cold-climate heat pump in Indiana?
Yes, cold-climate heat pumps are strongly recommended for Indiana. Indianapolis has an ASHRAE 99% design temperature of about 5°F, Fort Wayne drops to 1–2°F, and even Evansville in the south reaches 8–10°F. Cold-climate models maintain heating capacity at these temperatures and are essential for reliable winter performance in central and northern Indiana.
Who administers Indiana’s heat pump rebate programs?
The Indiana Energy Saver Program (HOMES and HEAR rebates) is administered by the Indiana Office of Energy Development (IOED). Applications are processed through IndianaEnergySaver.com. Utility rebates are administered separately by each utility: AES Indiana, Duke Energy Indiana, NIPSCO, Indiana Michigan Power, and CenterPoint Energy Indiana. The Weatherization Assistance Program is administered by the Indiana Housing and Community Development Authority (IHCDA).
What is the income limit for Indiana HEAR rebates?
HEAR rebates are available to Indiana households earning less than 150% of Area Median Income (AMI). Households below 80% AMI receive 100% of project cost up to federal caps ($8,000 for a heat pump). Households at 80–150% AMI receive 50% of project cost. Households above 150% AMI do not qualify for HEAR but can access HOMES rebates and utility rebates.
Sources
- Indiana Office of Energy Development — Home Energy Rebates
- Indiana Energy Saver Program
- Indiana Energy Saver — Home Appliance Rebate (HEAR)
- Indiana Energy Saver — Home Efficiency Rebate (HOMES)
- AES Indiana — Home Improvement Rebates
- Duke Energy Indiana — Smart $aver Rebates
- NIPSCO — Residential Rebates
- CenterPoint Energy Indiana — Residential Rebates
- IHCDA — Weatherization Assistance Program
- Bloomington Green Home Improvement Program
Disclaimer: This page covers the main statewide, utility, and IRA heat pump incentives available to Indiana homeowners in 2026. It does not calculate savings, guarantee eligibility, or represent any incentive program. Utility rebate amounts for Indiana Michigan Power and CenterPoint Energy Indiana are based on the most recent published schedules and may have changed. We verify status regularly but programs can change without notice. Always confirm current amounts and eligibility with the Indiana Energy Saver Program (IndianaEnergySaver.com) and your contractor before making decisions.