Heat Pump Tax Credit 2026: The 25C Credit Has Expired — Here's What Still Works
Heat Pump Tax Credit 2026: The 25C Credit Expired — Here's What Incentives Remain
If you're searching "heat pump tax credit 2026," you've likely seen older articles claiming you can still claim 30% back from the IRS. Those articles are wrong. The landscape changed dramatically when President Trump signed the One Big Beautiful Bill Act on July 4, 2025 — a sweeping budget reconciliation law that, among many other provisions, terminated the clean energy tax credits enacted under the Inflation Reduction Act.
This guide covers exactly what expired, what remains, and how to stack the incentives that are still on the table to get the lowest out-of-pocket cost on a new heat pump in 2026.
What Exactly Expired on December 31, 2025
Two residential energy credits died at midnight on New Year's Eve 2025:
- Section 25C — Energy Efficient Home Improvement Credit: Up to $2,000 per year for heat pumps, $600 for central air conditioners, up to $3,200 combined with other improvements. Gone.
- Section 25D — Residential Clean Energy Credit: 30% of the cost of solar panels, geothermal heat pumps, battery storage, and fuel cells. Also gone.
The IRS has confirmed this on its own website in the FAQs published for P.L. 119-21. The key rule is the "placed in service" date — not the purchase date, not the contract date, not when you paid the deposit. A heat pump is placed in service when it is installed, operational, and ready to use. If that date falls on or after January 1, 2026, the 25C credit does not apply. Period.
This matters because some contractors are still advertising "tax credit eligible" equipment. The equipment may have met the 25C efficiency standards — CEE Tier or higher — but meeting efficiency standards and qualifying for a tax credit are two different things. Buying a credit-spec heat pump in 2026 earns you nothing from the IRS.
One more thing worth knowing: the OBBBA also eliminated the 25C credit retroactively for property placed in service after December 31, 2025. There is no grandfather provision for equipment purchased before July 4, 2025, if it was installed afterward.
What Survives: HEAR Rebates in 2026
The best remaining federal incentive is the Home Electrification and Appliance Rebates (HEAR) program, funded under the original Inflation Reduction Act and administered directly by states. Because HEAR money was already appropriated and distributed to state energy offices as grants — not delivered as tax credits — the One Big Beautiful Bill Act did not claw it back.
The structure is straightforward: income-qualified households (under 150% of Area Median Income) can receive up to $8,000 for a qualifying heat pump, paid as a point-of-sale discount on the contractor invoice. You do not file a tax return or wait for a refund. The contractor applies the rebate at the time of installation.
The catch is availability. HEAR rollout has been uneven:
- About a dozen states had active programs as of mid-2026, including Colorado, Wisconsin, Michigan, North Carolina, Georgia, Indiana, Arizona, and Washington.
- California's single-family HEAR allocation was fully reserved as of February 2026.
- New Hampshire anticipated a mid-summer 2026 launch at time of publication.
- Several states — including most of the South and Plains states — have not yet deployed programs.
Availability is a moving target. The best way to check current status in your state is the ENERGY STAR HEAR program page or your state energy office website. Our heat pump rebates in 2026 guide tracks which states have launched and estimated funding availability.
Even where programs are open, funding is finite and offered first-come, first-served. If you are income-qualified, apply before shopping for a contractor — not after.
State Programs: The Real Action in 2026
With federal tax credits gone, state-level programs are carrying more weight than ever. A few standouts:
Massachusetts — Mass Save
Massachusetts runs what is arguably the strongest heat pump rebate program in the country, entirely independent of federal tax credits. Mass Save 2026 rebates are structured by installation type:
| Category | Rebate per ton | Maximum rebate |
|---|---|---|
| Whole-home (primary heat source replaced) | $2,650/ton | $8,500 |
| Partial-home | $1,125/ton | $8,500 |
| Basic | $250/ton | $2,500 |
| Sizing bonus | +$500 | |
| Weatherization bonus | +$500 | |
One critical 2026 change: Mass Save now requires heat pumps to use R-32 or R-454B refrigerant to qualify. Systems using R-410A are no longer eligible — which aligns with the EPA's 2026 refrigerant transition rule anyway (more on that below). There is no income restriction for Mass Save rebates. See our Massachusetts rebates page for current program details and participating contractors.
