A homeowner called us in late February asking why his contractor couldn’t promise the $2,000 federal tax credit on his new heat pump install. The installer was right. Section 25C ended on December 31, 2025, along with the Section 25D geothermal credit, and any system placed in service after that date no longer qualifies for either.
What’s still in play for 2026 is the rebate side. State programs continue to move money, most utility incentives remain active, and HEEHRA dollars are still landing in homeowner accounts in the states that have rolled the program out. If your install was complete and operational on or before December 31, 2025, you can still claim the $2,000 credit on the 2025 return you file this year.
TL;DR Quick Answers
Heat Pump Rebates
In 2026, federal heat pump tax credits under Sections 25C and 25D will end for new installs. Four rebate pathways remain active:
- HEEHRA point-of-sale rebates up to $8,000 (income-qualified, state-administered, availability varies by state)
- State-level rebates listed in the DSIRE database
- Utility-company rebates, typically $200 to $1,500 per qualifying system
- Last-chance Section 25C filings for systems installed and operational on or before December 31, 2025
Total 2026 savings depend on state, income level, and utility provider. The range runs from a few hundred dollars to $8,000 or more.
Top 5 Takeaways
- Federal Credits Ended December 31, 2025. Both Section 25C ($2,000 air-source heat pump credit) and Section 25D (30 percent geothermal credit) terminated under the One Big Beautiful Bill Act, Public Law 119-21.
- Last-Chance Filings Are Still In Play. If your install was complete on or before December 31, 2025, you can still claim it on your 2025 return via IRS Form 5695.
- HEEHRA is still federally funded, but state-administered. Income-qualified households can claim rebates up to $8,000, though several states have already paused new applicant intake as funds get reserved.
- State And Utility Rebates Have Become The Reliable Lever. They’re often stackable with HEEHRA and easier to confirm by ZIP code via the DSIRE database and the ENERGY STAR Rebate Finder.
- The Long-Term Math Still Holds. Even with a smaller incentive stack, properly sized heat pumps continue to deliver lifetime operating savings in most climate zones.
What Expired On December 31, 2025
Two federal credits ended on that date. Section 25C, the Energy Efficient Home Improvement Credit, capped at $2,000 for air-source heat pumps that met the Consortium for Energy Efficiency’s highest tier. Section 25D, the Residential Clean Energy Credit, covered 30 percent of a geothermal heat pump installation with no annual cap and could carry forward to future tax years if the credit exceeded the homeowner’s federal tax liability.
Both credits worked on the same logic. They rewarded homeowners for replacing fossil-fuel heat with high-efficiency electric heat. A heat pump, which moves heat between indoor and outdoor environments instead of generating it through combustion, sits at the center of both incentive structures.
The One Big Beautiful Bill Act, signed July 4, 2025, as Public Law 119-21, accelerated termination dates that the Inflation Reduction Act had originally extended through 2032. The IRS issued Fact Sheet 2025-05 in August 2025 to clarify the new expiration. If your install date falls after December 31, 2025, the system no longer qualifies for either credit. In our experience, the homeowners who feel the change hardest are the ones who started a 2025 project but pushed installation into early 2026 to wait out scheduling delays. The credit follows the placed-in-service date, not the purchase date.
Claiming The $2,000 Credit On Your 2025 Return
If your installer finished and commissioned your heat pump on or before December 31, 2025, you can still claim the $2,000 Section 25C credit on your 2025 return. The form itself is simple. Pulling together the supporting documents is where most homeowners get stuck.
Here’s what you need to have on file before you sit down to file:
- A qualifying air-source heat pump that meets the Consortium for Energy Efficiency’s highest tier, and verify your model in the AHRI directory before filing
- Documentation of the placed-in-service date, including installer records and the manufacturer’s certification statement
- Total project cost, including both labor and equipment, with any rebates or utility incentives subtracted first
- IRS Form 5695, filed with your 2025 federal return
The credit covers 30 percent of net project cost, capped at $2,000 for heat pumps and heat pump water heaters. It’s non-refundable, so it can zero out your federal tax liability but won’t generate a refund beyond what you owed that year. There’s no carry-forward either, which means the unused portion can’t roll into a future tax year.
