Can I still claim the heat pump tax credit?

Only if the system was placed in service — installed and operational — by December 31, 2025. If so, claim 30% of the cost, up to $2,000, on IRS Form 5695 with your 2025 federal return. The credit is nonrefundable and has no carryforward, so it's limited to your 2025 tax liability. Anything placed in service in 2026 or later gets no federal credit.

Is the 25C credit coming back?

There is no scheduled revival. OBBBA wrote the termination into the statute — the credit simply doesn't apply to property placed in service after December 31, 2025 — so bringing it back would take a new act of Congress. Plan your 2026 purchase around $0 federal, and treat any restoration as upside.

What's the difference between HEAR and HOMES rebates?

Both are IRA-funded and run by state energy offices, and both survived 25C's expiry. HEAR (Home Electrification and Appliance Rebates) is a point-of-sale discount on specific electric equipment — up to $8,000 for a qualifying heat pump — and is income-qualified. HOMES (Home Efficiency Rebates) pays for whole-home retrofits based on the energy savings the project achieves, regardless of which equipment delivers them.

Do state and utility incentives still exist in 2026?

Yes. OBBBA ended the federal 25C and 25D credits but didn't touch state programs, utility rebates, or financing. Many states run their own credits or rebates, most utilities pay heat-pump and smart-thermostat incentives, and 0% or low-APR efficiency loans persist. The DSIRE database and your state energy office are the two places to check.

Does losing the credit change which system I should buy?

Less than you'd think. The credit was a $2,000 thumb on the scale for heat pumps (versus $600 caps for an AC or furnace), but a ducted heat pump usually wins the install price on its own — about $7,750–$16,000 on a typical 2,000 sq ft home versus $10,350–$20,200 for an AC + furnace pair. If you qualify for a state HEAR rebate, the scale tips electric again.

HVAC · After the tax credit

The Heat Pump Tax Credit Expired — Now What? (2026)

Ballpark Lab Research TeamUpdated July 10, 20265 min read

Key takeaways

The 25C Energy Efficient Home Improvement Credit — 30% of installed cost, up to $2,000 a year for heat pumps — is gone for any system placed in service after December 31, 2025, terminated by OBBBA (P.L. 119-21, signed July 4, 2025), the same law that ended the 25D solar credit.
'Placed in service' means installed and operational — not when you signed the contract, paid the deposit, or took delivery. A heat pump commissioned in January 2026 gets $0 even if it was paid in full in 2025.
2025 installs can still claim: file IRS Form 5695 with your 2025 return (the one due April 2026). The credit is nonrefundable and doesn't carry forward, so it can't exceed what you owe for 2025.
State HEAR electrification rebates — IRA-funded but state-run — survived: up to $8,000 off a qualifying heat pump at qualifying incomes, with HOMES paying separately for whole-home efficiency work; availability varies state by state.
Utility rebates, state credits, and 0%/low-APR efficiency financing are untouched — check DSIRE, your state energy office, and your utility before signing anything.
The net effect is roughly a $2,000 price increase on a typical whole-home heat pump — which makes 2026 a negotiating year: installers lost their best closing line and know it.

The short version: the federal heat-pump credit is gone. The 25C Energy Efficient Home Improvement Credit — 30% of the installed cost back at tax time, up to $2,000 a year for heat pumps — ended for any system placed in service after December 31, 2025, terminated by the One Big Beautiful Bill Act (P.L. 119-21, signed July 4, 2025). A 2025 install can still be claimed this filing season; a 2026 install gets $0 federal. Here's what the credit was worth, the one date that decides, and what still pays in 2026.

What the credit was worth

25C returned 30% of a project's installed cost, with caps per category per year: $2,000 for heat pumps (shared with heat-pump water heaters and biomass stoves), plus a separate $1,200 annual bucket with $600 caps apiece for a high-efficiency central AC, a furnace or boiler, or an electrical panel upgrade, along with insulation, windows, and doors.

For whole-home heat pumps, the cap did the talking. Thirty percent hits $2,000 at just $6,667 of project cost — and even the low end of our reference install (a 4-ton ducted heat pump on a 2,000 sq ft home, $7,750–$16,000) clears that. So in practice nearly every whole-home heat pump earned the flat $2,000: the mid-range $11,350 job netted out to $9,350 in 2025 and costs the full $11,350 today. Rewiring America's 25C guide keeps the qualification details for anyone still claiming a 2025 install.

The timeline: created, supercharged, terminated

Through 2022 — the old 25C was modest: 10% back with a $500 lifetime cap, exhausted after one project.
August 16, 2022 — the Inflation Reduction Act reboots it: 30%, annual instead of lifetime caps, effective January 1, 2023 and written to run through 2032.
July 4, 2025 — OBBBA (P.L. 119-21) is signed and terminates 25C for property placed in service after December 31, 2025 — seven years ahead of schedule. The same law ends 25D, the 30% residential solar credit, on the same date.
December 31, 2025 — the last day a system could be placed in service and still qualify.
Spring 2026 — 2025 installs claim the credit on Form 5695 with the 2025 return. After that, the program is history.

Solar homeowners are living the identical story one meter over — our interactive map of what losing the 30% credit did to solar payback in every state is the companion piece to this page.

"Placed in service" — the date that decides

The statute doesn't care when you signed, paid, or took delivery; it cares when the system was installed and operational. A heat pump sitting crated in the garage on New Year's Eve earns nothing. One commissioned December 30 qualifies in full — even with the invoice unpaid. That's why installers spent late 2025 racing commissioning visits, and why a January 2, 2026 startup date is worth $0 despite a 2025 contract.

