Limited-Time Heat Pump Water Heater Promotion Saves Homeowners Thousands
Heat pump water heaters might be worth considering if your electric water heater is getting older or your electricity bills seem high. The federal government currently offers tax credits for energy-efficient home improvements, and heat pump water heaters qualify.
These incentives exist because heat pump water heaters use about 70% less electricity than traditional electric water heaters. They work like a reverse refrigerator, pulling heat from the surrounding air to warm your water instead of generating heat directly through electric elements.
You might benefit from considering a heat pump upgrade if you currently have an electric tank water heater that's more than 8-10 years old, or if you've noticed your energy bills going up. Families with high hot water usage—multiple daily showers, frequent dishwasher use, or teenagers—often see the most noticeable savings.
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How Much Money Can You Save?
The federal tax credit for heat pump water heaters covers 30% of your total standard project cost, including the unit and professional installation, up to $2,000. This is one of the largest credits available for home energy improvements.
When you file your taxes, you'll need to include A. O. Smith's Qualified Manufacturer (QM) code A5X5 on IRS Form 5695. Starting in 2025, the IRS requires this four-digit code to verify that your water heater meets the efficiency standards needed to qualify.
Heat pump water heaters have their own $2,000 annual credit limit, separate from the $1,200 limit that covers other efficiency improvements like insulation or windows. 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 has been developing water heating technology for nearly 150 years. Our Voltex® lineup includes several models that meet federal tax credit requirements. These units are ENERGY STAR® certified and 4 times more efficient than standard electric water heaters.
The Voltex® series comes in four sizes: 40-gallon Voltex MAX® units for compact spaces or smaller households, 50-gallon units for smaller families, 66-gallon models for average households, and 80-gallon units for larger families or homes with higher hot water demand. All provide good first-hour ratings, meaning plenty of hot water available when multiple people shower or when you're running appliances.
These units operate quietly, work efficiently down to 37°F, and include backup electric heating elements that automatically turn on during very cold weather or when demand is high.
- The units include Wi-Fi connectivity for monitoring and adjusting settings, plus anti-leak detection that provides alerts if problems develop. A. O. Smith provides a 10-year limited warranty, and these units typically last 12-15 years.
More Ways to Save Money
The federal tax credit can be combined with other savings. You can claim the $2,000 heat pump credit along with up to $1,200 in credits for other energy-efficient home improvements completed in the same tax year, like efficient windows or insulation upgrades.
Many local utility companies offer rebates for heat pump water heater installations, typically ranging from $200 to $2,500, depending on your location and utility policies. These rebates are separate from federal tax credits, so you can claim both.
A. O. Smith's rebate center helps you find available incentives in your area. Enter your zip code to see what local programs might apply, including utility-specific programs like GE's heat pump promotion, PEPCO's rebate program, and Delmarva's incentives. Some utilities also offer financing programs or additional rebates for replacing older equipment.
The savings can add up quickly for Arizona homeowners. Arizona families spending $800-900 annually on electric water heating often see costs drop to $200-300 per year after switching to a heat pump system. In Arizona's hot climate, the energy reduction from upgrading to a heat pump water heater is equivalent to taking a car off the road for six months every year.
Rebates & Tax Credits
Rebate and incentive programs provide savings to consumers for the purchase of water heaters that meet certain energy efficiency standards.
*When filing a federal tax return, include A. O. Smith's Qualified Manufacturer (QM) code A5X5 on tax form 5695.
Need Help From A Pro?
A. O. Smith water heaters are professionally installed by local independent contractors.
Installation Basics for Heat Pumps
Heat pump water heaters need at least 450 cubic feet of air space around the unit to operate properly. This means they work better in basements, garages, or large utility rooms rather than small closets where traditional water heaters might fit.
The units draw in air and exhaust cooler air as part of their operation, so adequate ventilation helps them work efficiently. They perform best in spaces that stay above 40°F most of the time, though the backup electric elements handle extreme temperatures.
Professional installation affects performance and warranty coverage. A. O. Smith works with certified contractors who understand the specific requirements for heat pump water heater installations. These installers receive training through A. O. Smith University and know local codes, electrical connections, condensate drainage, and proper positioning.
Installation typically takes a few hours and may require electrical work, depending on your current setup. Many homes can use existing electrical connections, but your installer will assess what's needed. Some Voltex® models offer 120V plug-in options where appropriate.
Filing Requirements and Documentation
Claiming the federal tax credit requires filing IRS Form 5695 with your regular tax return. The form asks for your water heater information, including A. O. Smith's Qualified Manufacturer (QM)code A5X5, purchase price, and standard installation costs. If you have questions about tax implications, consult with your tax advisor.
Documentation you'll need to keep:
- Purchase receipt showing model number and total standard cost.
- Installation verification from your contractor.
- Proof that your unit meets efficiency requirements.
- Records of the installation completion date.
The water heater must be installed in your primary residence—where you live most of the year. The credit also applies to second homes, but not rental properties unless you personally live there.
Installation must be completed by December 31, 2025, since the credit applies to the tax year when work is finished rather than when you purchase the equipment. The credit is non-refundable, meaning it reduces taxes you owe rather than creating a refund, though unused portions can carry forward to future tax years.
Use A. O. Smith's water heater selector to find the right Voltex® model based on your household's hot water usage and home specifications. Then connect with a certified installer who can assess your space requirements and handle the installation. A. O. Smith's network of trained installers helps make sure you get proper installation and reliable performance from your heat pump water heater.
Need Help From A Pro?
A. O. Smith water heaters are professionally installed by local independent contractors.
A. O. Smith: Decades of Water Heating Innovation
For more than 85 years, A. O. Smith has been developing water heating solutions for American homes and businesses. From our world's largest water heater factory in Ashland City, Tennessee, to our nationwide network of certified installers, we design and build everything from traditional tank water heaters to advanced heat pump and tankless systems.
Our Voltex® heat pump water heaters represent decades of research and development in energy-efficient technology. With ENERGY STAR® certification and efficiency ratings that make them 4 times more efficient than standard electric units, these systems help millions of families reduce their energy costs while enjoying reliable hot water every day.
A. O. Smith's commitment to innovation and quality means you can count on consistent performance, whether you're taking a morning shower or running multiple appliances. Our trained contractor network and warranty coverage ensure your heat pump water heater installation goes smoothly and continues working properly for years to come.
Frequently Asked Questions
You can get 30% of your total standard project cost back, up to $2,000 maximum. So if your heat pump water heater and installation cost $6,000, you'll get the full $2,000. If it costs $4,000, you'll get $1,200 back.
Installation must be completed by December 31, 2025. You claim the credit on your taxes for the year it gets installed, not when you buy it.
It needs to be ENERGY STAR certified. A. O. Smith's Voltex models all meet this requirement and are 4 times more efficient than standard electric water heaters.