Based on our service calls, the most common mistake we see is homeowners forgetting to subtract their utility rebate from the project cost before calculating the credit. The IRS treats those heat pump rebates as a price adjustment, not a separate incentive. Get the order of operations right, and the rest of the form falls into place.
HEEHRA And State Rebates In 2026
HEEHRA, the High-Efficiency Electric Home Rebate Act, is the largest federal rebate program still running in 2026. The Inflation Reduction Act funds it, and individual state energy offices administer the actual programs. The income structure matters:
- Households at or below 80 percent of the area median income (AMI) may qualify for rebates up to $8,000 for a qualifying heat pump
- Households between 80 percent and 150 percent of AMI may qualify for rebates up to $4,000
- Households above 150 percent of AMI are generally not eligible for HEEHRA
The point-of-sale rebate model means you don’t wait until tax season to see the discount. It comes off the installer’s quote when a certified contractor processes your reservation.
The catch is availability. State rollouts have been uneven. A handful of states are still onboarding contractors. California has already fully reserved its Phase I allocation for single-family homes and moved new applicants to a waitlist. The NASEO Residential Energy Efficiency Task Force tracks state-by-state status.
State-level rebates run in parallel and are often the easiest dollars to claim in 2026, ranging from a few hundred dollars to several thousand, depending on the state. Utility-company rebates layer on top of either, typically $200 to $1,500 for a qualifying system. The DSIRE database is the most reliable place to confirm what’s offered in your ZIP code. Based on what we see at ACTuneupPros.com, homeowners who stack a state rebate with a utility incentive often see total savings in the $1,500 to $4,000 range without ever touching HEEHRA.
Heat Pump Or Air Conditioner? Choosing What Fits Your 2026 Plan
With the federal credit gone for new installs, some homeowners are asking whether a heat pump still makes sense or whether a traditional central air conditioner is the smarter 2026 choice. The answer depends on your existing heating fuel, your winter climate, and the rebates available in your ZIP code.
A heat pump handles both jobs from one outdoor unit: cooling in summer, heating in winter. A central air conditioner only handles cooling and assumes you keep your existing furnace. For homeowners on natural gas in cold climates, the math sometimes favors keeping the furnace and replacing only the AC. For homeowners on electric resistance heat or propane, the heat pump operating cost almost always wins, rebates or not. For a deeper view of the installed and operating cost math on a heat pump specifically, our heat pump heating cost guide breaks down the installation range, the monthly bill expectations, and the comparison to a gas furnace.
For a side-by-side look at heat pumps versus traditional air conditioners, this honest comparison of heat pumps and air conditioners walks through operating-cost differences by climate zone and use case.
What we’ve learned in the field is that homeowners who run the lifetime cost numbers, including state and utility rebates, almost always still land on a heat pump in moderate and warm climates. The federal credit was a useful accelerant, never the entire case. Properly sized and maintained, a heat pump’s efficiency math holds up in 2026, especially when state and utility incentives close the upfront gap.
“The credit landscape changed, but the math on heat pumps didn’t. State and utility programs are doing the heavy lifting in 2026, and a properly maintained system still pays homeowners back in lower lifetime operating costs.”
Essential Resources On Heat Pump Rebates
These are the trusted guides we point customers toward when they want to verify the 2026 rebate landscape on their own. All seven are independent, public-record sources. Each one handles a different piece of the picture.
1. Confirm What Expired And When, Direct From The IRS
The IRS Fact Sheet on the One Big Beautiful Bill walks through the termination of Sections 25C and 25D, including the placed-in-service rules that decide whether your 2025 install still qualifies.
Source: IRS Guidance On One Big Beautiful Bill Provisions
2. See Every Federal Home Energy Rebate In One Place
The Department of Energy’s Home Upgrades portal lists the heat pump, water heater, and electrification rebates still federally funded for 2026, with a tool to check rebate availability by state.
