The federal heat pump credit is gone.
The 25C Energy Efficient Home Improvement Credit was terminated for property placed in service after December 31, 2025. There is no federal tax credit for a heat pump installed in 2026. Here is what you can still claim for a 2025 install, and where the money actually is now.
25C ended on December 31, 2025
Verified July 15, 2026 against IRS guidance and the statute. Half the pages ranking for this question still describe the old law.
The One Big Beautiful Bill Act (OBBB, Public Law 119-21, signed July 4, 2025) terminated the 25C Energy Efficient Home Improvement Credit for property placed in service after December 31, 2025. A heat pump, heat pump water heater, insulation job, or energy assessment completed in 2026 gets no federal tax credit. Not a smaller one. None.
This surprises people because the Inflation Reduction Act had scheduled 25C to run through 2032, and a lot of published advice still reflects that. OBBB moved the sunset up by seven years. Anything you read that promises a 30% credit or a $2,000 heat pump credit in the present tense is describing law that expired.
25C: the Energy Efficient Home Improvement Credit
Expired. Terminated for property placed in service after December 31, 2025 under the One Big Beautiful Bill Act (OBBB, Public Law 119-21, signed July 4, 2025). This was the credit that covered heat pumps, heat pump water heaters, insulation, air sealing, and energy assessments. Historically it was worth up to $2,000 a year on a qualifying heat pump or heat pump water heater, and 30% of cost up to $1,200 a year on envelope work such as insulation and air sealing. Both of those are past tense now.
25D: the Residential Clean Energy Credit
Also expired, for expenditures made after December 31, 2025, under the same law. It matters here only because homeowners mix the two up: geothermal heat pumps were 25D's one HVAC-adjacent measure, and they went away on the same date.
Was supposed to run through 2032
Under the Inflation Reduction Act, 25C was scheduled to stay open through 2032. OBBB moved the sunset up by seven years. If you read a 2024 article saying the credit runs for another decade, that article is describing law that no longer applies.
The rule that catches people: "placed in service"
The IRS does not use the date you paid, the date you signed the contract, or the date the equipment arrived on a truck. It uses the placed-in-service date, meaning the day the system was installed and operational. So the homeowner who put a deposit down in November 2025 on a heat pump that got installed in February 2026 has no credit. The purchase happened under the old law; the install did not.
25D, the Residential Clean Energy Credit, ended on the same date for expenditures made after December 31, 2025. We mention it because homeowners routinely confuse the two, and because geothermal heat pumps sat under 25D rather than 25C. Both HVAC paths closed at once.
A 2025 install is still worth filing for
One filing season is left. If your system was placed in service on or before December 31, 2025, the credit goes on the 2025 return you file in 2026.
This is the part people leave on the table. The credit expired going forward, but it did not retroactively cancel work you already finished. A heat pump, water heater, insulation job, window, door, or energy assessment placed in service in 2025 is claimed on IRS Form 5695, attached to your 2025 Form 1040. After this filing season, 25C is closed for good.
Confirm the placed-in-service date
The system has to have been installed and operational on or before December 31, 2025. Your final invoice, the commissioning date, or the inspection sign-off is the evidence. A contract signed in 2025 with a spring 2026 install does not qualify.
Collect the paperwork
Itemized invoice showing the equipment and labor, the manufacturer certification statement for the model installed, and for qualifying heat pumps the product identification number the manufacturer supplies. Keep the rebate paperwork separate: a state or utility rebate you received reduces the cost basis you claim.
File IRS Form 5695 with your 2025 return
Form 5695 is the residential energy credits form. It attaches to your 2025 Form 1040, which you file in 2026. This is the last filing season the credit exists in. Our walkthrough goes line by line.
Our Form 5695 walkthrough takes the form line by line, including which line a heat pump goes on and how a state rebate affects the amount you claim. If your install was in 2025 and you have not filed yet, start there.
