Quick Answer: The federal 25C tax credit for HVAC equipment expired December 31, 2025. If you installed a qualifying heat pump or high-efficiency system by that date, you can still claim up to $2,000 on your 2025 tax return. For new installations in 2026, the savings opportunity has shifted to state IRA rebate programs, utility rebates, and local incentives, which can still reach $1,000–$8,000 in many areas.
What HVAC Tax Credits Are Available in 2026?
Homeowners replacing HVAC systems in 2026 face a significantly different incentive landscape than in prior years. Before exploring rebates, confirm whether your system actually needs replacement by reviewing the signs it is time to replace your HVAC. Here is the direct answer on incentives:
| Incentive | Status in 2026 | Max Savings |
|---|---|---|
| Federal 25C Tax Credit (heat pumps, AC, furnace) | Expired Dec 31, 2025 | Not available for new installs |
| Federal 25D Residential Clean Energy Credit | Expired Dec 31, 2025 | Not available (see geothermal note) |
| IRA HEEHRA State Rebates (low/moderate income) | Active in select states | Up to $8,000 |
| IRA HOMES State Rebates (all incomes) | Active in select states | Up to $8,000 |
| Utility Rebates | Widely available | $40–$1,500+ |
| State Tax Credits (varies by state) | Varies by state | Varies |
The federal tax credit window closed faster than most homeowners expected. The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, accelerated the expiration of the Section 25C credit, which was originally authorized through 2032 under the Inflation Reduction Act. The IRS confirmed in official guidance (IR-2025-86): “The credit will not be allowed for any property placed in service after December 31, 2025.”
That said, there is still real money on the table for 2026. It just comes from different sources. State-administered IRA rebate programs, utility rebates, and local incentives remain active in many areas, and knowing where to look can still save you hundreds to thousands of dollars. If your budget does not allow an outright purchase, review your HVAC financing options before your contractor visit.
The Federal 25C Credit Expired — But You May Still Be Able to Claim It
There is an important distinction that is creating confusion in early 2026: the credit expired for new installations, but homeowners who completed a qualifying installation by December 31, 2025 can still claim the credit when they file their 2025 federal tax return in spring 2026.
If you installed a qualifying heat pump, high-efficiency furnace, or central air conditioner before the end of 2025, you have not missed your opportunity. You just need to file the right form when you do your taxes. For a step-by-step walkthrough focused specifically on heat pumps, see our heat pump tax credit 2026 guide. The key date is when the equipment was placed in service (installed and operational), not when you file.
What the 25C Credit Was Worth (For 2025 Tax Returns)
For homeowners filing their 2025 tax return, the Section 25C credit worked as follows:
| Equipment Type | Credit Amount | Maximum Credit |
|---|---|---|
| Air-source heat pumps | 30% of equipment + installation cost | $2,000 per year |
| Central air conditioners | 30% of equipment + installation cost | $600 per year |
| Gas furnaces (≥97% AFUE) | 30% of equipment + installation cost | $600 per year |
| Gas boilers (≥97% AFUE) | 30% of equipment + installation cost | $600 per year |
| Insulation, windows, doors, audits | 30% of costs | Up to $1,200 combined |
| Annual aggregate cap | N/A | $3,200 total |
A few key mechanics to understand: the credit is non-refundable, meaning it can reduce your federal tax liability to zero but will not generate a refund beyond what you owe. It also cannot be carried over to future tax years. Any credit you could not use in a given year is lost. The credit resets annually, which is why some homeowners staged upgrades across multiple tax years to maximize the total savings.
How to Claim the 25C Credit (If You Installed by Dec 31, 2025)
Claiming the credit requires completing IRS Form 5695 (Residential Energy Credits) and attaching it to your 2025 federal tax return (Form 1040). You do not need to itemize deductions. This is a standard tax credit, separate from deductions.
Documents you should have ready:
- Contractor invoice showing equipment cost and labor cost separately
- Manufacturer’s written certification or AHRI certificate confirming the equipment qualifies
- Qualified Manufacturer Identification Number (QMID) for 2025 claims (the IRS required this starting in 2025)
- Confirmation of installation date (the “placed in service” date)
If your contractor did not provide a QMID, contact the manufacturer directly. Most will have a product certification sheet or a lookup tool on their website. You can also search the Energy Star federal tax credits page for qualifying product lists.
