If you searched “heat pump tax credit 2026,” you are likely one of two homeowners: someone who installed a qualifying heat pump in 2025 and wants to know if they can still claim the credit, or someone planning a new installation this year wondering what federal incentives remain. The answer to both questions matters, and it changed significantly in July 2025 when Congress passed the One Big Beautiful Bill Act.
TL;DR: The federal 25C heat pump tax credit expired December 31, 2025, after the One Big Beautiful Bill Act (signed July 4, 2025) accelerated its end date. If you installed a qualifying heat pump by that deadline, you can still claim up to $2,000 on your 2025 federal tax return using Form 5695. For new heat pump installations in 2026, the federal credit is gone, but state IRA rebates (up to $8,000 for qualifying households) and utility rebates ($40–$1,500+) remain available in many areas. Check DSIRE.org for programs in your state.
What Happened to the Heat Pump Tax Credit?
The federal Section 25C Energy Efficient Home Improvement Credit covered 30% of the cost of qualifying heat pump installations, up to $2,000 per year. It was expanded under the Inflation Reduction Act of 2022, which originally set the credit to run through 2032. Then Congress passed the One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025), which accelerated the expiration of multiple energy credits.
The IRS confirmed this in official guidance (FS-2025-05, August 21, 2025): “25C | Energy efficient home improvement credit | The credit will not be allowed for any property placed in service after December 31, 2025.” There is no ambiguity. For heat pumps installed in 2026 or later, the federal 25C credit is not available.
The 25D Residential Clean Energy Credit, which covered geothermal heat pumps, also expired December 31, 2025 under the same legislation.
If You Installed a Heat Pump in 2025: How to Claim Your Credit
Homeowners who completed a qualifying heat pump installation by December 31, 2025 can still claim the credit when they file their 2025 federal tax return in spring 2026. The installation date is what matters, not when you file. Here is what you need to do.
Step-by-Step Filing Process
- Confirm your system qualifies. Your heat pump must have met the highest efficiency tier established by the Consortium for Energy Efficiency (CEE) as of the installation date. For 2025, this generally meant ENERGY STAR Most Efficient certification with a minimum SEER2 of 16 for split systems.
- Obtain your Qualified Manufacturer Identification Number (QMID/PIN). Starting in 2025, the IRS required a four-digit manufacturer PIN on the tax return. Your installer or the manufacturer’s website should have provided this. Check the manufacturer’s website for the specific product PIN.
- Gather your receipts. You need documentation of both equipment cost and installation labor costs. Both are included in the 30% calculation.
- Complete IRS Form 5695, Part II. This is the Residential Energy Credits form. Calculate 30% of your qualifying costs. The maximum credit for heat pumps is $2,000 per year.
- File with your Form 1040. Attach Form 5695. You do not need to itemize deductions to claim this credit.
The credit is non-refundable, which means it reduces the taxes you owe but will not generate a refund beyond your tax liability. If your credit exceeds what you owe, the unused portion does not carry forward to future years.
What the 25C Credit Was Worth — A Real Example
To put dollar amounts in context: a typical heat pump replacement runs $8,000–$15,000 installed depending on system size, efficiency rating, and your region. For a direct comparison of heat pump installed costs against a central AC and furnace combination, see our heat pump vs. central air cost guide. Here is how the 25C math worked for a 2025 installation.
| Scenario | Total Installation Cost | 30% of Cost | Maximum Credit | Actual Credit |
|---|---|---|---|---|
| Budget install ($8K system) | $8,000 | $2,400 | $2,000 | $2,000 (capped) |
| Typical install ($12K system) | $12,000 | $3,600 | $2,000 | $2,000 (capped) |
| Low-end install ($6.5K system) | $6,500 | $1,950 | $2,000 | $1,950 (below cap) |
For most homeowners, the credit hit its $2,000 cap because heat pump installations typically exceed $6,667 (the breakeven point for the 30% calculation). A $12,000 system with 30% equals $3,600, but the credit is capped at $2,000.
The annual cap of $3,200 applies across all 25C improvements in a single tax year. The heat pump sub-limit is $2,000, separate from the $600 sub-limit for other improvements like windows or a furnace.
Which Heat Pumps Would Have Qualified for the 25C Credit?
For 2025 installations, qualifying heat pumps had to meet three conditions.
- New equipment only. Used or refurbished systems did not qualify.
- Primary residence. The credit applied to your main home, not rental properties or vacation homes.
- CEE highest efficiency tier. Specifically, the highest efficiency tier (not including advanced tiers) established by the Consortium for Energy Efficiency. For 2025, ENERGY STAR Most Efficient certification was required. Practically, this meant SEER2 of 16 or higher for split systems. Not all ENERGY STAR equipment qualified; it had to be ENERGY STAR Most Efficient.
The IRS noted that homeowners could rely on the manufacturer’s written certification that a product qualifies. Manufacturers like Carrier, Trane, Lennox, and Goodman published lists of qualifying models on their websites. If you still need to verify your 2025 installation, check the manufacturer’s tax credit page for your specific model number.
