Rebates & Tax Credits for Tankless Water Heaters

Federal Tax Credits (2024-2032)

Under the Inflation Reduction Act, homeowners may claim a federal tax credit of up to $2,000 per year for qualifying energy-efficient home improvements, including high-efficiency tankless water heaters.

To qualify, your tankless water heater must be:

• Energy Star certified
• A Uniform Energy Factor (UEF) of 0.95 or higher for gas models
• Installed in your primary residence (not rental properties)

The credit covers 30% of the total installation cost, including labor, up to the $2,000 annual cap. This is a tax credit, not a deduction — it directly reduces your tax bill dollar for dollar.

State and Local Rebates

Many states, counties, and utility companies offer additional rebates for upgrading to energy-efficient water heaters. These vary significantly by location and can range from $100 to $1,000 or more.

How to Find Rebates in Your Area

Rebate programs change frequently. Here's how to identify what's available to you:

1. Ask during your free estimate — our team tracks current rebates in every market we serve and will identify all available incentives for your project.
2. Check your utility company's website — most gas and electric utilities maintain a rebates or incentives page for energy-efficient appliances.
3. Visit the DSIRE database — the Database of State Incentives for Renewables & Efficiency tracks programs nationwide.
4. Consult your tax professional — they can confirm your eligibility for federal and state tax credits.

Maximize Your Savings

The best strategy is to combine all available incentives:

Important Notes

• Keep all receipts and manufacturer certification documents for your tax records
• The federal tax credit applies to the year the installation is completed
• Some utility rebates must be applied for before installation begins
• Not all tankless models qualify — verify Energy Star certification before purchasing
• Consult a tax professional for advice specific to your situation