BGE, PEPCO, Potomac Edison, SMECO, and Delmarva Heat Pump Water Heater Programs: Guide to Maryland Rebates
If you're a Maryland homeowner considering a heat pump water heater, you could save up to $3,600 through combined federal tax credits (worth up to $2,000) and local utility rebates. These programs work together on the same installation, but the federal tax credit program ends December 31, 2025, so homeowners should act now.
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How Maryland Utility Rebates Work
Maryland has five main utility companies that give rebates when you install an ENERGY STAR® heat pump water heater. Each company offers different amounts.
Baltimore Gas and Electric Company (BGE), Potomac Electric Power Company (PEPCO), South Maryland Electric Cooperative (SMECO), and Delmarva Power Customers:
- For Do-It-Yourself installations apply for an instant coupon on your utility's website. You can redeem at LOWES to receive an instant $1,600 rebate off the purchase of a heat pump water heater. Or ask your plumber to purchase a qualifying heat pump water heater from a participating distributor to get $1,600 as instant rebate off the product and installation.
Potomac Edison Customers:
- For Do-It-Yourself installations apply for an instant coupon on your utility's website. You can redeem at LOWES to receive an instant $1,200 rebate off the purchase of a heat pump water heater. Or ask your plumber to purchase a qualifying heat pump water heater from a participating distributor to get $1,200 as instant rebate off the product and installation.
All five utilities require ENERGY STAR® certification for rebate eligibility. Starting May 1, 2025, Maryland's Home Performance with ENERGY STAR® programs through BGE, PEPCO, and Delmarva Power offer up to $15,000 for electrification projects that include heat pump water heaters.
Various other utilities across the United States of America offer similar rebate programs for heat pump water heaters.
Federal Tax Credit Details
The federal government will reimburse you 30% of what you spend on a heat pump water heater project, up to $2,000. This includes the cost of the water heater and its installation.
When you do your taxes, put A. O. Smith's Qualified Manufacturer (QM) code A5X5 on Form 5695. The IRS now wants this code to make sure your water heater saves enough energy to get the credit.
Heat pump water heaters share a $2,000 annual credit limit with other heat pump systems like HVAC heat pumps. This is separate from the $1,200 limit that covers other efficiency improvements like insulation or windows. If you're installing multiple heat pump systems in the same year, consult a tax professional to maximize your credits. You could potentially claim the full $2,000 heat pump credit plus up to $1,200 for other qualifying home upgrades in the same tax year—up to $3,200 total.
The current program runs through December 31, 2025. After that, the credit structure may change or end entirely.
A. O. Smith Voltex® Models That Qualify
A. O. Smith's ProLine® XE Voltex® series includes several models that meet federal tax credit requirements and qualify for Maryland utility rebates. These units are ENERGY STAR® certified and up to 4 times more efficient than standard electric water heaters.
Available Voltex® Models
Choosing the right size depends on your household's hot water usage patterns rather than just family size. Available options include:
- 40 and 50-gallon Models: Work well for households with 1-2 full bathrooms, 2-3 residents, and moderate hot water use.
- 66-gallon Units: Handle average demands, such as households with 2 full bathrooms, 3-4 residents, provides hot water for longer showers or occasional high-usage periods.
- 80-gallon Models: Serve homes with heavy hot water use, households with 2-3 full bathrooms, 4-5 residents, large bathtubs, or multiple simultaneous demands.
All Voltex® models operate quietly—about as quiet as a high-efficiency dishwasher running. They work efficiently down to 37°F and include backup electric heating elements that automatically activate when temperatures drop below 37°F or during periods of high demand.
Rebates & Tax Credits
Rebate and incentive programs provide savings to consumers for the purchase of water heaters that meet certain energy efficiency standards.
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A. O. Smith water heaters are professionally installed by local independent contractors.
Documentation and Filing
Claiming your federal tax credit and utility rebates requires keeping specific documentation throughout the process. You'll need proof that your heat pump water heater is ENERGY STAR® certified and installed in your primary residence.
Keep these papers for your taxes and rebate applications:
- Your receipt with the model number, what you paid, and the purchase date.
- Paperwork from your installer showing when they finished the job.
- Copies of your utility rebate applications.
- Papers showing your water heater is ENERGY STAR® certified.
You need to install your water heater by December 31, 2025, to get the federal tax credit. You claim the credit for the year you got it installed, not the year you bought it. Fill out Form 5695 when you do your taxes and use A. O. Smith's Qualified Manufacturer (QM) code A5X5.
Planning Your Installation
Start by assessing your space requirements. Heat pump water heaters need at least 450 cubic feet of air. Most basement and garage installations work well, and ducting kits are available for tighter spaces. If you water heater is in a small closet you can meet space and air requirements by installing a louvered door.
A. O. Smith's XPERT™ Water Heater Sector helps you pick the right water heater size. You answer questions about your family and how much hot water you use, and it tells you which model to get.
A. O. Smith works with trained contractors all over Maryland who know the local rules and how to get rebates. They'll get any permits you need and make sure everything is done right so you get your rebates.
Need Help From A Pro?
A. O. Smith water heaters are professionally installed by local independent contractors.
Your Trusted Water Heating Partner
A. O. Smith has been making water heaters for over 80 years. We know what works because we've been doing this longer than almost anyone else in America. We make tank water heaters, tankless models, and heat pump systems for homes and businesses across the country.
Our Voltex® heat pump water heaters use up to 4 times less electricity than regular electric water heaters. We build them at the world's largest water heater factory in Ashland City, Tennessee, and they're installed by trained contractors who know local codes and rebate requirements.
Connect with a qualified local contractor who specializes in heat pump water heater installations.
Frequently Asked Questions
Your heat pump water heater must be ENERGY STAR® certified to qualify for both utility rebates and federal tax credits. A. O. Smith's Voltex® models meet these requirements.
Installation must be completed by December 31, 2025. You claim the credit on your taxes for the year the installation is finished, not when you purchase the unit.
Heat pump water heaters need at least 450 cubic feet of space to operate efficiently. Most basement and garage installations work well, and ducting kits are available for tighter spaces.