Minnesota Heat Pump Rebates
Stackable incentives available to Minnesota homeowners installing a qualifying heat pump in 2026.
Rebate data is re-verified against primary sources every two months.
In plain terms
A typical Minnesota homeowner can get up to $5,900 back from 2 programs that are open right now.
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What's available in Minnesota
Minnesota has one of the most active utility heat pump rebate ecosystems in the Midwest, anchored by the Energy Conservation and Optimization (ECO) Act of 2021 which expanded the older CIP framework to credit utilities for efficient fuel-switching such as gas-to-heat-pump conversions. Xcel Energy (up to $2,000 for a cold-climate ASHP for customers with Xcel gas service, $900 for electric-only customers) and CenterPoint Energy ($1,100 dual-fuel ducted ASHP) lead the investor-owned utility programs. Minnesota Power pays $400 for a standard air-source heat pump and $1,000 for a cold-climate unit, and $800-$1,000 per ton for geothermal, on purchases made through December 31, 2026; Otter Tail Power offers per-ton rebates for air-source, air-to-water and ground-source systems. Connexus Energy pays up to $1,000 for a ducted cold-climate ASHP, $500 for a ductless unit (SEER/SEER2 17.2 minimum) and up to $600 per ton for geothermal through December 31, 2026, while funds last, and other cooperatives like Minnesota Valley Electric offer their own ASHP rebates. The federal IRA-funded HEAR program (income-qualified, up to $8,000 below 80% AMI or $4,000 at 80-150% AMI) and the companion state Residential Heat Pump Rebate Program (up to $4,000) are administered by the Minnesota Department of Commerce under the Save Energy Minnesota umbrella; as of October 2026 Commerce's latest update still says Minnesota is waiting for formal US DOE approval, there is no estimated launch date, and DOE has issued new program rules the state is still assessing. Neither program has launched and retroactive rebates are not allowed. The state program requires prior HEAR approval, an ENERGY STAR cold-climate ASHP, a home energy audit within the prior 18 months, and caps its rebate at $4,000 or the installation cost minus the federal HEAR rebate, whichever is less.
HEEHRA in Minnesota
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. Minnesota is finalizing program rules.
How heat pump rebates work in Minnesota
Minnesota has one of the most active utility heat pump rebate ecosystems in the Midwest, anchored by the Energy Conservation and Optimization (ECO) Act of 2021 which expanded the older CIP framework to credit utilities for efficient fuel-switching such as gas-to-heat-pump conversions. Xcel Energy (up to $2,000 for a cold-climate ASHP for customers with Xcel gas service, $900 for electric-only customers) and CenterPoint Energy ($1,100 dual-fuel ducted ASHP) lead the investor-owned utility programs, while Minnesota Power, Otter Tail Power, and cooperatives like Connexus and Minnesota Valley Electric offer ASHP and ground source rebates with per-ton structures. Otter Tail Power's geothermal rebate stacks aggressively: $1,200/ton base + $200/ton desuperheater + $200/ton Quality Installation contractor + $40/ton dual-fuel/RDC rate = up to $1,640/ton (20-ton system limit). The federal HEAR (up to $8,000) and state Residential Heat Pump Rebate Program (up to $4,000) are administered by the Minnesota Department of Commerce; as of October 2026 Commerce still says it is waiting for formal US DOE approval with no estimated launch date, neither program has launched, and retroactive rebates are not allowed.
Minnesota rebate programs
Xcel Energy Cold Climate Air Source Heat Pump Rebate
$2,0002025–2026 Xcel Minnesota rebate: $2,000 for a ducted or mixed-ducted cold-climate ASHP (15.2 SEER2, 10.0 EER2, 8.1 HSPF2, COP at 5°F of 1.75 or higher, 70% of rated capacity at 5°F) for customers with Xcel gas service (combo or gas-only), or $900 for electric-only customers. Standard ducted ASHPs pay $1,600 (gas) or $500 (electric-only). Non-ducted mini-splits pay $1,600 standard or $2,000 cold-climate for any customer. Geothermal pays $500 per heating ton. Invoices and installs by December 31, 2026; applications through September 30, 2027. Rebates cannot exceed installation cost. Heat pump owners using it as primary heat can also get Xcel's reduced electric space heating rate.
CenterPoint Energy Ducted Air Source Heat Pump Rebate
$1,100$1,100 rebate for a ducted ASHP (HSPF2 7.8 or higher) installed in an existing CenterPoint gas-served Minnesota home alongside a natural gas furnace of 92% AFUE or higher ($400 in new construction). The invoice must show the AHRI number and the switchover temperature the technician programmed. Installed January 1 – December 31, 2026; applications due December 31, 2026 (paper postmarked by then).