What Incentives Are Available for New Heat Pump Installations in 2026
For income-qualified homeowners, the bigger opportunity in 2026 may be the state-administered IRA rebate programs. Our IRA HVAC rebates guide covers HEEHRA and HOMES in detail, including which states have active programs, income tiers, and the step-by-step claiming process.
The federal 25C credit is gone for new installations. But there is still real money available in 2026. It comes from three sources, each with different eligibility rules.
1. IRA State Rebate Programs (HEEHRA and HOMES)
The Inflation Reduction Act allocated $8.8 billion in rebate funding to states through two programs. Unlike the federal tax credit, these are income-restricted rebates paid directly at point of sale or as reimbursements.
- HEEHRA (High-Efficiency Electric Home Rebate Act): Up to $8,000 for households earning less than 80% of the Area Median Income (AMI), and up to $4,000 for households earning 80–150% AMI. Specifically for appliance upgrades including heat pumps.
- HOMES Program: Based on measured whole-home energy savings. Up to $8,000, available at all income levels (though higher rebate amounts go to lower-income households).
As of March 2026, program availability is uneven. California’s HEEHRA program was fully reserved as of February 24, 2026. States that launched programs early (including New York, Michigan, North Carolina, Wisconsin, Indiana, Georgia, and Washington DC) are proceeding. Many other states have been delayed. Check your state energy office or DSIRE.org for current status.
2. Utility Rebates
Utility company rebates continue independent of the federal credit expiration. Most major utilities offer $40–$1,500 or more for qualifying heat pump installations, with higher amounts for cold-climate models.
Requirements vary, but most programs require SEER2 of 15.2 or higher. Your utility company’s website is the most reliable source. You can also use the ENERGY STAR Rebate Finder to search by ZIP code.
3. State Tax Credits
Some states have their own income tax credits or sales tax exemptions for energy-efficient equipment, unrelated to the now-expired federal credit. These vary significantly by state. DSIRE (dsireusa.org) is the most comprehensive database. Search by state and technology type (heat pump) for current programs.
How Do I Find Heat Pump Rebates in My State?
The fastest approach is to check three sources before signing a contract with an HVAC contractor.
- DSIRE.org. The Database of State Incentives for Renewables and Efficiency. Filter by state, then technology type. Includes utility programs, state tax credits, and IRA rebate programs. Updated regularly and considered the authoritative source for state-level programs.
- Your utility company’s website. Search for “rebate” or “energy efficiency” on your utility’s site. Programs change frequently. Confirm current availability before installation.
- Your HVAC contractor. Qualified contractors in active HEEHRA states are trained and certified to process rebates. Ask any contractor you interview whether they are HEEHRA-certified in your state.
If your state’s IRA program has not launched yet, utility rebates are often your best near-term option. Understanding your HVAC financing options is worth reviewing at the same time, since incentives and financing work together on your total out-of-pocket cost.
Frequently Asked Questions
Can I still get the heat pump tax credit in 2026?
Not for new installations. The federal 25C credit expired December 31, 2025. If you installed a qualifying heat pump in 2025 or earlier, you can still claim the credit on your 2025 tax return filed in spring 2026. For heat pumps installed in 2026, the 25C credit is not available. The alternative incentives available now are state IRA rebates and utility rebates.
I installed a heat pump in 2025. How do I claim the credit?
File IRS Form 5695 (Residential Energy Credits) with your federal Form 1040. Use Part II of the form. Calculate 30% of your qualifying costs (equipment plus labor), subject to the $2,000 maximum. For 2025 installations, you also need the Qualified Manufacturer Identification Number (QMID/PIN) for your specific heat pump model. This is a four-digit number your manufacturer can provide. You do not need to itemize deductions to claim this credit.
What form do I need to claim the heat pump tax credit?
IRS Form 5695, Residential Energy Credits. Complete Part II for the 25C Energy Efficient Home Improvement Credit. Attach the completed form to your federal Form 1040. The IRS provides instructions for Form 5695 at irs.gov that walk through each line item and the manufacturer PIN requirement.
Are there any federal heat pump incentives left in 2026?
The federal tax credit under Section 25C is gone. Federal funding still flows through the IRA’s state rebate programs (HEEHRA and HOMES), but those are administered by individual states, not the IRS. Income limits apply. Whether a program is available in your state depends on whether your state has launched its program. California’s program is fully reserved. Many other states are active or in progress. DSIRE.org has current status by state.
Can I combine state rebates with utility rebates for my heat pump?
Yes, in most cases. Utility rebates and state tax credits can generally be stacked with each other. The IRA state rebate programs (HEEHRA/HOMES) have restrictions on combining with other federal grants but typically can be combined with utility rebates. The order matters for HEEHRA: the rebate is calculated on the net cost after other non-federal incentives are applied. Confirm the stacking rules with your state’s program administrator before installation.
Do I need to itemize to claim the heat pump tax credit?
No. The 25C credit is a non-refundable tax credit, not a deduction. You can take the standard deduction and still claim the credit. The credit directly reduces your federal tax liability. If your credit exceeds your tax liability for the year, the unused portion does not carry forward to future years.