Source: Department Of Energy Home Upgrades Portal
3. Verify The Federal Heat Pump Tax Credit Rules Before You File
ENERGY STAR’s federal tax credits page for air-source heat pumps explains the qualification tier requirements, including the CEE Highest Tier standard that determines eligibility for the $2,000 credit.
Source: ENERGY STAR Federal Tax Credits For Air Source Heat Pumps
4. Search Every State And Utility Incentive In One Database
DSIRE consolidates every state, local, and utility-level renewable energy and efficiency incentive in the U.S. It’s the most thorough rebate database we recommend to homeowners.
Source: DSIRE Programs Database
5. Walk Through The 25C Rules Used By Tax Pros And Electrification Specialists
Rewiring America’s planner explains the Section 25C credit, the placed-in-service deadline, and how to apply it on a 2025 return filed during 2026.
Source: Rewiring America 25C Heat Pump Tax Credit Guide
6. Verify Your Refrigerant Meets The 2026 EPA Rule
Beginning January 1, 2026, residential heat pumps must use refrigerants with a global warming potential of 700 or lower under the EPA’s Technology Transitions Rule. The sector-by-sector restrictions page details the compliance schedule and HFC limits.
Source: EPA Technology Transitions HFC Restrictions By Sector
7. See Which States Lead On Heat Pump Adoption
ACEEE’s State Energy Efficiency Scorecard ranks all 50 states and DC on policies and programs that support heat pump adoption, including rebates, codes, and utility programs. Useful context before evaluating a state-specific rebate stack.
Source: ACEEE State Energy Efficiency Scorecard
Supporting Statistics
These data points frame what 2026 actually looks like for heat pump buyers. All three come from federal or non-profit research sources with public-record methodologies.
1. Space Heating And Cooling Account For Over Half Of Home Energy Use
EIA Residential Energy Consumption Survey data shows that about 52 percent of a U.S. household’s annual energy consumption goes to just two end-uses: space heating and air conditioning. That single figure is why heat pump efficiency still matters even after the federal credit window closed in 2025. The operating-cost math compounds across years of ownership.
Source: EIA Use Of Energy In Homes
2. NREL Field Studies Confirm Heat Pump Performance In Cold Climates
NREL researchers monitored twelve variable-capacity, centrally ducted air-source heat pumps in single-family homes across cold-climate regions for a full winter season. The field study measured coefficient-of-performance values across that period and found that properly sized variable-capacity systems hold their efficiency in cold conditions.
Source: NREL Field Study On Cold-Climate Air-Source Heat Pumps
3. HEEHRA is actively distributing in roughly a dozen states in 2026
HEEHRA rebates are actively distributed in roughly a dozen states as of mid-2026, with several other states still onboarding contractors or pending additional federal allocations. Availability varies by state energy office capacity, which is why ZIP-level verification matters before counting on any specific dollar figure. The NASEO Residential Energy Efficiency Task Force is the central coordinating body that tracks rollout by state.
Source: NASEO Home Energy Rebates Tracker
Final Thoughts And Opinion
Here’s the honest read from our side of the industry. The federal credit was substantial while it lasted. Losing it in 2026 changed the upfront math for some homeowners, but it didn’t change the long-term math at all.
What we’ve learned in the field is that homeowners who upgrade strategically still come out ahead:
- A properly sized, well-installed heat pump can drop lifetime heating costs significantly in most climates
- State and utility rebates often cover more of the upfront cost than people expect, especially when stacked
- HEEHRA, where available, can still erase most of the installation cost for income-qualified households
- Operating cost differences between a heat pump and a comparable AC-plus-furnace setup compound year over year
Our honest take. Heat pump economics didn’t stop working in 2026. The federal subsidy stepped off the field, and state programs, utility programs, and the underlying efficiency math are still pulling their weight. Homeowners who run the full lifetime cost numbers almost always still find the case.
The smaller incentive stack lengthens the payback window in some climates, but it doesn’t erase the payback altogether.
If you upgraded in 2025 and want to protect the efficiency you paid for, regular maintenance keeps the operating-cost math working for you. See our heat pump lifespan and replacement guide for what to expect across the 12 to 18-year ownership window. Even the most efficient system loses ground to a dirty coil or a clogged filter.