Minnesota Power Air Source Heat Pump Rebate
$1,000Two tiers, not a single flat amount: $400 for a standard air-source heat pump (ducted or ductless) and $1,000 for a cold-climate air-source heat pump (ducted or ductless), plus a $25 tune-up rebate. Valid on purchases made Jan. 1 - Dec. 31, 2026; the participating contractor files the application and checks take 8-10 weeks.
Minnesota Power Ground Source Heat Pump Rebate
$4,000$800 per ton for an ENERGY STAR certified ground source (geothermal) heat pump (open or closed loop), rising to $1,000 per ton when installed by a MNGHPA Master Installer. Purchases must be made and installed Jan. 1 - Dec. 31, 2026 by a participating contractor; as of April 1, 2026, systems connected to an existing non-electric heating system are also eligible. The amount shown assumes a typical 4-ton system (4 × $1,000/ton).
Otter Tail Power Air Source Heat Pump Rebate
$3,200Cold-climate ducted ASHP: $800/ton base (SEER2 16.0+, HSPF2 8.0+), up to $1,040/ton with a $200/ton Quality Installation bonus and $40/ton energy-control (Dual Fuel/Demand Control rate) bonus. Cold-climate ductless: $600/ton base, up to $840/ton with the same adders. Standard ASHP: $300/ton (SEER2 14.3+, HSPF2 7.5+), up to $500/ton with the Quality Installation bonus only. Western MN and eastern Dakotas service territory. The amount shown assumes a typical 4-ton system (4 × $800/ton).
Otter Tail Power Ground Source Heat Pump Rebate
$4,800$1,200 per ton base rebate for residential ENERGY STAR certified or COP/EER-qualifying ground source heat pumps installed by Dec 31, 2026. Stackable: +$200/ton when a desuperheater is added for domestic hot water preheating; +$200/ton for a Quality installation contractor; +$40/ton on Dual Fuel, Deferred Load, or Residential Demand Control Rate. Total potential: $1,640/ton (20-ton system limit). Available to OTP residential electric customers in western MN and eastern Dakotas. The amount shown assumes a typical 4-ton system (4 × $1,200/ton).
Connexus Energy Ductless Air Source Heat Pump Rebate
$500$500 for a qualifying ductless air-source heat pump for Connexus members. Minimum efficiency is now SEER/SEER2 17.2 and HSPF2 7.8 — a significant tightening from the previously listed SEER 11.7 threshold. Rebate amount unchanged.
Otter Tail Power Air-to-Water Heat Pump Rebate
$3,200$800 per ton base rebate for a residential air-to-water heat pump with COP of 1.7 or higher at A5W110F. Stackable: +$200/ton for a Quality Installation contractor, +$200/ton for a buffer tank (20-ton limit), and +$40/ton on Dual Fuel, Deferred Load, or Residential Demand Control rates, for up to $1,240/ton. Available to Otter Tail Power residential electric customers in western MN and eastern Dakotas. The amount shown assumes a typical 4-ton system (4 × $800/ton).
Connexus Energy Ducted Air Source Heat Pump Rebate
$1,000Tiered by efficiency for ducted air-source heat pumps: $630 (15.2 SEER2 / 10.6 EER2 / 7.8 HSPF2), $700 (17.2 SEER2), $850 (19.0 SEER2) and $1,000 for cold-climate models (COP of 1.75 or higher at 5°F). Minimum scope is condenser and coil replacement; the installing contractor files the application and the rebate is credited to the bill. One rebate per member account; valid January 1 - December 31, 2026, or while funds last.
Connexus Energy Ground Source Heat Pump Rebate
$2,400$400 per ton for a new qualifying residential ground source heat pump, or $600 per ton when installed by an MNGHPA Master Installer. Replacement systems get $50 per ton ($100 per ton with a Master Installer). One rebate per member account; applications due by December 31, 2026, first-come, first-served while funds last. The amount shown assumes a typical 4-ton system (4 × $600/ton).
10 utility-specific programs not shown here. Enter your ZIP in the calculator to filter to just your utility.
A worked example: cold-climate ASHP in Minneapolis
Anika owns a 1,900 sq ft home in Minneapolis. Like most Minneapolis households, she buys electricity from Xcel Energy and natural gas from CenterPoint Energy. Her 23-year-old gas furnace is end-of-life. She gets quotes for a 3-ton ducted cold-climate air-source heat pump (Mitsubishi Hyper Heat H2i, NEEP cold-climate certified with COP at 5°F ≥ 1.75) paired with the existing gas furnace as backup for the coldest 4-6 weeks. Installed cost: $16,200. The equipment is NEEP-listed cold-climate certified, but because she has no Xcel gas service, Xcel treats her as an electric-only customer and pays $900 for a ducted cold-climate heat pump rather than the $2,000 it pays customers with Xcel gas (most of St. Paul, for example). CenterPoint's $1,100 ducted heat pump rebate requires pairing the heat pump with a gas furnace of 92% AFUE or higher; her old furnace doesn't qualify, so she could only add that rebate by replacing the furnace with a qualifying model at the same time. Her household income is approximately 145% of Hennepin County AMI — Minnesota HEAR hasn't launched, so the federal income-qualified rebate isn't available. The federal §25C credit is gone. Combined stack: $900 against $16,200. Net out-of-pocket: $15,300. The Xcel cold-climate tier specifically requires the equipment to be listed on ashp.neep.org — Anika confirms this at the AHRI certificate review stage.
