COLORADO TAX CREDIT
$1,000
STATUS
INCOME REQUIREMENT
WHO QUALIFIES
TYPICAL SAVINGS
All Colorado Residents
Available Now
None
colorado heat pump tax credit
Beginning January 1, 2024, residents of Colorado became eligible for tax credits to install heat pumps for both space and water heating. In 2026 and after, the credit has been reduced to $1,000 for heat pumps. UniColorado is a registered contractor.
Minimum discounts by System Type
The contractor provides at least ehses amounts as upfront discounts. Many contractors offer more.
Colorado Tax Credit
YOU QUALIFY IF
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Air-source heat pump
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Ground-source heat pump
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Water-source heat pump
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Combined-source heat pump
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Heat ppump water heater
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VRF heat pump system
NOT ELIGIBLE IF
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Systems covering less than 80% of heating needs
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DIY installations (must use registered contractor
Equipment Reqirements
System Type | Minimum Discount |
|---|---|
Ground, water, or combined-source heat pump | $667 |
Heat pump water heater | $83 |
Air-source heat pump | $333 |
How does the Colorado heat pump tax credit work?
Colorado's heat pump tax credit gives all residents an upfront discount when they install a qualifying heat pump through a registered contractor. For 2026, the total credit is $1,000 per heat pump system. There is no income requirement.
The credit launched January 1, 2024 at $1,500 per system, dropped to $1,250 in 2025, and settled at $1,000 for 2026 and beyond. The reduction reflects the program's planned phase-down, not a loss of funding. The program remains fully active.
This is a state-level incentive administered by the Colorado Energy Office and Department of Revenue. It is separate from the federal 25C tax credit, which ended December 2025. The Colorado credit continues regardless of federal policy changes.
The contractor receives the full credit from the state and passes a portion to you as an upfront discount on your invoice. The minimum discount varies by system type (see table below). Many contractors, including A&O Heating and Air Conditioning offer more than the required minimum. This credit stacks with Xcel Energy rebates and HEAR rebates for even greater savings.
How to claim the Colorado heat pump tax credit?
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Work With Registered Contractor- A&O Heating and Air Conditioning is a registered contractor
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Receive Discount at Install -Credit applied directly to your invoice
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Contractor Handles Paperwork- We submit to Department of Revenue
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State Reimburses Contractor- You're done - no further action needed
You don't file any paperwork. A&O Heating and Air Conditioning manages the entire process from quote to state reimbursement. You receive the discount directly at installation.
Why A&O Heating and Air Conditioning?
A&O Heating and Air Conditioning is a registered contractor with the Colorado Department of Revenue for the heat pump tax credit program. We pass the full $1,000 discount to our customers on every qualifying installation. Some contractors retain a larger portion of the credit. We don't.
We handle the entire process: Manual J load calculation to confirm your system covers 80%+ of annual heating needs (the threshold for eligibility), equipment selection from Mitsubishi, Bosch or Carrier permitting, installation, and all Department of Revenue paperwork. Your discount appears on your invoice at installation. You don't file anything.
The state credit stacks with Xcel Energy rebates and HEAR (if income-qualified). We apply all qualifying programs as upfront discounts on one invoice.
What A&O Heating and Air Conditioning Offers
A&O Heating and Air Conditioning participates in the Colorado Tax Credit program for heat pumps.
