It depends. Rebates are often issued as checks or credits through your utility company, while tax incentives reduce what you owe when you file with the IRS. You may not get cash in hand immediately — but you’ll still see the savings.

Rebates: These are typically provided by utility companies, local governments, or manufacturers, often in the form of a check or a credit applied directly to your utility bill. Rebates are designed to encourage the adoption of specific energy-saving products or services, such as upgrading to a high-efficiency HVAC system or installing smart thermostats. While you might not receive “cash in hand” immediately at the point of sale, the savings are tangible and will be reflected in your financial statements or reduced utility expenses. The rebate application process usually involves submitting proof of purchase and installation to the issuing entity.

Tax Incentives: In contrast, tax incentives, often called tax credits, directly reduce the income tax you owe to the IRS. These incentives are claimed when you file your annual federal income tax return. They are not a deduction from your taxable income but rather a dollar-for-dollar reduction of your tax liability. For example, if you qualify for a $1,000 tax credit, your tax bill will be lowered by $1,000. Similar to rebates, you won’t see this money immediately; instead, it translates into a lower tax payment or a larger refund when you complete your taxes. Eligibility for tax incentives typically depends on meeting specific criteria related to the efficiency and type of equipment installed, as outlined by the IRS.