If the work already happened and you never applied for the state and utility side either, applying for rebates after installation covers what is still recoverable and what the deadlines look like.
State and utility money is now the whole game
Rebates first, then low-interest loans. In several states the combination is worth more than 25C ever was.
The order to pay for a retrofit has not changed, only the top of it. Take rebates first, because that is money you never repay. Then 0% or low-interest state and utility loans. Then utility on-bill financing. Then home equity (a HELOC or a home equity loan). Then contractor or dealer financing. A personal loan or a card is last, and usually only for a small gap. The federal credit used to sit alongside the rebate layer; now the rebate layer stands alone.
Rebate amounts are state-specific and change during the year, so the honest answer to "what do I get" is your state page or the Rebate Matcher. One example of the scale involved: Mass Save (verified July 15, 2026) lists up to $9,500 for a partial-home air-source heat pump with bonuses, up to $8,500 whole-home, up to $13,500 for ground-source, and up to $16,000 for an air-source heat pump for income-qualified households. That is a state program, not a federal one, and it has its own weatherization prerequisites.
Verified low-interest loan programs
These are administrator-verified programs with published terms. Every one of them carries conditions, and the conditions are the point: read the second half of each line.
Mass Save HEAT Loan
0% interest, up to $25,000. The cap is a lifetime maximum per customer, not per project.
Efficiency Maine Home Energy Loans
Unsecured, no property lien. 1-year 0% APR up to $25,000 with a $500 origination fee; 5-year 5.99% APR and 10-year 7.99% APR up to $25,000, no fees; income-based 10-year 5.99% APR up to $7,500. Standard underwriting needs a 620 FICO and 55% max DTI. The work has to be done by an Efficiency Maine Registered Vendor.
NJ Clean Energy Whole Home financing
$25,000 at 0% over 10 years, or $10,000 at 0% over 7 years. No income requirement for the program itself, but the 0% financing runs a credit check.
Home Energy Performance (HEP) 2% financing
2% APR unsecured, $1,000 to $15,000, terms up to 7 years on loans of $12,001 to $15,000. Listed as valid for a limited time while funding is available, so confirm before you count on it.
Connecticut Green Bank Smart-E Loan
Standard APRs of 6.99% (5, 7, and 10-year), 7.49% (12-year), and 7.99% (15-year), max $50,000. The 0.99% heat pump special offer ran April 1 to July 31, 2026 and has ended; a 1.99% 5-year successor was announced. Confirm the current rate with the administrator.
Tacoma Power on-bill loans
0% for 7 years: heat pump up to $20,000, insulation up to $10,000, heat pump water heater on a 5-year term up to $5,000. Pre-approval required, and a Tacoma Power Participating Contractor is required except for a DIY water heater.
More states run programs we can name but whose terms we have not verified with the administrator, including Michigan Saves, the Nevada Clean Energy Fund, Carolina SURE in North Carolina, the Center for Energy and Environment loan program in Minnesota, and Me2 in Milwaukee. The full picture is in state energy efficiency loans. For the heat-pump-specific version of this decision, see how to pay for a heat pump, and for the whole-project view, how to pay for home energy upgrades.
HEAR and HOMES, and where they actually pay
A federal allocation is not a rebate. Both programs are run state by state, and most states have not launched.
The IRA created two rebate programs that survived OBBB. HEAR (Home Electrification and Appliance Rebates, IRA section 50122) is designed to pay up to $14,000 total per household, income-tiered: households under 80% of area median income can get 100% of project cost up to per-measure caps, households at 80 to 150% AMI get 50% of cost against the same caps, and above 150% AMI is generally not eligible. The per-measure design caps are $8,000 for a heat pump, $1,750 for a heat pump water heater, $4,000 for an electrical panel, $1,600 for insulation, air sealing, and ventilation, and $2,500 for wiring.
