Replacing your furnace in Minnesota is a significant investment — but state and utility rebate programs can meaningfully reduce your out-of-pocket cost. Xcel Energy and CenterPoint Energy both operate residential efficiency programs that pay rebates for upgrading to high-efficiency heating equipment. Combined with federal tax credits, the total incentive package can reduce the effective cost of a quality furnace replacement by hundreds of dollars. This guide explains what's available, who qualifies, and how to claim it.
Why Minnesota Utilities Offer Furnace Rebates
Minnesota law requires utilities to operate energy efficiency programs — called Conservation Improvement Programs (CIPs) — funded by a small surcharge on all customer bills. Rather than building more power plants or gas infrastructure, utilities pay customers to use less energy through efficiency upgrades. From a utility standpoint, a rebate that incentivizes a homeowner to install a 96% AFUE furnace (instead of replacing with another 80% unit) is cheaper than acquiring new gas supply to cover the waste from the less efficient unit.
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This means the rebate programs are well-funded, consistently available year after year, and worth taking advantage of. If you're replacing a furnace anyway, capturing the rebate is essentially free money.
Xcel Energy Furnace Rebates (Natural Gas Customers)
Xcel Energy is the largest natural gas utility in the Twin Cities metro, serving most of the core suburban ring. Their residential efficiency programs typically offer rebates for upgrading to high-efficiency heating equipment.
Typical rebate tiers for furnace replacement:
- 95% AFUE gas furnace: $200
- 96% AFUE gas furnace: $300
- 97% AFUE gas furnace: $400
- 80% AFUE gas furnace: $0 — 80% units do not qualify for any Minnesota gas rebate. You need 95% AFUE or higher.
- Smart thermostat: $50 for a qualifying ENERGY STAR connected thermostat
- Central air conditioner: $450 at 13.4 SEER2 or better, with an AHRI reference number on the application
- Whole-home air sealing/insulation combo: Bundled rebates when furnace replacement is paired with weatherization upgrades
Important note: Rebate amounts and program terms change annually. Always verify current rebate amounts at Xcel Energy's website or by calling their efficiency program line before purchasing. Programs may also have limited annual funding — applying early in the calendar year typically ensures availability.
How to claim Xcel Energy rebates: Most rebates are claimed after installation by submitting the contractor invoice, equipment model number and serial number, and the rebate application form. Xcel typically processes rebates within 6–8 weeks of a complete application. Some contractors facilitate the submission on your behalf — ask at the time of installation.
CenterPoint Energy Furnace Rebates (Natural Gas Customers)
CenterPoint Energy serves natural gas customers in portions of the metro and greater Minnesota. Their efficiency programs run similarly to Xcel's, with rebates for high-efficiency heating equipment.
Typical CenterPoint rebate tiers:
- 94–95.9% AFUE gas furnace: $300
- 96% AFUE or higher gas furnace: $400
- Water heater: $75 tank, $250 tankless
- Ducted dual-fuel heat pump paired with a gas furnace: $1,100
- Cooling-only AC and mini-splits: $0 — CenterPoint is a gas utility. AC rebates come from your electric utility.
- Propane homes: $0 regardless of AFUE — CenterPoint rebates require natural gas service.
CenterPoint's programs are administered similarly to Xcel's — apply after installation with equipment documentation and contractor invoice. Check their current program terms at the CenterPoint Energy website before purchase.
Federal Tax Credits for High-Efficiency Furnaces
The federal 25C credit has expired. Under the One Big Beautiful Bill Act, the Energy Efficient Home Improvement Credit terminated for property placed in service after December 31, 2025. A furnace installed in 2026 does not qualify for any federal tax credit. The terms below describe the credit as it applied through the 2025 tax year:
Energy Efficient Home Improvement Credit (25C) — through 2025 only: Homeowners could claim a tax credit of up to 30% of the cost of qualifying high-efficiency heating equipment, with an annual cap of $600 for furnaces (gas, oil, or propane), at a threshold of typically 97% AFUE for forced-air gas systems. This applied to equipment placed in service on or before December 31, 2025.
Important distinction: The credit applies to primary residences only, not rental properties. It's a non-refundable tax credit — it reduces your tax liability dollar for dollar but cannot generate a refund if your credit exceeds your tax bill. Consult a tax professional for your specific situation.
Heat pump tax credits: Cold-climate heat pumps qualify for a larger credit — up to $2,000 under the IRA. If you're evaluating a heat pump vs. gas furnace decision, the larger federal credit for heat pumps is a meaningful factor in the economics.
Stacking Rebates: How to Maximize Your Incentives
The key to maximizing incentives is stacking — combining multiple programs that can be used simultaneously:
- Xcel or CenterPoint rebate (utility program) — claim after installation
- Federal 25C tax credit — expired for 2026 installations; available only if your equipment was placed in service on or before December 31, 2025
- Smart thermostat rebate — often available as an add-on from both utilities
- Furnace Direct wholesale pricing — factory-direct savings before any rebates apply
Example: a Goodman 96% AFUE furnace bought direct from Furnace Direct earns a $300 Xcel rebate (or $400 from CenterPoint), plus $50 for a qualifying smart thermostat. Specifying 97% AFUE instead raises the Xcel rebate to $400. Those rebates come off a cost base that is already well below a contractor-supplied quote — which is where the larger share of the savings comes from.
Rebates and Furnace Direct: How It Works Together
Furnace Direct provides the documentation you need to claim rebates:
- Invoice showing equipment cost, model number, and purchase date
- AHRI certification number (required by most utility programs to confirm efficiency rating)
- Warranty documentation showing equipment meets program specifications
Your HVAC installer provides the installation invoice — also typically required for rebate applications. Most utility rebates require both equipment purchase documentation and an installation receipt showing the work was done by a licensed contractor.
Rebate Timing Considerations
Don't let rebates drive you to delay a necessary replacement. A failing furnace costs money in emergency repair calls, efficiency losses, and the risk of complete failure on the coldest night of the year. If your furnace is at end of life, replace it now — rebates are available year-round and the 6–8 week processing time doesn't affect your heating season. Read our repair vs. replacement guide to assess whether your situation calls for immediate action.
Getting Started
Furnace Direct supplies factory-direct Goodman equipment to Minnesota homeowners at wholesale pricing — the same cost contractors pay, without the markup. Same-day delivery is available throughout the Twin Cities metro. We'll provide the documentation you need for utility rebate applications, and our pricing ensures you're starting from the lowest possible baseline before rebates and credits are applied.
Contact us with your home's square footage and current equipment specs. We'll recommend the right Goodman model, confirm current BTU options in stock, and get your replacement equipment delivered fast. See our complete furnace buying guide and financing options guide for the full picture on making replacement as affordable as possible.
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Tell us a little about your home and what you're replacing. We'll send real numbers on a Goodman 96% AFUE setup — shipped direct to your door anywhere in the lower 48. No contractor markup, no obligation.