Frequently Asked Questions
Q: Is There A Federal Heat Pump Tax Credit In 2026?
A: No, not for new installs. The Section 25C Energy Efficient Home Improvement Credit, which gave homeowners up to $2,000 for a qualifying air-source heat pump, expired on December 31, 2025, under the One Big Beautiful Bill Act. The Section 25D Residential Clean Energy Credit for geothermal systems ended on the same date. State and utility rebates remain active in 2026.
Q: Didthe $2,0000 Heat Pump Tax Credit Expire?
A: Yes, for installs placed in service after December 31, 2025. If your installer finished the job on or before that date, you can still claim the credit using IRS Form 5695 on your 2025 return filed in 2026.
Q: Can I Still Claim The 25C Credit On My 2025 Tax Return Filed In 2026?
A: Yes, as long as your installer placed the system in service on or before December 31, 2025. The IRS counts the placed-in-service date, not the date you ordered or paid for the system. Fact Sheet 2025-05, published by the IRS in August 2025, spells this out.
Q: What Is The HEEHRA Rebate, And Is It Still Available In 2026?
A: HEEHRA is the High-Efficiency Electric Home Rebate Act, a federally funded program that provides up to $8,000 in point-of-sale rebates for qualifying heat pumps. State energy offices run the program, and availability varies state by state. A handful of states have already fully reserved their initial funding allocation and moved new applicants to a waitlist.
Q: How Do I Find Heat Pump Rebates By State?
A: The DSIRE database is the most thorough source for state, local, and utility incentives by ZIP code. If you want a faster utility-only check, the ENERGY STAR Rebate Finder is the shortcut. State energy office websites usually carry the most current reservation status for HEEHRA and HOMES dollars.
Q: Can I Stack A State Rebate With A Federal Tax Credit?
A: In principle,e yes, but for the 2025 filings still on the table, you have to reduce the federal credit by the value of any rebate that lowered your effective project cost. Order of operations matters. Subtract utility and state rebates from your project total first, then apply the federal credit percentage to the net amount.
Q: What Does The One Big Beautiful Bill Act Mean For Heat Pump Credits?
A: It accelerated the termination of multiple residential energy credits that the Inflation Reduction Act had originally extended through 2032. For heat pumps specifically, both Section 25C (air-source) and Section 25D (geothermal) ended on December 31, 2025. The IRS published Fact Sheet 2025-05 in August 2025 to clarify the new rules and the placed-in-service deadline.
Q: Do Geothermal Heat Pumps Still Qualify For A Federal Tax Credit In 2026?
A: No, not for new installs placed in service after December 31, 2025. The 30 percent Section 25D credit ended on that date. If your geothermal system was placed in service on or before then, you can still claim it, and any unused carryforward from earlier 2025 filings can still roll into future returns. We cover geothermal-specific rebate paths in our geothermal heat pump costs and benefits guide.
Q: How Do I Claim A Heat Pump Tax Credit On IRS Form 5695?
A: For a qualifying 2025 install, file Form 5695 with your 2025 federal tax return. The form walks through net project cost (after rebates), the 30 percent calculation, and the $2,000 cap for heat pumps. Keep your manufacturer certification statements and the AHRI qualifying-equipment confirmation in your records in case of an audit.
Q: Are There Income Limits For HEEHRA Heat Pump Rebates?
A: Yes. HEEHRA uses area median income (AMI) tiers. If your household sits at or below 80 percent of AMI, you may qualify for the full $8,000. Households between 80 and 150 percent of AMI are eligible for up to $4,000. Above 150 percent AMI, HEEHRA generally doesn’t apply. The 25C tax credit, when it was active, had no income cap.
Schedule Your 2026 Heat Pump Tune-Up
If you installed a heat pump in 2025 to capture the federal credit, regular maintenance protects the efficiency you paid for. Visit ACTuneupPros.com to schedule a tune-up that keeps your system performing at the level the rebate math assumed.