HOMES (Home Efficiency Rebates, IRA section 50121, called HER in some state materials) is designed to pay up to $8,000 per household for whole-house retrofits that hit modeled or measured savings tiers. DOE's program page, verified July 15, 2026, describes up to $8,000 for projects achieving at least 20% energy savings. Market-rate households at smaller savings tiers land lower. A few states got DOE approval for higher caps: North Carolina and Georgia at $16,000.
Those are design caps, not offers. Federal money being allocated to your state does not mean a rebate exists for you there. Each state has to file a State Implementation Blueprint, get DOE approval, then stand up and fund its own program. Here is where that stands.
| State | HEAR | HOMES | Verified |
|---|---|---|---|
| North Carolina Energy Saver North Carolina, admin NC DEQ State Energy Office | Launched and operational | Launched and operational | 2026-07-11 |
| Georgia Admin GEFA; $25M+ delivered to 1,900+ households as of April 9, 2026, average rebate $10,160 | Launched and operational | Launched and operational | 2026-07-11 |
| Indiana Indiana Energy Saver; HOMES up to $4,000 for general homeowners, more if income-qualified | Launched | Launched | 2026-07-11 |
| Wisconsin Delivered through Focus on Energy, admin PSC of Wisconsin | Launched and available | Launched since 8/1/2024 | 2026-07-11 |
| Michigan MiHER, admin EGLE via CLEAResult; intake limited to households at or below 150% AMI | Launched, income-limited | Launched, income-limited | 2026-07-11 |
| Arizona Efficiency Arizona, admin Governor's Office | Launched and active | Not launched to consumers | 2026-07-11 |
| New Mexico Branded ECAM, admin EMNRD/ECMD, point-of-sale, live since 9/3/2024 | Launched, partial intake | Not launched | 2026-07-11 |
| New York NYSERDA; first state to launch IRA-funded home energy rebates, June 2024 | Launched and active, amendment imminent | Status unverified | 2026-07-15 |
| Colorado Single-family split by region; Region 1 / Front Range closed | Launched, partially closed | Launching 2026, limited home types | 2026-07-11 |
| California Admin CEC via TECH Clean California; single-family fully reserved statewide since February 24, 2026, waitlist only | Active, closed to new single-family | Not launched to consumers | 2026-07-15 |
| Maine New-construction affordable multifamily and income-eligible mobile/manufactured homes only ($12,900 Mobile Home Initiative). Provisional pending the state's response to Program Notices 26-1 and 26-2 | Active, highly restricted | Not launched | 2026-07-15 |
| District of Columbia Delivered only through the Affordable Home Electrification program | Launched, income-restricted | Not launched | 2026-07-11 |
Every other state was not launched to consumers as of its verified date, all July 11, 2026 unless noted: Connecticut (July 5), Massachusetts (July 15, administrator-confirmed, to be delivered through the Mass Save income-eligible channel), Vermont (July 15, funding in question and paused), New Jersey, Pennsylvania, Maryland, Illinois, Ohio, Iowa, Minnesota, Missouri, Kansas, Nebraska (listed as preparing its application), North Dakota, Montana, Utah, Nevada, Oregon (DOE approval suspension), Washington, Texas, Oklahoma, Louisiana, Mississippi, Tennessee, South Carolina, Virginia, Kentucky, Florida (active pre-launch, not dead), and Hawaii. Not launched is not the same as never: several are in active pre-launch. Check your state page for the current read.
DOE Program Notices 26-1 and 26-2 changed what qualifies
Both notices are dated May 29, 2026 (announced June 1, 2026, verified July 15, 2026). Notice 26-2 covers HEAR and 26-1 covers HOMES, and between them they rewrote the rules that matter most to a homeowner replacing a heating system.
Fuel-switching is eliminated
HEAR rebates are no longer available for replacing a gas, oil, or propane appliance with an electric one. Heat pumps and electric appliances qualify only in new construction or when they replace existing electric equipment. If you heat with oil or gas today, do not assume a HEAR heat pump rebate covers your conversion. Check your state's amended rules first.
