Indiana HVAC Rebates 2026: IRA Tax Credits, Utility Programs, and How to Claim Them

Indiana homeowners replacing AC, heat pump, or furnace equipment in 2026 have access to more financial incentive than at any point in the last 20 years. The Inflation Reduction Act federal tax credits are still in force, AEP Indiana Michigan Power and Centerpoint Energy run utility rebate programs, and the federal HEEHRA point-of-sale rebate program is rolling out through state energy offices. Here is the plain version, written by the people who actually do the paperwork.

1. Federal Section 25C tax credit (the big one)

Section 25C is a non-refundable federal tax credit on qualifying high-efficiency equipment installed in your primary residence. Caps that matter:

• Up to $2,000 per year on a qualifying heat pump (must meet the CEE highest efficiency tier for your region)
• Up to $600 on a qualifying central AC
• Up to $600 on a qualifying gas furnace
• Up to $1,200 total per year on non-heat-pump equipment combined

How to claim: your contractor (us) provides the AHRI certificate showing the matched equipment numbers and the CEE tier rating. You file IRS Form 5695 with your federal return. The credit applies against your federal income tax liability for the year of installation. Non-refundable means it cannot exceed what you actually owe.

2. AEP Indiana Michigan Power rebates

AEP I&M runs ongoing residential energy efficiency rebates for customers in their service territory, which covers most of Delaware County including Muncie. The rebate amounts and qualifying equipment list change periodically; in recent years they have offered:

• $100 to $400 on qualifying central AC by SEER2 tier
• $200 to $600 on qualifying air-source heat pumps
• Higher rebates on ENERGY STAR-rated equipment
• Smaller rebates on smart thermostats and ECM blower motors

How to claim: rebate forms are submitted post-install with proof of equipment (model and serial) and contractor invoice. Most are processed in 4 to 8 weeks as a mailed check.

3. Centerpoint Energy rebates (gas furnace side)

For natural gas customers, Centerpoint (formerly Vectren) typically offers rebates on 95+ AFUE furnaces and ENERGY STAR water heaters. If you are replacing a furnace at the same time as your AC, stack the gas rebate with the federal credit and the electric utility AC rebate.

4. HEEHRA (Home Electrification and Appliance Rebate)

HEEHRA is a federal program funded by the IRA but administered through state energy offices. Indiana's rollout was delayed but is starting to come online for income-qualified households. The program provides point-of-sale rebates on heat pumps (up to $8,000), heat pump water heaters, electrical panel upgrades, and weatherization. Income caps apply: typically households below 150 percent of area median income qualify for partial or full rebates.

How to claim: this is an evolving program and the application process is still firming up at the time of writing. We track the Indiana Office of Energy Development page for updates and will tell you when your project qualifies.

How to stack incentives

On a typical 3-ton dual-fuel heat pump replacement in Muncie, an Indiana homeowner who is not income-qualified for HEEHRA might see:

• $2,000 federal tax credit on the qualifying heat pump
• $400 to $600 utility rebate from AEP I&M
• $100 smart thermostat rebate
• Total: $2,500 to $2,700 of effective price reduction on a 10,500 to 14,000 dollar install

For income-qualified households, the HEEHRA rebate can push that total much higher, sometimes covering 50 to 100 percent of the install cost on a qualifying heat pump.

What we do

On every install we hand you the AHRI certificate, equipment model and serial numbers, and an itemized invoice formatted for rebate submission. We will fill out the rebate paperwork on your behalf for the local utility rebate if you want us to. For the federal tax credit we provide the documentation; your accountant files Form 5695. We are not tax professionals and we do not give tax advice, but we know how the documentation needs to look.