By Tim Wulling

You might convert your house to high-efficiency all-electric for increased comfort, healthier indoor air or lower carbon emissions.

Anyone considering home energy upgrades should start with this thorough introductory website: mncee.org/electrify-everything-mn.

How will you pay the up-front costs?

Financial help is available as rebates, tax credits and loans. Rebates are treated as price discounts, not taxable income. Tax credits reduce the amount of federal income tax you owe. Be sure to check that any equipment you are considering meets the required specifications.

Weatherization Assistance Program (WAP), a federal program implemented by Minnesota and local providers, offers free upgrades—insulation, air-sealing, water heater, furnace, boiler—for income-qualified households. mn.gov/commerce/energy/consumer-assistance/wap

Utility rebates. Xcel Energy offers: $400 to $500 for a heat pump water heater; $1,500 to $2,000 for a cold-climate air-source heat pump and 40% of the cost of attic insulation up to $600, of wall insulation up to $1,200, and of air-sealing up to $600. mn.my.xcelenergy.com/s/residential/home-rebates

Minnesota rebates. The state plans to offer $2,000 for a heat pump that heats/cools your house and $2,000 for a heat pump water heater. mn.gov/commerce/energy/consumer/energy-programs/heat-pump.jsp

IRA Rebates. The federal Inflation Reduction Act made money available to Minnesota for rebates. Minnesota is deciding which rebates to make available and is working out the procedures by which we can apply for the following IRA rebates. mn.gov/commerce/energy/consumer/energy-programs/home-energy-rebates.jsp

When Minnesota rebates and IRA rebates will be available is still uncertain.

IRA Home Energy and Appliance Rebates (HEAR). These rebates are for low- and moderate-income households. For Ramsey County, the 2024 income limit for a low-income household of three people was $88,050 and for moderate-income was $167,700. mn.gov/commerce-stat/energy/HUD80and150Percent_042624.pdf

Equipment must be Energy Star: energystar.gov/products.

Rebates, subject to maximum amounts, are for 100% of project costs for low-income households and for 50% of costs for moderate-­income households.

Minnesota’s maximum amounts are likely to be: $840 for an induction stove or a heat pump clothes dryer; $4,000 for an electric panel upgrade; $2,500 for new circuits for qualifying appliances; $1,750 for heat pump water heater; $1,600 per year for insulation, air-sealing, windows and doors; and $8,000 for a cold-climate air-source heat pump.

$14,000 is the maximum total allowed for HEAR rebates.

IRA Home Efficiency Rebate for all household income levels. Rebates range from $2,000 to $8,000 (based on amount of energy saved and household income) for upgrades that do not receive an IRA HEAR rebate.

Other payment help

Federal income tax credit. The credits are:

30% of project cost: up to $600 for an electric panel upgrade, up to $2,000 for a heat pump ­water heater and up to $2,000 for a cold-­climate air-source heat pump; and 30% of cost of materials for insulation and air-sealing ($1,200 maximum per year), windows and skylights ($600 per year), and doors ($500 per year) with a combined maximum of $1,200 per year.

Internal Revenue Service tax form 5695 and instructions have specific requirements. irs.gov/instructions/i5695

Incentive stacking. As an example, a heat pump water heater with installed cost of $3,000 could get a $500 Xcel rebate and Minnesota rebate of $2,000. Net cost after rebates would be $500. The tax credit would be 30% of $500 or $150.

Minnesota Loans. Minnesota Energy Loan Plus (has household income limits) or Fix Up Home Improvement Loans are $2,000 to $30,000, 3- to 20-year term, low interest, with no prepayment penalty. A loan could bridge the gap between paying for your project and receiving rebates and credits – and could also finance the remaining costs. mnhousing.gov/homeownership/improve-your-home.html

Note: This article assumes that tax credits and IRA rebates, passed by Congress, will continue being implemented. 

Tim Wulling is a retired engineer, a founding member of Transition Town—ASAP and an advocate of ways to reduce energy used in our homes.

Photo cutline: Financial incentives can help you insulate your home and replace gas furnace and appliances (left) with all-electric (right). Image copyright 2025 by T.E. Wulling.