Federal water heater tax credits expired December 31, 2025. However, Utah homeowners still have access to state incentives and utility rebates.

This guide explains:

• What federal credits were available for 2025 claims
• What incentives remain available in 2026
• How to maximize savings through Rocky Mountain Power and Utah programs

Federal Credits (Expired)

The 30% tax credit (up to $2,000) for heat pump water heaters installed before December 31, 2025 expired per IRS Section 25C rules.

If your heater was installed in 2025, you may still claim the credit on your 2025 tax return filed in 2026.

What qualified (2023-2025) per IRS Energy-Efficient Home Improvement Credit and ENERGY STAR:

• Heat pump water heaters: 30% credit, max $2,000
• Gas tankless: Up to $600 per item
• Requirement: ENERGY STAR certified or CEE Tier 1 efficiency

Heat pump water heaters: 30% credit, max $2,000

Gas tankless: Up to $600 per item

Status for 2026 installations:
No federal tax credit is currently available.

2026 Options: State and Utility Rebates

Even though federal incentives ended, Utah homeowners can still reduce installation costs through utility rebates and potential state programs.

Rocky Mountain Power (Primary Utah Rebate)

Per Rocky Mountain Power’s current incentive program:

• Heat pump water heater: Up to $550 (existing home replacement)
• Gas tankless: $300-$500
• Requirement: Must apply within 180 days of installation
• Contact: 1-888-221-7070

Other Utility Rebates

Some municipal utilities offer additional programs.

Check with your local provider, including:

• Salt Lake City utilities
• Logan utilities
• Provo utilities

These programs sometimes offer supplemental rebates or efficiency incentives.

Utah State Programs

The Utah State Energy Office may introduce new energy-efficiency incentive programs in 2026.

Check for updates at:

energy.utah.gov

You can also contact your local building department or utility provider to verify current incentives.

How to Claim Rocky Mountain Power Rebates

1. Purchase and install an ENERGY STAR certified water heater
2. Keep your receipt and installation documentation
3. Contact Rocky Mountain Power within 180 days of installation with:
   • Receipt and proof of installation
   • Model number and ENERGY STAR certification
   • Your utility account information
4. Rebate processing typically takes 4–6 weeks

No tax filing is required. These rebates are direct payments, not tax credits.

What Qualifies for Utah Rebates

Most programs require:

• ENERGY STAR certified water heaters
• Installation in a primary residence
• Replacement of an existing water heater (new construction is often excluded)
• Licensed contractor installation

Always verify current eligibility rules with Rocky Mountain Power before purchasing equipment.

Heat Pump Water Heaters: Best Remaining Value

Heat pump water heaters (hybrid electric models) are among the most efficient water heating systems available and often qualify for the largest rebates.

Typical numbers

• Installed cost: $1,500–$2,200
• Operating cost: ~$350/year (similar to gas, per ENERGY STAR operating cost estimates)
• Rebate potential: $300–$550 through Rocky Mountain Power

If combined with future Utah state incentive programs, total savings could reach $800–$1,000.

Straight Answer: Timing for 2026

Buying in 2026?
Focus on Rocky Mountain Power rebates ($300–$550) and watch for new Utah state programs.

Already bought in 2025?
Claim the federal credit on your 2025 tax return filed in 2026.

Planning for 2027?
Monitor announcements for new federal incentives or state rebate programs.

Pre-Purchase Checklist

Before buying a water heater, confirm the following:

• Verify ENERGY STAR certification
• Confirm Rocky Mountain Power rebate eligibility
• Get receipt and installation documentation
• Apply for rebates within 180 days
• Check for new programs at energy.utah.gov

Find Local Help

A licensed plumber can help verify rebate eligibility and assist with the rebate process. Many contractors handle rebate paperwork as part of installation.

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Frequently Asked Questions

Can I claim a 2025 federal credit on my 2026 tax return?

Only if the installation was completed in 2025. The credit applied to equipment placed in service through December 31, 2025.

Are there any 2026 federal credits available?

No federal tax credits currently apply to water heaters in 2026. Future programs may be introduced.

Is the Rocky Mountain Power rebate a tax credit?

No. It is a direct rebate payment from the utility, and no tax filing is required.

Sources and Update Policy

This article reflects current federal tax credit status and Utah state rebate programs as of March 2026. Credits and incentives change annually.

Federal Credits:

• IRS Energy-Efficient Home Improvement Credit (Section 25C)
• Rewiring America — Heat Pump Water Heater Tax Credits
• ENERGY STAR Water Heater Federal Tax Credits

Utah Utility Rebates:

• Rocky Mountain Power Water Heater Rebates

Certification Standards:

• ENERGY STAR Certified Water Heaters

We update this article quarterly as new state programs are announced and federal credit proposals emerge.