Federal tax credits

Eligible energy-efficient technologies 

Thanks to the Inflation Reduction Act (IRA), federal tax credits are now available when you invest in specific heating, cooling, and water heating appliances that are highly energy efficient. Tax credits are a direct reduction of federal income taxes. They’re also available for installing energy-efficient doors and windows and can be combined with our rebates.

Our rebates and special rates can be combined with federal rebates and tax credits!

Contact your tax professional or accountant regarding the application of federal tax credits.

Heat pump technologies

30% tax credit, $2,000 cap
The IRA provides residential customers a 30% tax credit, capped at $2,000 per year, for heat pumps—including cold-climate heat pumps—and heat pump water heaters. This credit resets each tax year, effectively becoming available again for additional projects, such as heat pump water heaters. It may also be combined with our rebates.

To qualify for tax credits, heat pumps must follow the following Consortium for Energy Efficiency (CEE) ratings:

• Ducted heat pumps must follow CEE Tier I North ratings of at least 8.1 HSPF2, 15.2 SEER2, and 10.0 EER2.
• Ductless heat pumps must follow CEE Tier II ratings of at least 9.5 HSPF2, 16.0 SEER2, and 9.0 EER2.

Applies to existing homes only, not new construction.

HSPF: Heating Seasonal Performance Factor
SEER: Seasonal Energy Efficiency Ratio
EER: Energy Efficiency Ratio

Electrical panel upgrade

30% tax credit, $600 cap
The IRA provides a 30% tax credit, capped at $600 per year, for an electrical panel upgrade in conjunction with another IRA-covered technology, such as a heat pump or heat pump water heater. This credit resets each tax year, effectively becoming available again for additional projects. Panel upgrades and all home efficiency project tax credits are capped at $1,200 per year. Applies to existing homes only, not new construction.

Geothermal heat pump

30% tax credit, no cap
The IRA provides an uncapped 30% tax credit for a geothermal heat pump installation, which is the most energy-efficient and environmentally friendly system for heating and cooling. Combining tax credits with our rebates can reduce your costs by more than half. Your costs will depend on a variety of factors, including the size of your house and the size and configuration of your planned geothermal heat pump installation.

Home efficiency

30% tax credit, $2,000 cap
The IRA covers the following efficiency upgrades: insulation, exterior doors, windows (including skylights), and energy audits. The 30% tax credit is capped at the following amounts up to the overall annual cap of $1,200:

• Insulation: $1,200
• Exterior doors: $250 per door, $500 total
• Windows: $600
• Energy audits: $150

Applies only to material costs, not installation costs, for efficiency upgrades. This credit resets each tax year, effectively becoming available again for additional projects. Rebates are also available for Minnesota customers whose primary heat source is electric.

Applies to existing homes only, not new construction.

Electric vehicles

The IRA offers two tiers of electric vehicle (EV) tax credits—one for new vehicles and one for used vehicles. A $7,500 tax credit applies to new EVs with a maximum Manufacturer’s Suggested Retail Price (MSRP) of $55,000 and new electric vans, SUVs, and pickup trucks with a maximum MSRP of $80,000. A $4,000 tax credit applies per vehicle to qualifying used vehicles purchased from licensed dealers. Some models may not be eligible due to geographic manufacturing requirements.

In 2024 rebates are available to our Minnesota customers for new and used EVs. Off-peak charging rates and rebates for Level 2 charging stations are available to all customers.

• Learn more about our EV rebates and find a list of tax credit eligible EV models.
• Learn more about our EV charging station rebate and rate information.

Battery storage installation

30% tax credit, no cap
The IRA provides an uncapped 30% tax credit for a battery storage installation. Your actual costs will depend on a variety of factors, including the size of your house, the size of your planned battery storage installation, and interconnection upgrades. A battery installation will need to go through a formal interconnection process to tie into your utility’s system.

25C Tax Credit for qualified electrification upgrades