One last pass through Form 5695.
The federal 25C credit ended for equipment placed in service after December 31, 2025. If your install was running by then, this filing season is your last chance to claim it. If it was not, no form gets you the credit, and the sooner you know that the better.
Placed in service by December 31, 2025. Period.
The IRS does not care when you signed, paid, or took delivery. It cares when the equipment was installed and operational.
Heat pump installed, commissioned, and heating your house on December 29, 2025. Claim it on Form 5695 with your 2025 return, even if the final invoice was paid in January.
Contract signed and deposit paid in November 2025, install completed January 8, 2026. The purchase date is irrelevant. This project gets nothing from 25C, full stop.
Why so abrupt: the One Big Beautiful Bill Act terminated 25C for property placed in service after December 31, 2025, cutting seven years off the schedule the IRA had set. If your install landed in 2026, skip to what you actually have instead.
What 25C paid, past tense
All of these expired together. They apply only to 2025 installs, claimed on your 2025 return or a prior-year amendment.
| Upgrade | Credit | Cap | The rule |
|---|---|---|---|
| Heat pump or heat pump water heater | 30% of cost | $2,000 | 2025 installs only, claimed on your 2025 return |
| Insulation and air sealing | 30% of cost | $1,200 | Materials-focused category, exempt from the QMID requirement |
| Home energy assessment | Flat credit | $150 | The form calls this line a home energy audit |
| Electrical panel upgrade | 30% of cost | $600 | Only when tied to qualifying equipment |
Caps applied per category, per year. The credit rate was 30% of qualifying cost within each cap.
Four steps through Part II
Form 5695 attaches to your Form 1040. Part II is the 25C section. It is shorter than it looks once you know which lines are yours.
Confirm the install qualifies
Two tests. First, the equipment was placed in service by December 31, 2025: installed, commissioned, and running, not just purchased. A signed contract or a paid invoice from 2025 with a January 2026 install date fails this test. Second, the improvement was to your main home located in the United States. If your project fails the first test, skip to the 2026 section below, that is your real map now.
Gather the paperwork
The itemized invoice with equipment and labor broken out (some categories credit labor and some do not, so the split matters). The AHRI certificate number for matched heat pump systems. The manufacturer certification statement with the four-character QMID code. And something that pins the placed-in-service date: the commissioning record, final inspection, or dated completion invoice.
Complete Form 5695, Part II
Part I of the form was the solar credit (25D), also expired and not your section. In Part II, insulation and air sealing costs go in Section A. Heat pumps, heat pump water heaters, panel work, and the energy assessment go in Section B. Enter costs by category, and enter the QMID on the same line as the cost for each piece of equipment. Insulation and air sealing are the one category exempt from the QMID requirement. The caps apply per category, then the form totals them into a single credit.
Attach it to your 1040 and file
Form 5695 files with your Form 1040. The credit is nonrefundable: it reduces the tax you owe for 2025, and any excess is not refunded and does not carry forward to future years. Nothing else gets mailed in. The invoices, certificates, and QMID documentation stay in your records in case the IRS asks.
Details worth confirming against the current IRS instructions as you fill it in: joint occupants split the credit proportionally, and the form asks about the home's use and location. When in doubt, the instructions for Form 5695 at irs.gov are the authority, not a blog post, including this one.
Have these in hand before you open the form
None of it gets mailed in. All of it protects the claim.
Itemized invoice
Equipment and labor broken out line by line. Categories differ on whether installation labor counts toward the credit, and a lump-sum invoice makes that math impossible.
AHRI certificate
The certified-rating number for the matched outdoor and indoor units. Your installer has it, and it belongs on the invoice.
Manufacturer certification + QMID
The manufacturer's certification statement and the four-character qualified manufacturer ID required for equipment placed in service in 2025. Insulation and air sealing are exempt.
Proof of placed-in-service date
Commissioning record, final inspection sign-off, or a dated completion invoice. This is the document that proves you are in the 2025 filing wave at all.
The moment to collect most of this was before the crew left, which is covered in what to expect during the work. If you have a Retrofit Relay account, keep the whole kit with your project so it is findable at tax time.
Missed a 2023 or 2024 claim? Amend it.
If qualifying equipment was placed in service in 2023 or 2024 and you never claimed 25C, the claim is not lost. File Form 1040-X to amend that year's return, with a Form 5695 completed using that tax year's version of the form and that year's caps. You generally have three years from when you filed the original return to amend, so 2023 claims are the ones running out of runway.
One quirk in your favor: the QMID requirement began with property placed in service in 2025, so amended 2023 and 2024 claims do not need a manufacturer code. If the dollars are meaningful, this is a reasonable job to hand a tax preparer.
No federal credit. Here is what is real.
There is no federal tax credit for a project placed in service in 2026. Websites and even contractors still quoting the $2,000 heat pump credit are working from stale information. What is still real: state and utility rebates, which never depended on the federal credit, and the IRA-funded HEAR and HOMES rebate programs in the states that have launched them.
Launch is the catch. A federal allocation does not mean money is available in your state. Several of the largest states have not launched at all, California's single-family program is effectively closed to new applicants, and launched programs carry income limits, generally topping out at 150% of area median income. Where HEAR is live, it can be worth up to $8,000 toward a heat pump for income-qualified households, which is more than 25C ever paid.
Start with the Rebate Matcher for your ZIP code, check heat pump rebates for the state-by-state picture, and once the work is done, the claiming process has its own guide: applying for rebates after installation.
Form 5695 questions
Can I claim the heat pump tax credit for a 2026 installation?
No. The 25C credit was terminated for property placed in service after December 31, 2025 under the One Big Beautiful Bill Act. There is no federal tax credit for a heat pump installed in 2026. State and utility rebates are a separate system, and many of those are still live.
I bought the equipment in 2025 but it was installed in 2026. Can I claim it?
No. The IRS test is the placed-in-service date, meaning the day the equipment is installed and operational. Purchase date and contract date are irrelevant. A unit paid for in December 2025 and commissioned in January 2026 does not qualify.
Is Form 5695 still used for anything?
Two things. Claiming the credit for property placed in service by December 31, 2025 on your 2025 return, and amending a 2023 or 2024 return where you missed a claim. It has no role for 2026 installs.
Can I still get any rebate for a 2026 install?
Possibly, but it depends on your state, not on the IRS. Utility and state efficiency rebates continue, and IRA-funded HEAR and HOMES rebates are live in a minority of states, usually with income limits. Run the Rebate Matcher with your ZIP code to see what actually applies to you.
Do I need to attach receipts to my return?
No. Form 5695 files with your return and the receipts stay in your records. Keep the itemized invoice, the manufacturer certification statement with the QMID, and proof of the placed-in-service date for at least three years in case the IRS asks for them.
Rebate rules changed mid-2025 and will keep changing. One email when your state's program moves.
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The credit is gone. The rebates are not.
State and utility programs are the money now, and they vary wildly by ZIP code. See what your state still pays toward your project before anyone quotes you a number.
Match my rebates