Heat Pump Pricing Index

Alabama Heat Pump Rebates

Stackable incentives available to Alabama homeowners installing a qualifying heat pump in 2026.

Max stackable total:$5,100(income-qualified)

What's available in Alabama

Alabama has no statewide heat pump rebate program. Alabama Power covers most of the state with gas-to-electric conversion rebates; TVA EnergyRight serves the north via local power companies; and several rural electric cooperatives add modest per-ton rebates. The IRA HEAR/HEEHRA program through ADECA had not launched as of April 2026.

Federal §25C tax credit
$2,000
30% of project, capped
Federal HEEHRA rebate
$8,000
Income-qualified only (≤80% AMI)
Alabama non-income-qualified
$3,100
3 programs
Alabama income-qualified
$0
0 programs

Federal incentives

§25C tax credit: 30% of project cost up to $2,000, claimed via IRS Form 5695 for the tax year the system was installed. Locked in through 2032 by the Inflation Reduction Act.

HEEHRA rebate: Point-of-sale rebate up to $8,000 for households at or below 80% of area median income. Funded by the IRA, administered by each state. Alabama is currently finalizing program rules.

Alabama rebate programs

Alabama Power High-Efficiency Heat Pump Rebate

$1,000
rebate

Available to Alabama Power residential customers replacing a gas furnace with a high-efficiency heat pump (18 SEER2 or 20 SEER+). Single-family owner-occupied only; apply within 90 days of install.

Source: alabamapower.com

Alabama Power Heat Pump Water Heater Rebate

$600
rebate

Flat rebate for Alabama Power residential customers switching from a gas water heater to a hybrid heat pump water heater.

Source: alabamapower.com

TVA EnergyRight Preferred Heat Pump Rebate

$1,500
rebate

Up to $1,500 for a TVA Preferred air-source or geothermal heat pump in TVA territory (north Alabama). Must use a Quality Contractor Network installer.

Source: energyright.com

6 utility-specific programs not shown here. Enter your ZIP in the calculator to filter to just your utility.

Estimate your net cost

Used to determine HEEHRA eligibility (under 80% area median income).

Average installed cost
$12,500
Incentives offset 43% of the install−$5,400
  • Federal §25C tax credit−$2,000
  • Oncor Take A Look program−$1,200
  • CenterPoint Energy SCORE−$800
  • Austin Energy Heat Pump Rebate−$1,400
Estimated out-of-pocket$7,100

Estimate only. Tax credits require sufficient federal tax liability. Rebate stacking rules vary — confirm with your installer and utility before signing.

How to claim each rebate

  1. Get pre-approved (where required). Some utility programs require approval before install. Check program details before signing a contract.
  2. Use a participating contractor. Many programs require a licensed installer from an approved contractor list.
  3. Save documentation. AHRI certificate, model numbers, and itemized invoice are required for most utility rebates and the federal §25C credit.
  4. Submit utility rebate within 60–90 days of install. Some programs are first-come first-served and close mid-year.
  5. Claim federal credit at tax time using Form 5695 for the year you placed the system in service.

FAQ

Most Alabama households can stack the federal $2,000 tax credit with up to $3,100 in state and utility rebates. Income-qualified households (under 80% AMI) may also access the $8,000 HEEHRA rebate plus an additional $0 in income-qualified state programs.