Choosing a contractor in Minnesota
Minnesota licenses HVAC contractors at the municipal level rather than statewide for residential work — verify at the city or county level where the install will happen (Minneapolis, St. Paul, Bloomington, Rochester, Duluth, etc.). Xcel Energy, CenterPoint Energy, Minnesota Power, and Otter Tail Power each have their own residential rebate programs and approved-contractor expectations. For Xcel's cold-climate tier specifically, the equipment must be on the NEEP cold-climate heat pump list at ashp.neep.org — ask your contractor for both the AHRI certificate and the NEEP listing screenshot. Otter Tail Power's geothermal rebate stack requires Quality Installation contractor certification for the $200/ton bonus tier.
Common pitfalls for Minnesota homeowners
- Missing NEEP cold-climate certification for Xcel's top tier. Xcel Minnesota's $2,000 cold-climate ASHP tier requires the equipment to be on the NEEP cold-climate heat pump list (ashp.neep.org) with COP at 5°F ≥ 1.75. Equipment that meets SEER2 thresholds but isn't NEEP-listed defaults to a smaller standard-tier rebate. The contractor's quote should explicitly confirm NEEP listing — ask for the screenshot if it's not on the AHRI documentation.
- Counting on Minnesota HEAR funds for 2026. As of October 2026, Minnesota is still awaiting formal US DOE approval for HEAR ($8,000 income-qualified) and the state Residential Heat Pump Rebate Program ($4,000), with no estimated launch date; the state program will also require HEAR approval before purchase, a cold-climate ENERGY STAR unit, and a home energy audit within the prior 18 months. Neither has launched, and retroactive rebates are not allowed — meaning installs completed before HEAR launches cannot claim the rebate even if the household would have qualified. Monitor the Minnesota Department of Commerce's Save Energy Minnesota page (mn.gov/commerce) for current status.
Estimate your net cost
Used to determine HEEHRA eligibility (under 80% area median income).
- Otter Tail Power Air Source Heat Pump Rebate−$3,200
- CenterPoint Energy Ducted Air Source Heat Pump Rebate−$1,100
- Minnesota Power Air Source Heat Pump Rebateexcluded — other utility's customers only
- Xcel Energy Cold Climate Air Source Heat Pump Rebateexcluded — other utility's customers only
- Otter Tail Power Air-to-Water Heat Pump Rebateexcluded — other utility's customers only
- Connexus Energy Ducted Air Source Heat Pump Rebateexcluded — other utility's customers only
Estimate only. Includes only programs accepting applications today — waitlisted or closed programs are excluded. Mutually exclusive programs (e.g. HEEHRA vs HOMES) and project-cost caps are applied per current program rules; confirm with your installer and utility before signing.
How to claim each rebate
- Get pre-approved (where required). Some utility programs require approval before install. Check program details before signing a contract.
- Use a participating contractor. Many programs require a licensed installer from an approved contractor list — especially HEEHRA, which routes through CEC-approved contractors who process the rebate at point of sale.
- Save documentation. AHRI certificate, model numbers, and itemized invoice are required for most utility rebates.
- Submit utility rebate within 60–90 days of install. Some programs are first-come first-served and close mid-year — funding can run out before the calendar year does.
If you can't afford a replacement in Minnesota
Rebates lower the price, but they still assume you can pay the rest. If your heating system is unsafe or has failed and a new one is out of reach, these programs repair or replace equipment at low or no cost for income-qualified households. Heat Pump Pricing Index is an independent information site — we don't fund, discount, or install equipment — so these are the doors to knock on first:
- Weatherization Assistance Program (WAP). Free energy and health-and-safety repairs — an unsafe furnace is exactly the kind of problem it fixes — for households at or near 200% of the poverty line. Apply through your local community action agency: how to apply (energy.gov).
- LIHEAP. Heating-bill help plus, in most states, a crisis component for broken or dangerous heating equipment. Same local agency; Minnesota LIHEAP contacts.
- USDA Section 504 Home Repair. For homeowners outside cities: 1% loans up to $40,000, and grants up to $10,000 for homeowners 62 and older to remove health and safety hazards. Program page and state offices (rd.usda.gov).
- Your utility and 211. Most electric and gas utilities run an income-qualified assistance fund — call the number on your bill and ask. Dialing 211 reaches a local specialist who knows which agencies in Minnesota currently have funds.
Safety first: if a technician has told you a heat exchanger is cracked, stop using the furnace and make sure you have a working carbon monoxide detector before anything else.