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State program · Colorado Energy Office and Colorado Department of Revenue

Colorado Heat Pump Tax Credit (State of Colorado Heat Pump Discount)

OpenVerified · energyoffice.colorado.gov

Up to $1,000 for an air-source heat pump. Your registered contractor claims the credit and must pass at least one third to you (at least $333) as an invoice line called "State of Colorado Heat Pump Discount". Ground-source: $2,000 (at least $667 to you); heat pump water heater: $250 (at least $83). The 2026 amount may be lower: a 2026 legislative fiscal note says 2026 credits are halved, while the CEO page still shows the full amounts.

How much

Amounts by upgrade
UpgradeWhat it pays forAmount
Heat pumpAir-source heat pump: your share of the credit
Your contractor claims $1,000 and must pass at least $333 to you. Ground-source: $2,000, at least $667 to you.
$333–$1,000
Heat pump water heaterHeat pump water heater: your share of the credit
Your contractor claims $250 and must pass at least $83 to you.
$83–$250

Who qualifies

  • Where: Statewide.
  • Upgrades: Heat pump, Heat pump water heater.

Equipment must be ENERGY STAR certified (air-source systems AHRI matched) and space heating systems designed for at least 80% of annual heating needs; CEO's heat load calculator is required for installs completed after January 1, 2026. Statute steps air-source down to $500 for 2029 to 2032; the credit ends after tax year 2032. Open question: whether the 50% revenue-trigger cut applies to 2026 claims. The old state sales tax exemption on heat pumps expired December 31, 2023.

How to apply

  1. Hire a contractor registered with the Colorado Energy Office for the heat pump tax credit.
  2. Check that your invoice shows the "State of Colorado Heat Pump Discount" line item.
  3. You file nothing; the contractor claims the credit on DOR form DR 1322.

Your contractor files the paperwork.

Sources