Many homeowners in Allentown, Harrisburg, or Scranton expect a new heat pump to bring three layers of money: a utility rebate, a state rebate, and a federal tax credit. That was a reasonable expectation through 2025. However, the federal Energy Efficient Home Improvement Credit (IRA 25C) ended for equipment placed in service after December 31, 2025, and that changes the math for every PPL Electric customer.
Plenty of money is still on the table for many households. PPL Electric Utilities' Act 129 rebates continue under a new five-year phase, and Pennsylvania's HEEHRA program uses federal dollars that Congress appropriated separately from the tax code.
PPL customers can pair Act 129 Phase V utility rebates with Pennsylvania HEEHRA rebates where DEP has them running. The federal 25C credit ended for equipment placed in service after December 31, 2025.
Who PPL Electric Serves
PPL Electric Utilities delivers power to more than a million homes and businesses across 29 counties in central and eastern Pennsylvania. Its territory includes the Lehigh Valley, the Harrisburg and Lancaster areas, the Scranton and Wilkes-Barre corridor, Hazleton, and Williamsport along the West Branch of the Susquehanna.
Keep in mind that Pennsylvania's electric map is a patchwork, so the next township over can belong to a different utility. For example, Met-Ed serves Reading and York and is now part of FirstEnergy Pennsylvania, while PECO serves Philadelphia and much of its suburbs.
The quickest check is the utility name printed on your bill. If it reads PPL Electric Utilities, this guide applies. If it reads PECO or FirstEnergy, see our PECO heat pump rebate guide or our FirstEnergy Pennsylvania rebate guide.
PPL Electric Utilities serves 29 counties in central and eastern Pennsylvania. Reading and York are served by Met-Ed (FirstEnergy) and Philadelphia by PECO, so check the utility named on your bill.
How Act 129 Funds PPL's Rebates
Pennsylvania's Act 129 of 2008 requires every electric distribution company with more than 100,000 customers to run an energy efficiency and conservation (EE&C) plan approved by the Pennsylvania Public Utility Commission. The PUC sets savings targets in multi-year phases, and each utility designs its own rebate catalog to meet them.
Phase IV ran from June 1, 2021 through May 31, 2026. Phase V began June 1, 2026 and is scheduled to run through May 31, 2031. As a result, PPL's residential offerings were refreshed this year, and the measures, amounts, and contractor requirements may differ from what a neighbor received in 2024 or 2025.
The money comes from a surcharge on PPL distribution bills, and the statute caps each utility's program spending at 2% of its 2006 annual revenue. Because budgets are finite, PPL can adjust or pause individual measures mid-phase when a program fills up faster than planned.
Act 129 Phase V runs from June 1, 2026 through May 31, 2031. PPL's heat pump rebates for this period come from its PUC-approved Phase V plan, so the amounts may differ from Phase IV offers.
What PPL's Heat Pump Incentives Typically Cover
PPL's residential efficiency programs have historically offered equipment rebates, home energy assessments, and income-qualified services. Measures that typically appear in the residential catalog include but are not limited to:
- Air-source heat pumps. These are ducted systems that replace a central air conditioner, an electric furnace, or an aging heat pump. Rebates are generally tied to ENERGY STAR certification or to posted SEER2 and HSPF2 minimums, verified with an AHRI-matched equipment certificate.
- Ductless mini-splits. These are single-zone and multi-zone systems for homes heated by baseboard resistance, oil, or propane. For the tradeoffs, see our mini-split vs. central heat pump comparison.
- Heat pump water heaters. This is often one of the most cost-effective electric measures in a utility catalog. Our heat pump water heater guide covers sizing and placement.
- Home energy assessments and weatherization. Air sealing and insulation reduce the load a heat pump has to carry. That smaller load can allow a smaller, less expensive unit.
In general, the catalog rewards efficiency tiers and complete paperwork, not a particular brand. Contractors who install often in PPL territory usually know the current forms, but the homeowner is the one who signs the application.
