Heat Pump Water Heater ROI Calculator
Compare a heat pump water heater (HPWH) against a gas or electric resistance water heater. Includes state HEEHRA rebate eligibility, local energy rates, and 15-year cumulative cost comparison.
50 gal · UEF 3.5 · $1,700 installed
UEF 0.62 · Fuel: Natural Gas · $900 installed
Federal 25C HPWH Credit — Expired Dec 31, 2025
⚠️ The federal 25C heat pump credit expired December 31, 2025. It is not available for 2026+ installations. If your HPWH was installed in 2025, you may still claim the $600 credit on your 2025 tax return. State HEEHRA rebates may still apply depending on your state and income — the HEEHRA program offers up to $1,750 for HPWHs for income-qualified households.
The credit shown below is for 2025 reference. For 2026, set the IRA credit to $0 unless you qualify under a state program. Consult a tax professional.
How does a heat pump water heater work?
HPWHs move heat from the surrounding air into the water tank using a refrigerant cycle — similar to a refrigerator in reverse. They use 2–4× less electricity than a conventional electric resistance water heater because they move heat rather than generate it.
Where should a heat pump water heater be installed?
HPWHs need at least 700–1,000 cubic feet of surrounding air space and work best in unconditioned or semi-conditioned spaces (basement, garage). They also expel cool, dehumidified air, which is a bonus in summer and a slight heating penalty in winter.
What incentives apply to HPWHs in 2026?
The federal IRA Section 25C tax credit (up to $600) expired December 31, 2025 and is no longer available for new 2026 installations. If you installed a qualifying HPWH in 2025, you may still claim the credit on your 2025 tax return. The HEEHRA/HEAR rebate remains active (income-based) and can provide up to $1,750 at point of sale if your state program has launched and you qualify by income. Check your state energy office for availability.
Is a heat pump water heater worth it vs. a gas water heater?
In most states with gas prices above $1.20/therm and electricity below 30¢/kWh, HPWHs become cost-competitive in 3–7 years. In gas-heavy areas like Louisiana or Oklahoma, the economics are tighter, but the IRA credit and rising gas prices often still make HPWHs the better long-term choice.