The Heat Pump Cliff That Wasn’t

A federal tax credit worth up to $2,000 for buying a qualifying heat pump expired at the start of this year. Some expected sales to drop once that money went away, but new shipment data through June shows heat pumps still selling at the same pace as before, with no dip after the credit ended and no rush to buy before it expired either.

Researchers looking at the numbers think the credit was never the main reason people bought heat pumps. Most homeowners who installed one probably would have done it anyway, since a heat pump handles both heating and cooling in one unit, works well in homes without natural gas, and can lower monthly energy bills depending on where you live and local electricity prices. The credit likely helped some people who were already leaning that way, but it wasn't the deciding factor for most.

This is different from what happened with home solar panels, where sales slowed sharply once incentives went away. One reason may be that solar is optional, while heating and cooling your house is not. Over the past few years, heat pump technology also improved for cold climates, more contractors learned to install them, and more models became available — changes that outlasted the tax credit itself. State and utility rebates still exist in many areas even though the national credit is gone, so it's worth checking what your state currently offers if you're considering one.