Verify before you budget. PPL publishes its Phase V rebate amounts, eligible models, and submission deadlines on its energy efficiency program pages, and they can change mid-phase.
We do not list dollar figures here because PPL's current plan sets them, not this guide. Check the amounts on the day you request quotes.
Where the Federal Credit Stands in 2026
Many older guides still promise a federal tax credit on top of utility rebates. That no longer holds for new installations. The 2025 federal budget reconciliation law, commonly called the One Big Beautiful Bill Act, ended the IRA 25C credit for property placed in service after December 31, 2025.
Before that date, 25C covered 30% of qualifying heat pump costs up to $2,000 per year, claimed on IRS Form 5695. A system placed in service in 2025 can still be claimed on a 2025 return, but a heat pump installed in 2026 does not qualify.
The federal residential clean energy credit (25D), which covered solar and geothermal, also expired on December 31, 2025. Our federal tax credit status tracker follows any changes, and state and utility programs continue regardless of what happens at the federal level.
A heat pump placed in service in 2025 can still be claimed on a 2025 return at 30%, up to $2,000. Systems placed in service in 2026 do not qualify for 25C under current federal law.
HEEHRA in Pennsylvania
The High-Efficiency Electric Home Rebate Act (HEEHRA) is a separate program from 25C. Congress funded it as a grant to state energy offices, not as a tax credit, so the end of 25C did not end HEEHRA.
In Pennsylvania, HEEHRA is run by the Department of Environmental Protection's Energy Programs Office, which serves as the state energy office. Rollout timing, contractor enrollment, and income verification follow DEP's approved plan, and our Pennsylvania HEEHRA guide tracks the current status.
Federal law sets the ceilings, and states can apply them but not exceed them. The per-upgrade limits include:
- Heat pump for space heating and cooling. Up to $8,000.
- Heat pump water heater. Up to $1,750.
- Electric load service center (panel). Up to $4,000.
- Electric wiring. Up to $2,500.
- Insulation, air sealing, and ventilation. Up to $1,600.
All of these fall under a $14,000 per-household cap. Households below 80% of area median income can receive up to 100% of eligible costs, and households between 80% and 150% of AMI can receive up to 50%. Our HEEHRA income tiers guide explains how the tiers work.
HEEHRA caps a space-heating heat pump at $8,000 within a $14,000 household limit. Households below 80% of AMI can receive up to 100% of costs, and households at 80–150% of AMI up to 50%.
How the Layers Stack
Stacking works because each layer comes from a different pool of money. Act 129 rebates are ratepayer funds and HEEHRA is a federal grant passed through the state. Neither is a tax credit, so the old worry about a rebate reducing a credit's cost basis does not apply to 2026 installs.
That said, HEEHRA cannot be combined with the HOMES whole-home rebate for the same upgrade, and combined incentives generally cannot exceed the total project cost. Here is how the layers compare:
| Layer | Sponsor | Form | 2026 Status |
|---|---|---|---|
| Act 129 Phase V rebates | PPL Electric Utilities, overseen by the PA PUC | Utility rebate after installation | Active, June 2026 through May 2031 |
| HEEHRA | U.S. DOE, administered by PA DEP | Point-of-sale rebate, income-tiered | State-administered; confirm rollout with DEP |
| HOMES | U.S. DOE, administered by PA DEP | Performance-based whole-home rebate | Cannot cover the same upgrade as HEEHRA |
| Federal 25C credit | IRS | Tax credit on Form 5695 | Ended for property placed in service after 12/31/2025 |
| WRAP | PPL Electric Utilities | No-cost services for income-eligible customers | Ongoing under PPL's universal service plan |
Our rebate stacking guide covers sequencing in more detail. In practice, the order of applications matters as much as the amounts, because some programs ask whether you received other incentives.
