Michigan HVAC Rebates and Tax Credits for 2026

One of the first things homeowners in the Grand Rapids area ask when they're looking at a new furnace, AC, or heat pump is "Are there any rebates?" Good news: 2026 is one of the best years we've seen for HVAC incentives. Between federal tax credits, Michigan utility rebates, manufacturer promotions, and income-qualified programs, it's possible to take several thousand dollars off the cost of a new system.

But figuring out what you qualify for, what stacks with what, and how to actually claim everything can be confusing. I've put together this guide based on what's available right now. A heads-up: program details, rebate amounts, and qualifying equipment can change during the year. We stay on top of these programs for our customers, so if anything here has shifted by the time you read it, give us a call and we'll get you current information.

Federal Tax Credits: The 25C Energy Efficient Home Improvement Credit

This is the big one. The Inflation Reduction Act extended and expanded the 25C tax credit through 2032, and it's the most valuable incentive available to most Michigan homeowners.

Here's how it breaks down for HVAC equipment:

Heat pumps (air-source and geothermal): Up to $2,000 This applies to qualifying heat pump installations and geothermal systems. The heat pump must meet ENERGY STAR efficiency requirements (typically CEE Tier 1 or higher). This $2,000 is a separate bucket from other efficiency improvements — it has its own annual cap.

Gas furnaces: Up to $600 Qualifying high-efficiency furnaces (97% AFUE or higher, ENERGY STAR certified) are eligible. This falls under the general $1,200 annual cap for home efficiency improvements.

Central air conditioners: Up to $600 Qualifying AC systems meeting ENERGY STAR Most Efficient criteria are eligible. This also falls under the $1,200 annual cap.

Boilers: Up to $600 ENERGY STAR certified boilers meeting the efficiency threshold (95% AFUE) qualify under the same $1,200 cap.

Important details:

• These are tax credits, not deductions. A $2,000 credit reduces your tax bill by $2,000. That's real money.
• The credit is nonrefundable. It can reduce your tax owed to zero but won't generate a refund. If your total tax liability for the year is $1,500, you can only use $1,500 of a $2,000 credit. The remaining $500 does not carry forward to next year.
• The heat pump credit ($2,000) is separate from the general $1,200 annual cap. So in theory, you could claim $2,000 for a heat pump and $600 for a furnace in the same year if you're installing a dual-fuel system. That's $2,600 in tax credits.
• You don't need to itemize your taxes. The credit is available to anyone with a tax liability, whether you take the standard deduction or itemize.
• You claim the credit using IRS Form 5695 when you file your tax return. Keep your receipts and the manufacturer's certification statement.
• The credit resets annually. If you do work in 2026 and more in 2027, you can claim the credit both years.

Michigan Utility Rebates

On top of the federal credit, your local utility likely offers rebates for high-efficiency HVAC equipment. These are instant or near-instant savings — you either get a check, a bill credit, or a point-of-sale discount.

Consumers Energy (serves most of the Grand Rapids, Jenison, Hudsonville, and Grandville area):

• Rebates for high-efficiency furnaces, air conditioners, heat pumps, and smart thermostats
• Amounts vary by equipment type and efficiency tier, but have typically ranged from $200 to $1,000 for qualifying equipment
• They also offer a home energy assessment that can identify other savings opportunities
• Apply through their website or ask your contractor (us) to submit on your behalf
• Programs are funded annually and can run out — apply soon after installation

DTE Energy (serves parts of the eastern Grand Rapids metro):

• Similar rebate programs for high-efficiency HVAC equipment
• Amounts and qualifying equipment are comparable to Consumers Energy
• Also offers home energy audit programs

Tip: Check your utility's current rebate amounts before making a purchase decision. These programs update periodically, and the specific amounts I list here may have shifted. We check these programs regularly for our customers, so we can tell you exactly what's available when you're getting a quote.

Manufacturer Rebates

Carrier, Lennox, and other major manufacturers run seasonal rebate programs — typically in spring (March through June) and fall (September through November), timed to when homeowners are making buying decisions.

These rebates usually work as either:

• Instant rebates applied at the point of sale (reduces your invoice)
• Mail-in rebates where you submit proof of purchase and receive a prepaid card

Typical manufacturer rebate amounts range from $200 to $1,500, depending on the equipment model and promotion. System rebates (buying a matched furnace + AC or heat pump system) tend to be higher than single-component rebates.

We're a Carrier and Lennox dealer, so we know what promotions are running and can apply them to your quote. These stack with federal tax credits and utility rebates — there's no rule against it.

One thing to watch: some manufacturer "rebate" programs are actually financing promotions disguised as rebates. "Get $2,000 back" might mean "$2,000 off if you finance through our lending partner at a higher interest rate." Always read the fine print, and we'll explain exactly what each promotion involves when we present options.

Income-Qualified Programs: HOMES and Weatherization Assistance

The Inflation Reduction Act also created the HOMES (Home Owner Managing Energy Savings) rebate program, which provides point-of-sale rebates for energy efficiency improvements. This program is administered at the state level, and Michigan is rolling it out through the Michigan Department of Environment, Great Lakes, and Energy (EGLE).