New York — NYS Clean Heat
New York's Clean Heat program — jointly administered by NYSERDA and the state's investor-owned utilities — provides $5,000 to $12,000 for air-source heat pumps in residential properties of 1–4 units. The exact amount depends on your utility territory, whether you are decommissioning fossil fuel equipment, and whether your address falls within a designated Disadvantaged Community (DAC).
For income-qualified households, the federal HEAR program channels additional funding through NYSERDA's EmPower+ program, allowing qualifying households to stack up to $24,000 in total heat pump and weatherization support. Visit our New York rebates page for utility-by-utility breakdowns.
Colorado — State Tax Credit
Colorado maintains its own state-level heat pump tax credit, separate from the now-expired federal 25C. For 2026, the credit is $1,000 per system (down from $1,250 in 2025 and $1,500 at launch in 2024). It is available to all Colorado residents with no income restriction. Participating registered contractors typically pass the credit through as a point-of-sale discount, reducing your invoice directly rather than requiring you to file for a state tax refund.
Colorado also has an active HEAR program through which income-qualified households can receive up to $8,000 in additional rebates — though the Front Range Single-Family program closed its waitlist in April 2026. Other regions remain open.
2026 Incentive Comparison: Old vs. What's Left
| Incentive | Available through 2025 | Available in 2026 |
|---|---|---|
| Section 25C tax credit | Up to $2,000 (30% of cost) | Expired Dec 31, 2025 |
| Section 25D tax credit | 30% of cost (geothermal) | Expired Dec 31, 2025 |
| HEAR rebate (income-restricted) | Up to $8,000 | Up to $8,000 (where state programs are open) |
| HOMES rebate (whole-home savings) | Up to $8,000 | Available in participating states |
| State and utility programs | Varied | Varied — some stronger than ever |
The 2026 Refrigerant Rule: Why Equipment Choice Still Matters
Even without a federal tax credit, there's a good reason to pay attention to which heat pump you buy in 2026. The EPA's phasedown of R-410A — a high global warming potential (GWP) refrigerant that has been standard in residential HVAC for two decades — took effect for new equipment. Heat pumps manufactured and sold in 2026 must use lower-GWP alternatives like R-32 or R-454B.
This matters for two practical reasons. First, if you're in Massachusetts (or other states that have updated rebate eligibility), an R-410A system purchased from remaining inventory may not qualify for rebates. Second, R-410A will become increasingly expensive and difficult to source as the phasedown advances, affecting future repair costs. Buying a next-generation refrigerant system now avoids that problem.
Efficiency thresholds worth targeting: ENERGY STAR's CEE Highest Tier (SEER2 16+ / HSPF2 9.5+) is the benchmark most rebate programs require, and it remains a reliable efficiency floor regardless of federal credit status.
Stacking What Remains
The loss of 25C doesn't mean incentives are gone — it means the math is different. Here's how a typical homeowner in a state with active programs can stack:
- HEAR rebate (if income-qualified and state program is open): up to $8,000
- State rebate or credit (Massachusetts, New York, Colorado, etc.): $1,000–$12,000 depending on location
- Utility rebate (many utilities run independent programs): $200–$2,000
- Mass Save HEAT Loan (Massachusetts only): 0% interest financing up to $25,000
In some states — New York and Massachusetts being the clearest examples — a 2026 heat pump installation can actually be cheaper out-of-pocket than it would have been under the old 25C regime, because state programs have expanded to fill the gap. The key is checking program status before you sign a contract, not after. Use our heat pump savings calculator to estimate your total incentive stack based on your location and household income.
What About Filing for 2025?
If your heat pump was installed and placed in service on or before December 31, 2025, you can still claim the 25C credit on your 2025 tax return using IRS Form 5695. The expiration applies to 2026 installations, not to 2025 installations claimed in 2026 filing season. Keep your contractor invoice and manufacturer's certification statement.
For a full overview of all the rebates and incentives that remain active this year, see our 2026 energy rebates guide.