A PPL Act 129 rebate and a HEEHRA rebate can generally apply to the same heat pump because PPL's funds are not federal grants. HEEHRA cannot be combined with HOMES on the same upgrade.
Sizing for PPL's Climate
PPL's territory is colder than many homeowners expect. ACCA 99% heating design temperatures run roughly from the single digits around Scranton, Wilkes-Barre, and Williamsport to the low-to-mid teens around Harrisburg and Lancaster.
That range is why a room-by-room ACCA Manual J load calculation matters more than a rule-of-thumb tonnage. An oversized unit short-cycles in spring and fall, and an undersized one relies on resistance backup heat on the coldest nights.
A cold-climate heat pump with a variable-speed inverter compressor can keep much of its capacity well below the design temperature. Our cold-climate heat pump sizing guide and heat pump calculator cover the inputs. Our cold-climate brand comparison lists models that publish low-temperature capacity data.
Dual Fuel and Backup Heat
Much of PPL's territory also has UGI natural gas service, so many homeowners consider a dual-fuel setup that keeps a gas furnace for the coldest hours. Keep in mind that Act 129 rebates are electric-efficiency incentives, so PPL's current measure rules decide how a dual-fuel system or a backup heat strip is treated.
Our heat pump backup heat guide compares resistance strips with a fossil-fuel furnace. In addition, our thermostat setback guide explains why deep setbacks can turn on backup heat when it is not needed.
Panel Capacity and Installation Costs
Many older homes in Lancaster, Bethlehem, and the coal-region towns still have 100-amp service. A heat pump, a heat pump water heater, and electric cooking on the same panel can push the load calculation past what that service supports.
For income-eligible households, HEEHRA's $4,000 panel allowance and $2,500 wiring allowance are meant for exactly this situation. Before committing to a service upgrade, read our panel capacity guide on NEC load calculations and load-management options, along with our heat pump installation cost guide for typical project ranges.
How PPL Compares With PECO and FirstEnergy Pennsylvania
All three utilities operate under the same Act 129 statute and the same PUC phase calendar. However, each one designs its own measure list, rebate amounts, and contractor network, so a measure offered in Philadelphia may be priced differently or missing in the Lehigh Valley.
On January 1, 2024, FirstEnergy merged Met-Ed, Penelec, Penn Power, and West Penn Power into FirstEnergy Pennsylvania Electric Company. PECO, PPL, and FirstEnergy Pennsylvania together serve most Pennsylvania households, and Duquesne Light serves the Pittsburgh area.
A Decision Rule by Phase
The right next step depends on where a household is in the process. Here is how the layers line up at each stage:
- Pre-purchase. Confirm that PPL is your distribution utility, pull PPL's current Phase V catalog, and check DEP's HEEHRA status and your AMI tier. A Manual J and a panel assessment at this stage keep you from paying for capacity or service you do not need.
- Mid-application. Keep the AHRI certificate, model numbers, invoice, and installation date together. If a HEEHRA rebate is applied at the point of sale, ask the contractor whether the utility application has to disclose it.
- Post-install. Track the submission deadline for the PPL rebate and keep copies of everything. A 2026 install has no 25C credit to claim, so Form 5695 is not part of this project.
All of these steps are paperwork, not negotiation. The documents you gather before installation day are the same ones every program asks for afterward.
Planning a Heat Pump in PPL Territory
PPL's Act 129 rebates, Pennsylvania HEEHRA, and PPL's income-qualified services are the main funding layers for a 2026 heat pump in central and eastern Pennsylvania. With the federal credit gone, the utility and state layers carry more of the cost, so checking current amounts matters more than it did a year ago.
For the state-by-state picture, start with our HEEHRA state guide hub. A licensed HVAC contractor enrolled in PPL's programs can confirm which measures apply to your home before you sign.
This article is for informational purposes and is not financial / tax / legal / medical advice. Consult a licensed professional (CPA, elder-law attorney, HVAC contractor, state Medicaid office) before acting.