Envelope work comes first
Insulation and air sealing upgrades are now required before appliance rebates. That is the sequence good contractors already recommend, and it is now a condition of the money.
The amendment window is short
States already paying rebates under the old rules have roughly three months to amend, which lands around the end of August or early September 2026. Program terms in operating states are likely to change inside that window.
Other rule changes
Under Notice 26-1, HOMES restarts after the post-January-2025 funding freeze and litigation (an injunction restored funds in March 2025). ENERGY STAR certification is now optional, warranties and accessories are coverable, and Alaska and Hawaii get shipping allowances. DEI and Justice40 provisions were removed and consumer-protection plans were replaced with fraud, waste, and abuse mitigation plans.
Read together with the expired credit, the practical effect is this: the federal government no longer pays a fossil-heated household to switch to a heat pump. Not through 25C, which is gone, and not through HEAR, which now excludes fuel-switching. What remains for that household is state and utility rebates, low-interest loans, and the operating-cost savings themselves. The deeper version of the rebate picture is in home energy rebates in 2026, and if you are combining programs, read rebate stacking before you sign anything. Whether the project still pencils without the credit is the question are heat pumps worth it in 2026 works through.
Tax credit questions
Is there still a federal heat pump tax credit in 2026?
No. The 25C Energy Efficient Home Improvement Credit was terminated for property placed in service after December 31, 2025 under the One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025). There is no federal tax credit for a heat pump installed in 2026.
What happened to the 30% credit?
Two different credits get called the 30% credit. 25C covered 30% of qualifying efficiency work up to annual caps, and 25D covered 30% of clean energy expenditures including geothermal heat pumps. OBBB ended both: 25C for property placed in service after December 31, 2025, and 25D for expenditures made after that same date. Under the Inflation Reduction Act, 25C had been scheduled to run through 2032.
I bought equipment in 2025 but it was installed in 2026. Do I qualify?
No. The IRS uses the placed-in-service date, meaning installed and operational, not the purchase date or the contract date. Equipment purchased in 2025 and installed in 2026 does not qualify for 25C.
Can I still claim a 2025 install?
Yes. If the system was placed in service on or before December 31, 2025, you claim it on your 2025 return, filed in 2026, using IRS Form 5695. This is the last filing season the credit exists in.
What about the insulation and air sealing credit?
Insulation and air sealing were 25C measures, so they ended on the same date and under the same rule. Envelope work placed in service on or before December 31, 2025 goes on your 2025 return. Work done in 2026 has no federal credit, but insulation and air sealing are among the most widely rebated measures at the state and utility level, and DOE now requires them before appliance rebates.
Is there anything federal left?
The IRA rebate programs, HEAR and HOMES, still exist, but they are run by states and only a minority have launched. A federal allocation to your state is not a rebate you can claim. Check your state page for its current status, and read the DOE Program Notice 26-1 and 26-2 changes below, because they narrowed what qualifies.
More money guides
Form 5695 walkthrough
Line by line through the residential energy credits form for a 2025 install, claimed on the return you file in 2026.
Home energy rebates in 2026
What HEAR and HOMES actually pay, which states are live, and what the DOE program notices changed.
State energy efficiency loans
The 0% and low-interest loan programs that replaced the credit as the cheapest money for a retrofit.
How to pay for a heat pump
Rebates, loans, on-bill financing, home equity, contractor financing: the order to use them in.
Stacking rebates
How state, utility, and federal rebate programs combine, and the rules that stop them combining.
Are heat pumps worth it in 2026?
The payback math without the federal credit, using installed costs and current fuel prices.
The credit is gone. See what your state still pays.
Answer a few questions about your home and your project, and the Rebate Matcher returns the state, utility, and federal programs you actually qualify for, with their current conditions.
Open the Rebate Matcher