What HVAC Equipment Would Have Qualified Under 25C
The 25C credit was designed to reward high-efficiency equipment, not just any system. Here are the efficiency thresholds that applied for heat pumps and HVAC equipment. If you are also considering comfort upgrades like zone control, see our HVAC zoning system cost guide for what zone control adds to the total project budget:
| Equipment | Efficiency Requirement | Standard |
|---|---|---|
| Air-source heat pumps (split systems) | ≥ 15.2 SEER2, ≥ 7.8 HSPF2, ≥ 11.7 EER2 | CEE Tier 1 (highest non-advanced tier) |
| Air-source heat pumps (mini-splits/ductless) | ≥ 16 SEER2, ≥ 9 HSPF2 | CEE Tier 2 |
| Central air conditioners | ≥ 17.5 SEER2 (Energy Star Most Efficient) | Energy Star Most Efficient |
| Gas furnaces | ≥ 97% AFUE | CEE highest tier |
| Gas boilers | ≥ 97% AFUE | CEE highest tier |
These efficiency requirements were deliberately set high. The credit was designed to push the market toward top-tier equipment, not reward mid-range upgrades. A standard 16 SEER2 central air conditioner would not have qualified for the AC credit (it needed to be 17.5 SEER2 or higher). However, heat pump thresholds were more accessible because the IRA treated heat pumps as a priority technology.
IRA State Rebate Programs: The Primary Opportunity in 2026
With the federal tax credits gone, the biggest remaining federal incentive for HVAC in 2026 comes from the IRA’s state-administered rebate programs. Unlike the 25C credit (which required filing a tax return and waiting for a refund), these programs offer point-of-sale discounts, meaning the rebate is deducted directly from your contractor invoice at the time of installation.
There are two separate programs, funded by nearly $9 billion in IRA dollars:
HEEHRA: High-Efficiency Electric Home Rebate Act
HEEHRA provides the largest rebates but is income-restricted. To qualify, your household income must be below 150% of your Area Median Income (AMI).
- Low-income households (below 80% AMI): Up to $8,000 for a qualifying heat pump
- Moderate-income households (80%–150% AMI): Up to $4,000 for a qualifying heat pump
- Additional rebates available for heat pump water heaters, electrical panel upgrades, weatherization, and EV chargers
- Maximum total HEEHRA rebate per household: $14,000
HOMES: Home Owner Managing Energy Savings
HOMES is a performance-based program available at all income levels, not just low- and moderate-income households. The rebate amount is tied to how much whole-home energy savings your upgrades achieve:
- 20–35% whole-home energy savings: Up to $2,000 (standard) or $4,000 (income-qualified)
- 35%+ whole-home energy savings: Up to $4,000 (standard) or $8,000 (income-qualified)
Which States Have Active Programs?
The honest answer is: it is complicated. As of early 2026, only a handful of states have fully operational programs. Many states received their federal allocations but have delayed or paused implementation due to federal funding uncertainty. States with active programs include California, New York, Michigan, North Carolina, Wisconsin, Indiana, Georgia, and Washington D.C., among others. Colorado offers strong utility rebates through Xcel Energy, including up to $6,750 for a qualifying cold-climate heat pump; see the Colorado HVAC replacement cost guide for the full breakdown. California’s HEEHRA program for single-family homes was fully reserved as of February 24, 2026.
To check your state’s current status, visit the Rewiring America Home Efficiency Rebates tracker or contact your state energy office directly.
Utility Rebates: Often Overlooked, Always Available
Utility rebates have been a reliable source of HVAC savings long before the IRA existed, and they remain active in 2026 regardless of federal program status. Unlike state IRA rebates, utility programs are funded by the utilities themselves (often through a charge built into customer rates) and are not subject to federal budget battles.
