2024 Heat Pump Tax Credit for Registered Contractors Worksheet
What’s New? The previous 10% income tax credit and sales tax exemption for a heat pump system or heat pump water heater expired on December 31, 2023. Starting January 1, 2024, the new heat pump tax credit is allowed only to a heat pump tax credit contractor that is registered with the Colorado Energy Office. To earn the credit, the registered contractor must provide a discount from the amount charged for the installation of qualifying heat pump technology in Colorado, and the discount must be shown as a separate item on the receipt or invoice. Additional information on heat pump installations made in 2024 can be found on the Colorado Energy Office's website.
Note: While the form number (DR 1322) is the same for both tax year 2023 and 2024, the contents of the form and the filing instructions are different due to changes in the law allowing the credit for each year. For credits earned in 2024, the worksheet is only a tool to assist the taxpayer in claiming the correct amount of credit based on the installations performed. Please take care to claim the credit on the current year's forms and read the instructions carefully.
2023 Heat Pump System or Heat Pump Water Heater Eligibility Certification and Assignment Election
For Tax Year 2023 only, Colorado allowed an income tax credit to building owners who installed certain types of heat pump systems or heat pump water heaters into residential or commercial buildings in Colorado. Colorado also allowed a state sales tax exemption for purchases of heat pump systems and heat pump water heaters. This form DR 1322 must be used for both the income tax credit and the state sales tax exemption for activity during 2023. For purposes of this form, the term “building owners” includes lessees who purchase a qualifying heat pump system or heat pump water heater and install it into a building in Colorado with the lessor’s approval. Building owners must use this form to certify that all required conditions for claiming the income tax credit and the sales tax exemption have been met.
When claiming the income tax credit, this form must be filed with the building owner’s Colorado income tax return unless the credit is assigned. If the credit is assigned, the amount of the credit allowed that exceeds the assignee’s income tax due is refunded to the assignee. However, if the credit is not assigned, the amount of the credit that exceeds the building owner’s income tax due is not refunded to the building owner and may not be carried forward to any future years’ income tax due.