Heat Pump Rebates 2026: What's Left After the Federal Tax Credit Expired

Published: February 27, 2026

The Federal Picture Changed at the Start of 2026

The 25C energy efficiency home improvement credit covered 30% of heat pump installation costs — up to $2,000 — for qualifying residential installations through December 31, 2025. The One Big Beautiful Bill eliminated this credit effective January 1, 2026. Expenditures made after that date are not eligible. If you installed your heat pump before year-end 2025 and have not yet filed your 2025 taxes, you can still claim the credit on your 2025 return.

The HOMES rebate program (Home Owner Managing Energy Savings) under the Inflation Reduction Act was administered at the state level. Several states had yet to fully deploy allocated funding when the federal picture shifted. Check your state's energy office for whether unexpended HOMES funds remain available — some states are honoring commitments for projects that were in progress when funding was allocated.

The result for 2026: federal incentives for heat pumps are largely gone. What remains is a patchwork of state programs, utility rebates, and demand response credits that varies significantly by location. Use the heat pump savings calculator to model your specific situation by state.

State Programs Still Available in 2026

Massachusetts: Mass Save — The Most Generous Remaining Program

Massachusetts' Mass Save program remains the largest active state heat pump rebate program in the country after California's HEEHRA Phase I reached capacity. The 2026 rebate structure:

System Type	Rebate Amount	Income Limit
Air source heat pump (HVAC)	$1,500–$3,000	None (income-qualified higher)
Air to water heat pump	$2,650/ton, max $8,500	None
Cold climate heat pump	$1,000–$2,000 additional	None
Whole-home electrification	Up to $13,500 total	Income-qualified households

Mass Save rebates are funded by utility ratepayer surcharges and are not dependent on federal policy. They are available to customers of Eversource, National Grid, Unitil, and other participating Massachusetts utilities. Apply through your utility's Mass Save portal; rebates are processed after installation by a participating contractor.

New York: NYSERDA Clean Heat Program

NYSERDA's Clean Heat program provides rebates through participating contractors rather than directly to homeowners. Rebate amounts in 2026:

• Air source heat pumps: $500–$1,000 per system (installer-redeemed rebate passed to customer)
• Ground source (geothermal) heat pumps: $1,000–$3,000 per system
• Cold climate heat pumps in priority zones: enhanced incentives available

New York also has utility-specific programs: Con Edison, NYSEG, and RG&E run their own heat pump incentives that stack on top of NYSERDA. A Long Island homeowner purchasing through PSEG Long Island may access PSEG rebates separately from NYSERDA. Calculate your combined rebate with the New York energy rebate calculator.

Colorado: RENU Loan and Utility Rebates

Colorado's RENU loan program offers below-market financing (not direct rebates) for heat pump installations alongside utility rebates from Xcel Energy and Black Hills Energy. Xcel's rebate structure for 2026: $200–$800 per ton for qualifying air source heat pumps. The RENU loan can finance the remaining installation cost at rates below conventional home improvement loans.

Colorado also has a state income tax credit for heat pump purchases in 2026 — 10% of installation cost, up to $5,000 for qualifying households. This is separate from and stacks with utility rebates. See state details at the Colorado energy rebate page.

Oregon: Oregon Department of Energy Rebates

Oregon's Residential Energy Tax Credit (RETC) was replaced by direct rebate programs administered through the Oregon Department of Energy. In 2026, income-qualified Oregon households can receive up to $7,500 in rebates for heat pump installation through the Heat Smart Oregon program, targeting low-to-moderate income households specifically.

California: HEEHRA Phase I Closed; Phase II Status Pending

California's HEEHRA (High-Efficiency Electric Home Rebate Act) Phase I program reached full reservation capacity as of February 24, 2026. No new reservations for single-family home retrofits are being accepted. California residents should check with their utility — PG&E, SCE, and SDG&E all have separate heat pump rebate programs that are not HEEHRA-dependent. Use the California energy rebate calculator for current utility program availability.

Utility Demand Response Credits: The Hidden Heat Pump Incentive

Beyond installation rebates, many utilities offer demand response programs that pay heat pump owners ongoing credits for allowing the utility to adjust thermostat settings during peak demand periods. These programs can generate $50–$200 per year in bill credits with minimal comfort impact — typically a 2°F thermostat adjustment for 1–3 hours on 10–15 days per year.

Utilities running active heat pump demand response programs in 2026 include Xcel Energy (Colorado, Minnesota, Texas), Duke Energy (multiple southeastern states), Pacific Gas & Electric (California), and PSEG (New Jersey, Long Island). These credits are available whether or not you received an installation rebate. Calculate ongoing savings with the energy savings calculator.

New Refrigerant Requirements That Affect 2026 Heat Pump Economics

Starting January 1, 2026, the EPA's Technology Transition Rule requires residential and light commercial heat pump systems to use refrigerants with a global warming potential (GWP) of 700 or lower. This replaces older R-410A refrigerant (GWP 2,088) with lower-GWP alternatives including R-32 and R-454B.

Practical impact for 2026 buyers: new heat pump systems installed this year will use the new refrigerants. Early inventory of R-410A systems may be available from contractors at discounted prices — but future service costs may be higher as R-410A availability decreases. Ask your contractor explicitly which refrigerant the proposed system uses and what the long-term service parts situation looks like. See our 2026 building code energy requirements guide for the full regulatory context.

Is a Heat Pump Still Worth It in 2026 Without Federal Credits?

The honest answer: yes, in most cases, but the payback period lengthened. With the federal 25C credit, a $10,000 heat pump installation cost $8,000 after the $2,000 credit. In 2026, that same installation costs $10,000 before state and utility rebates.

For a Massachusetts household capturing Mass Save rebates ($2,000–$3,000) and operating in a cold climate where a heat pump replaces oil heat, the economics remain strong. Oil heat in New England averages $3.50–$4.00 per gallon in 2026. A properly sized cold-climate heat pump can reduce heating costs by 40–60% even in Massachusetts winters. Use the heat pump cost calculator to model your specific fuel type, climate zone, and available rebates.

For households in states with no state programs and replacing natural gas heat, the economic case is weaker in 2026 than it was in 2024–2025. Grid electricity prices vary significantly by region — in states where grid electricity is expensive (Hawaii, parts of New England excluding Massachusetts with Mass Save), the operating cost advantage over efficient gas appliances may not offset installation costs over a reasonable payback period without state support.

FAQ: Heat Pump Rebates 2026