If yours made the cutoff, claim it on IRS Form 5695 with your 2025 federal return. Two mechanics to get right: for equipment installed in 2025 the return also asks for the manufacturer's product identification number (the qualified-manufacturer PIN rule — your installer or the manufacturer's site can supply it), and the credit is nonrefundable with no carryforward — it can offset your 2025 tax bill, but any excess simply evaporates, unlike the old solar credit's carryover.

What survives in 2026

The federal credit was one layer of a stack, and the rest of the stack is still standing. The IRA's rebate programs are funded separately and run by state energy offices, so OBBBA didn't touch them — though rollout varies: some states are fully live, others are waitlisted or between funding rounds.

Program	What it pays in 2026	Where to check
HEAR (Home Electrification & Appliance Rebates)	Up to $8,000 off a qualifying heat pump, as a point-of-sale discount — income-qualified (full rebate below ~80% of area median income, partial up to 150%)	Your state energy office
HOMES (Home Efficiency Rebates)	Pays for whole-home retrofits based on the energy savings achieved; larger amounts at qualifying incomes	Your state energy office
Utility rebates	Per-unit heat-pump, smart-thermostat, and panel incentives, usually with no income test — varies by utility	Your electric utility
State credits & rebates	Several states run their own tax credits or rebate programs, unaffected by OBBBA	DSIRE database
Financing	0% or low-APR efficiency loans through utilities, states, and manufacturers	Your installer + utility

How to buy a heat pump in 2026

Check HEAR eligibility before you sign. The rebate is reserved through your state's program and its participating contractors — it's a paperwork step before install, not a receipt you mail in afterward.
Negotiate like the credit's gone, because it is. The expiry is effectively a $2,000 price increase, installers lost their best closing line, and the 2025 rush pulled demand forward — a slower 2026 book is your leverage. Get three bids.
Don't accept "it still qualifies for the federal credit." That's only true for systems placed in service by December 31, 2025. In 2026 it's a red flag on the whole bid.
Stack what's left. A HEAR rebate, a utility incentive, and 0% financing on one project is real money — sometimes more than 25C ever was for income-qualified households.
Pick the system on its own economics. Without the federal thumb on the scale it's a pure cost comparison, and the heat pump usually still wins the install — the head-to-head is in heat pump vs. furnace + AC, with full pricing in the HVAC replacement cost guide.

Get your number

Every figure on this page is 2026 list price — no credit baked in, because there isn't one. Price your own home's system the same way: square footage, climate, system type, ducts, and state, with every line item shown.

Open the HVAC cost calculator →

Run your own number

Estimate HVAC replacement cost by system type — heat pump, AC + furnace, or ductless mini-split — sized Manual-J-style from your square footage, climate, and ductwork.

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Frequently asked questions

Can I still claim the heat pump tax credit?: Only if the system was placed in service — installed and operational — by December 31, 2025. If so, claim 30% of the cost, up to $2,000, on IRS Form 5695 with your 2025 federal return. The credit is nonrefundable and has no carryforward, so it's limited to your 2025 tax liability. Anything placed in service in 2026 or later gets no federal credit.
Is the 25C credit coming back?: There is no scheduled revival. OBBBA wrote the termination into the statute — the credit simply doesn't apply to property placed in service after December 31, 2025 — so bringing it back would take a new act of Congress. Plan your 2026 purchase around $0 federal, and treat any restoration as upside.
What's the difference between HEAR and HOMES rebates?: Both are IRA-funded and run by state energy offices, and both survived 25C's expiry. HEAR (Home Electrification and Appliance Rebates) is a point-of-sale discount on specific electric equipment — up to $8,000 for a qualifying heat pump — and is income-qualified. HOMES (Home Efficiency Rebates) pays for whole-home retrofits based on the energy savings the project achieves, regardless of which equipment delivers them.
Do state and utility incentives still exist in 2026?: Yes. OBBBA ended the federal 25C and 25D credits but didn't touch state programs, utility rebates, or financing. Many states run their own credits or rebates, most utilities pay heat-pump and smart-thermostat incentives, and 0% or low-APR efficiency loans persist. The DSIRE database and your state energy office are the two places to check.
Does losing the credit change which system I should buy?: Less than you'd think. The credit was a $2,000 thumb on the scale for heat pumps (versus $600 caps for an AC or furnace), but a ducted heat pump usually wins the install price on its own — about $7,750–$16,000 on a typical 2,000 sq ft home versus $10,350–$20,200 for an AC + furnace pair. If you qualify for a state HEAR rebate, the scale tips electric again.

Related guides

Costs & pricing

HVAC Replacement Cost by State (2026)

A 2,000 sq ft ducted heat pump runs ~$9,045 in Kentucky to ~$19,251 in Hawaii installed in 2026 — labor and climate-zone load, not equipment, drive the 2× gap.

Updated July 11, 2026

How it works

What Size HVAC Do I Need? Tons, BTUs & Sizing (2026)

Size it with one formula: conditioned sq ft × 20–30 BTU (cooling, by climate) ÷ 12,000 = tons. A 2,000 sq ft mixed-climate home needs about 4 tons and a 100k BTU furnace. Climate factors, envelope adjustments, and the math shown.

Updated July 10, 2026

System comparisons

SEER2, AFUE & HSPF2 Explained — Is High-Efficiency Worth It in 2026?

SEER2 rates cooling, HSPF2 rates heat-pump heating, AFUE rates a furnace — decoded in plain English, with the payback math at 17¢/kWh. High-efficiency adds 18–40% to equipment cost; here's which climates earn it back now that the 25C credit is gone.

Updated July 10, 2026

A ballpark estimate for planning — not a final quote. HVAC data last updated July 10, 2026.