What utility rebates look like in practice (for example, Memphis homeowners on MLGW can access TVA EnergyRight rebates up to $800 on qualifying heat pump installs; Knoxville homeowners through KUB can access the same TVA EnergyRight program with up to $800 on qualifying 17 SEER2+ heat pumps; Baton Rouge homeowners served by Entergy Louisiana can access Entergy Solutions rebates up to $500 on mini-split heat pumps when the program reopens in 2026; Oklahoma City homeowners through OG&E can access the HVAC Burnout Replacement rebate up to $1,500 per unit):
- A typical central AC rebate: $100–$500 for systems meeting SEER2 ≥ 15.2 thresholds
- Heat pump rebates: $200–$1,000+ at many utilities
- Smart thermostat add-ons: Often an additional $50–$100 (for smart thermostat cost details and rebate eligibility, see our smart thermostat cost and rebates guide)
- Some utilities (like Austin Energy) offer up to $1,500 for high-efficiency heat pumps
The catch: utility rebates are typically tied to your specific utility territory, not your state. A homeowner in one part of a state may have access to generous rebates while a neighbor served by a different utility has nothing. This is why you need to check your actual utility’s website, not just a state-level resource.
Most utility rebates also require installation by a licensed HVAC contractor and submission of proof of purchase within a set window (usually 30–90 days after installation). Ask your contractor if they are familiar with local utility programs. Note that most rebates require a permitted installation — learn what an HVAC permit costs and why it affects your rebate eligibility. Experienced contractors often know what is available and can help you file the paperwork.
How to Stack Incentives (What Can Be Combined)
For 2026 installations, here is what you can and cannot combine:
- State IRA rebates + utility rebates: Generally combinable. IRA rebate guidance prohibits combining IRA rebates with other federal grants or rebates for the same project, but utility programs are not federal grants.
- State IRA rebates + state tax credits: Depends on your state. Many states explicitly allow this combination.
- 25C federal tax credit: No longer available for 2026 installations, so stacking is a moot point for new systems.
- For 2025 returns: If you claimed the 25C credit on your 2025 return, you cannot also claim a state IRA rebate for the exact same equipment cost, as the IRA rebate reduces your qualified cost basis for the tax credit calculation.
For a deep dive on the HEEHRA and HOMES programs specifically, including income eligibility tiers, state rollout status, and how to claim, see our IRA HVAC rebates guide for 2026.
nnnnnThe total savings picture in 2026: a homeowner in a state with an active HEEHRA program who also has a utility rebate could realistically combine $4,000–$8,000 in HEEHRA rebates with $200–$1,000 in utility rebates, for a total of $4,200–$9,000 off the cost of a new heat pump, without any federal tax credit involved. These rebates also apply when replacing both the AC and furnace together. See our AC and furnace replacement cost guide for what bundled systems cost before incentives.
How to Find Incentives in Your State (Using DSIRE)
DSIRE (Database of State Incentives for Renewables and Efficiency), maintained by NC State University’s Clean Energy Technology Center, is the most comprehensive free resource for finding state and utility incentives. It has been tracking these programs since 1995.
How to use DSIRE effectively:
- Go to dsireusa.org and enter your ZIP code for location-specific results
- Filter by “Technology” → select “Heat Pump” or “Air Conditioner” to narrow results
- Look for “Utility Rebate Program” entries, which are often more current and accessible than state programs
- Check the “Last Updated” date on each incentive, as programs change frequently and an outdated DSIRE entry may reflect expired or modified programs
- Use it as a discovery tool, then verify current eligibility directly with the program administrator
For most homeowners, the most actionable next step is: enter your ZIP in DSIRE, identify any utility rebate programs, call your utility directly to confirm current availability, and then get quotes from contractors who are familiar with the rebate submission process. As you evaluate those quotes, review the HVAC quote red flags guide to spot vague equipment specs or missing warranty details that can complicate rebate claims later.
Common Mistakes When Trying to Claim HVAC Tax Credits
Based on what homeowners frequently get wrong when navigating these programs:
- Assuming the federal 25C credit is still available in 2026. It is not available for new installations. Multiple HVAC companies and even some tax prep software have been slow to update their guidance. Double-check with the IRS directly.
- Confusing tax credits with rebates. A credit reduces your tax bill. A rebate is a direct payment or invoice reduction. They work completely differently and have different income, timing, and documentation requirements.
- Installing equipment, then trying to find rebates. Most rebate programs require pre-approval or reservation before installation begins. Starting the rebate process after the fact often disqualifies you.
- Not checking the efficiency requirements. A contractor quoting you a “high-efficiency system” does not automatically mean it meets program thresholds. Always confirm the specific SEER2, HSPF2, or AFUE rating against the program’s published requirements.
