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Colorado heat pump tax credit discount open
Administered by the Colorado Energy Office and the Colorado Department of Revenue, through registered contractors.
Colorado gives registered contractors a state tax credit for each heat pump they install, and they must pass at least 33% of it to you as a discount on the invoice: at least $333 on an air-source heat pump, $667 on a ground-source system and $83 on a heat pump water heater installed from 1 January 2026. You file nothing.
source · verified 3 October 2026 · amounts in US dollars
What it pays
| Heat pump | Credit to the contractor | Minimum discount to you |
|---|---|---|
| Air-source | $1,000 | $333 |
| Ground-source, water-source or combined-source | $2,000 | $667 |
| Heat pump water heater | $250 | $83 |
| Heat pump | Credit | Minimum discount |
|---|---|---|
| Air-source | $1,500 | $499.95 |
| Ground-source, water-source or combined-source | $3,000 | $999.90 |
| Heat pump water heater | $500 | $166.65 |
The contractor may keep up to two-thirds of the credit and must show the rest on your invoice as 'State of Colorado Heat Pump Discount'. The Energy Office's checklist gives the 2026 amounts for 2026 to 2028; the credit drops again in tax year 2029.
Who is eligible
- who
- Anyone installing a qualifying heat pump in Colorado through a contractor registered with the Energy Office, at any income.
- equipment
- ENERGY STAR certified; air-source systems AHRI matched; space-heating heat pumps sized to meet at least 80% of annual heating needs. Water heaters are exempt from the sizing rule.
- types
- Air-source, ground-source, water-source and combined-source heat pumps, heat pump water heaters, variable refrigerant flow systems and thermal energy networks.
- apartments
- For a heat pump serving several units, the contractor can claim one credit per unit served.
- new homes
- The Energy Office says new construction may be eligible.
Where the application goes
Hire a registered contractor and check the invoice for the discount line; there is no form for you to file.
| If this is you | Apply here |
|---|---|
| Registered contractors and rules | energyoffice.colorado.gov |
| Department of Revenue (contractor form DR 1322) | tax.colorado.gov |
The thing most pages get wrong
A rebate guide says the state's 'contractor-claimed heat pump tax credit remains active at $1,000 for air-source systems'. The $1,000 is the contractor's credit. What reaches you is the discount, at least $333 on an air-source heat pump in 2026, and the Energy Office says customers do not file any paperwork.
The sales tax exemption is gone
The Department of Revenue: 'The previous 10% income tax credit and sales tax exemption for a heat pump system or heat pump water heater expired on December 31, 2023.' Heat pumps bought now pay sales tax.
Contractors register through 2026
The Energy Office says 31 December 2026 is the last day for a contractor to register to claim credits for installations completed in 2026. From April 2026 registered contractors must also pass quarterly training quizzes or be removed.
Sources
- https://energyoffice.colorado.gov/hptc — primary source, read 3 October 2026
- https://tax.colorado.gov/DR1322
- https://energyoffice.colorado.gov/ira-rebate-faq