Heat Pump Tax Credit 25C: Expired Dec 2025 — What's Still Available for 2026 Installations
A lot of homeowners are still reading 2025 guides that describe a $2,000 federal heat pump tax credit. That credit expired December 31, 2025. If you installed a heat pump before that date, you can still claim it on your 2025 return — and we cover that below. If you’re planning an installation in 2026, the picture is different but still worth understanding.
What Happened: Section 25C Heat Pump Credit Timeline
| Period | Federal Heat Pump Credit | Status |
|---|---|---|
| 2023–2025 | 30% of cost, capped at $2,000/year (Section 25C) | Was available |
| 2026 and beyond | Section 25C terminated under OBBBA (PL 119-21) | EXPIRED |
The One Big Beautiful Bill, signed July 4, 2025, accelerated the termination of multiple IRA energy credits. Section 25C — the energy efficiency credit covering heat pumps, insulation, windows, and panels — ended December 31, 2025 instead of 2032 as originally legislated.
Claiming the 2025 Credit (For Installations Completed Before Dec 31, 2025)
If you installed a qualifying heat pump in 2023, 2024, or 2025 and haven’t claimed the credit yet:
| Detail | 2025 Rules (for 2025 Tax Return) |
|---|---|
| Credit rate | 30% of total project cost (equipment + labor) |
| Maximum credit | $2,000 (shared cap with heat pump water heaters) |
| Credit type | Non-refundable (no carry-forward) |
| Eligible properties | Primary residence only |
| How to claim | IRS Form 5695, Part II — file with your 2025 1040 |
| Filing deadline | April 15, 2026 (or October 15 with extension) |
What Heat Pumps Qualified for the 2025 Credit
For 2025 installations, a heat pump needed to meet ENERGY STAR Most Efficient criteria or CEE Tier 1 specifications. General benchmarks:
- SEER2: 16+ (cooling efficiency)
- HSPF2: 9+ (heating efficiency)
- EER2: 12+ (steady-state cooling)
If you’re filing a 2025 return for an installation done before December 31, 2025, verify your model on the ENERGY STAR product finder and keep your manufacturer’s certification statement (MCS).
What's Available for 2026 Installations
The federal tax credit is gone, but meaningful incentives remain:
HEAR Program (High-Efficiency Electric Home Rebate Act)
HEAR provides income-based upfront rebates for qualifying electric appliances, including heat pumps. These rebates are IRA-funded but administered by state energy offices and are not affected by the OBBBA termination of tax credits.
| Household Income Level | Max HEAR Rebate for Heat Pump | Coverage |
|---|---|---|
| Low income (≤80% AMI) | $8,000 | 100% of costs up to cap |
| Moderate income (80–150% AMI) | $8,000 | 50% of costs up to cap |
| Above 150% AMI | Not eligible | — |
AMI means Area Median Income — it varies by county. Check your state energy office or our rebate calculator to determine eligibility.
State Heat Pump Incentives (Ongoing)
State programs are not affected by the OBBBA and continue independently. Some 2026 examples:
- Massachusetts: Up to $10,000 through Mass Save for whole-home heat pump conversions
- New York: NYSERDA $1,000–$2,000 per qualifying unit
- Maine: Efficiency Maine $800–$2,400 per heat pump
- California: TECH Clean California $3,000–$5,500 for gas-to-electric conversions
- Colorado: $3,000–$12,000 via utility programs depending on income and system type
Utility Company Rebates
Many electric utilities still offer $500–$2,000 for heat pump installations. Check with your local provider — these programs are unaffected by federal tax credit changes.
Real-World Cost Scenarios for 2026
| Scenario | System | Installed Cost | 25C Credit | HEAR Rebate | Net Cost |
|---|---|---|---|---|---|
| Single-zone mini-split, above 150% AMI | Ductless | $4,500 | $0 (expired) | $0 | $4,500 |
| Central ducted heat pump, moderate income | Air-source | $12,000 | $0 (expired) | $4,000 | $8,000 |
| Central ducted heat pump, low income | Air-source | $12,000 | $0 (expired) | $8,000 | $4,000 |
| Multi-zone mini-split (4 heads), moderate income | Ductless | $18,000 | $0 (expired) | $8,000 | $10,000 |
For higher-income households no longer eligible for the tax credit or HEAR rebates, the economics are tighter than in 2023–2025. State and utility rebates, combined with long-term energy savings, are the primary financial case.
Heat Pump vs. Traditional HVAC: The 2026 Math
| Factor | Gas Furnace + Central AC | Air-Source Heat Pump |
|---|---|---|
| Equipment + install cost | $8,000–$12,000 | $10,000–$16,000 |
| Federal tax credit | $0 | $0 (expired Dec 2025) |
| HEAR rebate (moderate income) | $0 | Up to $4,000 |
| State/utility rebates | $0 | $500–$5,000 (varies) |
| Annual heating + cooling cost | $1,800–$2,400 | $1,000–$1,600 |
| Annual savings vs. gas | — | $600–$1,000 |
| Payback period (after available incentives) | — | 4–10 years (vs 3–7 in 2025) |
State Incentives That Remain in 2026
For homeowners considering insulation improvements alongside a heat pump, our guide to insulation rebates covers what's currently available.
Should You Install a Heat Pump in 2026 Without the Tax Credit?
The calculation changed, but it hasn’t reversed. Heat pumps still beat gas furnaces on long-term operating costs for most homeowners. Without the $2,000 federal credit, the payback period is longer — but income-qualifying households can still get substantial HEAR rebates, and state programs cover many who don’t qualify for HEAR.
For higher-income households ineligible for HEAR: focus on state and utility rebates, time your purchase for off-season pricing, and remember that energy savings of $600–$1,500/year still compound over a 15–20 year lifespan.
Frequently Asked Questions
Is there a federal tax credit for heat pumps installed in 2026?
No. The Section 25C federal heat pump tax credit expired December 31, 2025 under the One Big Beautiful Bill (OBBBA). Heat pumps installed in 2026 do not qualify for this credit. HEAR rebates (up to $8,000 for qualifying households) and state incentives remain available.
I installed a heat pump in 2025 — can I still claim the $2,000 credit?
Yes. If your heat pump was placed in service before December 31, 2025, and meets ENERGY STAR Most Efficient or CEE Tier 1 standards, you can claim the 30% credit (up to $2,000) on your 2025 federal tax return using IRS Form 5695. File by April 15, 2026 (or October 15 with extension).
What heat pump incentives are available in 2026?
The HEAR program (up to $8,000 for households under 150% AMI, administered by state energy offices), state rebate programs ($500–$10,000 depending on state), and utility rebates ($500–$2,000). Use our rebate calculator to find what's available in your state.
Do heat pump rebates apply to rental properties?
Generally no. HEAR rebates apply to the primary residence of the qualifying household. State programs vary — some cover rentals under specific landlord rebate tracks. Check your state energy office for current rules.
When did the heat pump tax credit expire?
The Section 25C heat pump tax credit expired December 31, 2025, terminated by the One Big Beautiful Bill (OBBBA, PL 119-21, signed July 4, 2025). This was earlier than the original 2032 expiration under the IRA.