For moderate-income households (80-150% of area median income):

• Rebates of up to 50% of project costs for whole-home energy improvements
• Up to $4,000 for heat pump HVAC systems
• Up to $1,600 for insulation, air sealing, and other envelope improvements

For low-income households (under 80% of area median income):

• Rebates of up to 100% of project costs
• Up to $8,000 for heat pump HVAC systems
• Up to $1,600 for insulation and envelope improvements

Michigan Weatherization Assistance Program: This existing program provides free home weatherization services — insulation, air sealing, furnace repair or replacement — for income-qualified homeowners. If you qualify, they may replace your furnace or other equipment at no cost. Contact the Michigan Department of Health and Human Services or your local Community Action Agency to apply.

Important note on the HOMES program: Funding availability and program rules vary as states roll out their programs. Michigan's timeline for full program availability may shift. Check with EGLE or ask us for the latest status when you're ready to move forward.

How to Stack Rebates: A Real Example

Let's say you're a homeowner in Jenison installing a new cold-climate heat pump system to replace your aging furnace and AC. Here's how the incentives might stack:

| Incentive | Amount | |-----------|--------| | Federal 25C tax credit (heat pump) | $2,000 | | Consumers Energy rebate | $500-1,000 | | Manufacturer spring promotion | $300-750 | | Total potential savings | $2,800-3,750 |

If you're also installing a new gas furnace as part of a dual-fuel system, add up to $600 more in federal tax credits for the furnace.

If you're income-qualified for the HOMES program, the numbers get even better. A qualifying household could potentially receive $4,000-8,000 in HOMES rebates on top of the federal credit.

On a $10,000-12,000 heat pump installation, stacking these incentives could cut your out-of-pocket cost by 25-35%. On a dual-fuel system running $14,000-18,000, you could save $3,400-4,350 or more.

What Equipment Qualifies

Not every furnace or heat pump qualifies for every incentive. Here are the general efficiency thresholds:

For the federal 25C tax credit:

• Gas furnaces: 97% AFUE or higher, ENERGY STAR certified
• Central AC: Must meet ENERGY STAR Most Efficient criteria
• Heat pumps: Must meet CEE Tier 1 (or higher) efficiency levels — check the ENERGY STAR product list
• Geothermal heat pumps: Must meet ENERGY STAR requirements

For utility rebates:

• Requirements vary by program and year, but generally align with or exceed ENERGY STAR certification
• Higher-efficiency equipment often qualifies for higher rebate tiers

For manufacturer rebates:

• Usually applies to specific model lines within the manufacturer's lineup
• Typically mid-range to premium equipment, not entry-level models

When we quote a system, we'll tell you exactly which incentives each option qualifies for. We make sure the equipment we recommend meets the efficiency thresholds for the maximum available credits and rebates.

How to Claim Everything

Here's the process for collecting your incentives:

Federal tax credit:

1. Save your installation invoice showing equipment model numbers and costs
2. Get the manufacturer's certification statement (we provide this)
3. File IRS Form 5695 with your tax return
4. The credit reduces your tax owed for that year

Utility rebates:

1. Check your utility's current program before installation (or let us check for you)
2. Install qualifying equipment
3. Submit the rebate application with proof of purchase (some contractors, including us, submit this on your behalf)
4. Receive your rebate as a check or bill credit, typically within 4-8 weeks

Manufacturer rebates:

1. We apply eligible promotions at the point of sale when possible
2. For mail-in rebates, complete the form with your purchase documentation
3. Receive a prepaid card or check, usually within 6-8 weeks

Income-qualified programs:

1. Apply through your state or local program administrator before installation
2. Verify income eligibility
3. Get pre-approval for the work
4. Some programs pay the contractor directly, reducing your upfront cost

We help our customers with the paperwork for all of these. When we finish a job, we'll provide you with everything you need — model numbers, efficiency ratings, manufacturer certifications — to claim your credits and rebates. You shouldn't have to chase down documentation.

A Few Honest Caveats

I want to be upfront about a few things:

Don't let incentives drive your decision entirely. A $2,000 tax credit for a heat pump is great, but if your home isn't a good candidate for a heat pump, you're spending more to get equipment that doesn't serve you well. The right system for your home is the one that works best for your situation, not the one with the biggest rebate.

Tax credits require tax liability. If you don't owe federal income tax — maybe you're retired and your income is below the filing threshold — you can't use the 25C credit. It's nonrefundable and doesn't carry forward. The HOMES program rebates may be a better path for you in that case.

Program amounts change. The federal 25C credit is authorized through 2032, so that's relatively stable. But utility rebates reset annually, manufacturer promotions change quarterly, and the HOMES program is still rolling out. What's available today may be different in six months.

Beware of contractors inflating prices to "cover" the rebate. Some less scrupulous outfits raise their prices by the amount of the available rebate, so you don't actually save anything. Get multiple quotes, compare the pre-rebate price, and make sure you're dealing with someone honest. That's one reason we show you the full price and the incentives as separate line items.

If you're thinking about a new furnace, AC, or heat pump and want to know exactly what incentives apply to your situation, call us at (616) 669-8085. We'll run through the current programs, make sure the equipment we quote qualifies for the maximum available credits and rebates, and give you the paperwork you need to claim everything. No charge for the estimate, and no pressure to buy.