Increasing the adoption of electrification technologies and decarbonizing the existing housing stock are important facets of Massachusetts meeting its ambitious 2050 climate goals. On that front, the Massachusetts government has proactively introduced incentives and exempted heat pumps from sales tax in order to reduce cost barriers. However, information from recent heat pump installations suggests that some contractors are incorrectly charging tax on heat pumps, which raises questions about how heat pumps are being taxed. The laws pertaining to sales tax on heat pump systems are very clear:

Massachusetts General Laws Chapter 64H Section 6 exempts from sales and use tax, 

“Equipment directly relating to any …heat pump system, which is being utilized as a primary or auxiliary power system for the purpose of heating or otherwise supplying the energy needs of an individual’s principal residence in the commonwealth.” 

Despite this, some heat pump installation quotes include sales tax as a line item. Recently, a resident participating in one of Abode’s programs experienced this issue when she noticed a $500 charge noted as sales tax for her project. After speaking with one of Abode’s heat pump project consultants, she provided this information to her contractor and the charge was eliminated from the quote. While this anecdote certainly does not reflect the behavior of most contractors, it is still indicative of a problem with either a lack of information or transparency. To avoid this problem, it is recommended that contractors list the specific breakdown of all tax charges, if there are any, to make sure that customers are aware of what exactly they are paying tax on. This will not only increase transparency for customers, but will also ensure that government incentives for heat pumps are being used appropriately, both of which will ultimately drive heat pump adoption.