- Missing the filing deadline for 2025 returns. If you installed equipment in 2025 and want to claim the 25C credit, you need to file Form 5695 with your 2025 tax return. Extensions are available, but the credit still applies to the 2025 tax year only.
For most homeowners, the best approach is to use our HVAC cost estimator to understand the total replacement cost, then research what rebates apply in your area before selecting a system, not after. If you are adding central air for the first time or replacing an existing system, see our central air installation cost guide for a full breakdown of installed costs by system size and ductwork scenario.
Frequently Asked Questions
Does the HVAC tax credit still exist in 2026?
The federal Section 25C Energy Efficient Home Improvement Credit expired on December 31, 2025, for new installations. Equipment installed and placed in service after that date does not qualify for the federal credit. If you installed qualifying equipment by December 31, 2025, you can still claim the credit on your 2025 federal tax return using IRS Form 5695.
I installed a heat pump in 2025. Can I still get the tax credit when I file in 2026?
Yes. If you installed a qualifying air-source heat pump before December 31, 2025, you can claim up to $2,000 as a Section 25C credit on your 2025 federal tax return, even though you are filing in 2026. You need IRS Form 5695, the manufacturer’s equipment certification, your contractor invoice, and the Qualified Manufacturer Identification Number (QMID) for the equipment.
What HVAC rebates are available in 2026 if the federal credit expired?
The primary incentives available for new HVAC installations in 2026 are:
- IRA state rebate programs (HEEHRA and HOMES), available in select states, income-restricted for HEEHRA
- Utility rebates from your electricity or gas provider
- State-level tax credits (varies by state; check DSIRE)
The savings vary significantly by location. In some states with active HEEHRA programs, income-eligible homeowners can receive up to $8,000 off a qualifying heat pump.
Can I get an IRA rebate if I’m not low-income?
It depends on the program. HEEHRA is strictly income-limited to households at or below 150% of Area Median Income. HOMES, the other IRA rebate program, is available to all income levels and bases the rebate amount on measured whole-home energy savings (20%+ reduction required). Some states may also have utility-funded programs open to all customers. Use DSIRE to find programs in your area.
How do I find utility rebates for my HVAC system?
The most reliable method is to go directly to your utility company’s website and search for “rebates” or “energy efficiency programs.” You can also use DSIRE (dsireusa.org) as a starting point: filter by your ZIP code and look for “Utility Rebate Program” entries. Your HVAC contractor may also be familiar with local programs and can guide you through the application process.
What efficiency rating did the 25C credit require for heat pumps?
For air-source heat pump split systems, the 25C credit required meeting the Consortium for Energy Efficiency (CEE) highest efficiency tier. For most split systems, this meant at least SEER2 ≥ 15.2, HSPF2 ≥ 7.8, and EER2 ≥ 11.7. Mini-split and ductless systems had slightly different requirements. For central air conditioners, the threshold was SEER2 ≥ 17.5 (Energy Star Most Efficient). Gas furnaces required ≥ 97% AFUE.
What is DSIRE and how does it help me find HVAC rebates?
DSIRE (Database of State Incentives for Renewables and Efficiency) is a free online database maintained by NC State University since 1995. It tracks federal, state, and utility incentives for energy efficiency and renewable energy across all 50 states. To find HVAC rebates, go to dsireusa.org, enter your ZIP code, and filter by technology (heat pump, air conditioning, or heating). Always verify current program availability directly with the administrator, since DSIRE entries may lag behind real-time program changes.
Phoenix, AZ homeowners served by SRP (Salt River Project) can access the SRP Cool Cash Rebate, one of the highest per-system utility rebates in the country: up to $1,125 for a qualifying variable-capacity system. APS customers in west Phoenix and Glendale have separate programs. Efficiency Arizona also provides income-qualified rebates up to $8,000 on heat pump installations. See the Phoenix HVAC replacement cost guide for full rebate tiers, SEER2 requirements, and how to stack utility and state rebates in the Arizona market.
Rocky Mountain Power’s wattsmart program offers Utah homeowners up to $2,000 on qualifying heat pumps, and IRA credits stack on top. See the full Utah HVAC rebates breakdown for 2026 amounts and eligibility.