PSE&G Heat Pump Rebates: Clean Heat, Dual Heat and Hybrid Heat Explained
PSE&G's Building Decarbonization program pays up to $10,000 toward a heat pump that fully replaces a fossil-fuel heating system, up to $5,000 if you keep your existing system as backup, and up to $2,000 if you add a heat pump alongside it. Income-qualified households get more. The balance can be financed at 0% on your PSE&G bill. Current program terms run through June 30, 2027.
Which of the three pathways you choose decides both your rebate and how your home is heated in January, so it is worth understanding them before you collect quotes.
First, the federal tax credit is gone
Until the end of 2025, a qualifying heat pump earned a federal tax credit of up to $2,000. That credit ended for systems placed in service after December 31, 2025. If you install in 2026 or 2027, do not budget for it. Utility rebates are now the main help available to most New Jersey homeowners.
The three pathways
Rebates are a percentage of your project cost, up to a cap.
| Pathway | What it means | Standard rebate | Income-qualified rebate |
|---|---|---|---|
| Clean Heat | A cold-climate heat pump fully replaces your fossil-fuel heating system | The lesser of $10,000 or 50% of project cost | The lesser of $12,000 or 60% |
| Dual Heat | The heat pump does most of the heating; your existing system helps on the coldest days | The lesser of $5,000 or 50% | The lesser of $6,000 or 60% |
| Hybrid Heat | Heat pump capacity is added alongside your current system as a first step | The lesser of $2,000 or 30% | The lesser of $3,000 or 40% |
Dual Heat and Hybrid Heat use a control that decides when the heat pump runs and when your existing system takes over.
Add-on rebates for related work
A heat pump project often needs more than the equipment. The program lists separate rebates for that work.
| Item | Maximum rebate |
|---|---|
| Decommissioning the old heating system | $2,000 |
| Duct modifications | $2,000 |
| Dual-fuel or hybrid control | $1,500 per unit |
| Heat pump water heater, as part of a project | $750 |
| 240-volt circuit | $300 per circuit |
| Electrical panel replacement | $300 (up to $4,000 if income qualified) |
| Additional wiring, income qualified only | Up to $2,500 |
How the percentage cap works: two examples
The "lesser of" wording trips people up. Two illustrations:
- Clean Heat, $18,000 project. Half of $18,000 is $9,000, which is under the $10,000 cap. The rebate is $9,000.
- Clean Heat, $24,000 project. Half is $12,000, which is over the cap. The rebate is $10,000.
The same logic applies to Dual Heat: on a $12,000 project, half is $6,000, so the $5,000 cap applies.
These are arithmetic examples, not price quotes. Your project cost depends on your home.
0% on-bill financing
PSE&G offers 0% interest On-Bill Repayment of up to $50,000 for these projects. You repay through your utility bill, and qualification is based on your PSE&G payment history. If you combine the heat pump with insulation and air-sealing work under PSE&G's Whole Home Energy Solutions program, which carries its own rebate of up to $7,500, the financing limit rises to $75,000.
If on-bill repayment does not suit you, we also offer monthly payment options.
Which pathway fits your home?
The largest rebate is not automatically the right choice. Start from what you have now.
Gas furnace with ducts. This is the simplest switch. The heat pump uses your existing ductwork, provided it is in good shape and sized for the airflow. Clean Heat suits homeowners ready to stop using gas for heating. Dual Heat suits those who want the furnace kept as a safety net for the coldest nights.
Gas boiler with radiators or baseboard hot water. There are no ducts for a central heat pump to use. Ductless mini-splits are the usual answer, and many homeowners start by keeping the boiler as backup, which points to Dual Heat or Hybrid Heat. A full Clean Heat conversion is possible but needs enough indoor units to heat every room, so the design matters more.
Oil heat. Oil is typically the most expensive fuel to heat with, so the running-cost case for a full switch is strongest here. Clean Heat's decommissioning rebate is aimed at exactly this kind of project. Ask us to confirm eligibility for your address and fuel before you plan around a figure.
Electric baseboard. These pathways are built around replacing fossil-fuel heating. If your home is heated by electric resistance, a heat pump will still cut your heating electricity use sharply, but check with PSE&G or with us which rebate applies before assuming these amounts.
Unsure whether a heat pump alone can carry your home? We cover that in whether a heat pump can handle a New Jersey winter.
What to do before you apply
- Confirm PSE&G delivers your electricity. The program is for PSE&G electric customers.
- Get a load calculation. The heat pump should be sized to your home's measured heat loss, not to the size of the old furnace.
- Look at insulation and air sealing first. A tighter house needs a smaller, cheaper heat pump and holds temperature better.
- Check your electrical panel. Many older North Jersey homes need a new circuit or a panel upgrade, which is why those add-on rebates exist.
- Ask whether you are income qualified. The higher tier changes the numbers substantially.
- Use a contractor taking part in the program. Qualifying equipment and paperwork are part of the job.
Not a PSE&G customer?
JCP&L runs a similar program for its electric customers, with rebates reported at up to $10,000 for a full conversion to a cold-climate heat pump and up to $5,000 for a heat pump paired with an existing system. Atlantic City Electric and Rockland Electric have their own offers. Tell us your utility and we will check the current terms.
Frequently asked questions
Do I have to remove my gas furnace or boiler to get a PSE&G heat pump rebate?
Only for Clean Heat. Dual Heat and Hybrid Heat both keep your existing system.
Is there still a federal tax credit for heat pumps?
No. It ended for systems placed in service after December 31, 2025.
Does the rebate cover an electrical panel upgrade?
Partly. The program lists up to $300 toward a panel replacement, or up to $4,000 for income-qualified households, plus $300 per new 240-volt circuit.
Can I finance what the rebate does not cover?
Yes. PSE&G offers 0% On-Bill Repayment of up to $50,000 for qualified customers.
When does the program end?
Current terms run through June 30, 2027. Funding and rules can change, so check PSE&G's program page before you commit.
Related services
- Heat pump installation: all-in-one heating and cooling.
- Mini-split installation: zoned comfort for any room, no ductwork required.
- Financing and rebates: monthly payment options for New Jersey and New York homeowners.
Find out which pathway your home qualifies for
Tell us what heats your home today and who your utility is. We will tell you which pathway fits, what the rebate would be on a system sized for your house, and what work your panel or ducts would need. Schedule your free consultation, or read more about our heat pump and mini-split installation.
