HVAC rebates and tax credits in 2026: what’s left

The federal 25C credit, worth up to $2,000 for a heat pump, ended for equipment placed in service after December 31, 2025. In 2026, look to state Home Energy Rebates (up to $8,000 for a heat pump for eligible incomes, now mostly limited to replacing electric equipment), utility rebates and manufacturer promotions.

Federal tax credits ended with 2025

The Energy Efficient Home Improvement Credit (section 25C) paid 30% of the cost of qualifying equipment: up to $2,000 a year for heat pumps and up to $1,200 for other items, including central air conditioners and furnaces, for a maximum of $3,200. Public Law 119-21, signed July 4, 2025, ended it. No credit is allowed for property placed in service after December 31, 2025.

The Residential Clean Energy Credit (section 25D), which covered geothermal heat pumps, ended for expenditures made after December 31, 2025. The IRS treats an expenditure as made when installation is complete, so a deposit paid in 2025 for a system finished in 2026 doesn’t qualify. If your system was installed by December 31, 2025, claim it on your 2025 return with Form 5695.

State Home Energy Rebates: HEEHR and HOMES

The Inflation Reduction Act funded two rebate programs that states run. The High-Efficiency Electric Home Rebates (HEEHR, called HEAR until May 2026) pay for specific electric equipment. Households at or below 80% of area median income can get up to 100% of the cost covered; households between 80% and 150% get up to 50%; above 150% is not eligible. Caps per item:

DOE changed the HEEHR rules effective May 29, 2026. Rebates no longer fund fuel switching: a heat pump rebate now covers upgrading from existing electric equipment to more efficient electric equipment, or new construction. Homes must also use rebates for insulation and air sealing before a heating and cooling upgrade, unless already insulated to a state-set level. Launched programs had three months to adopt the changes; reservations approved under the old rules can still be paid.

HEEHR rebates are designed to come off the price at the point of sale, through contractors on your state’s qualified list. States may allow do-it-yourself installs for some items, but not for HVAC systems. Your state program says which area median income figures apply; they come from HUD income data for your area.

The Home Owner Managing Energy Savings (HOMES) program rebates whole-home projects that cut energy use by at least 20%, up to $8,000 depending on savings and income. It doesn’t restrict fuel. By law, a HEEHR rebate can’t be combined with another federal grant or rebate for the same project.

Status varies widely: some states have launched, some are fully reserved or closed, and some haven’t started. Only your state energy office can tell you what is open today.

Utility rebates

Many electric and gas utilities offer their own rebates on heat pumps, air conditioners, furnaces, smart thermostats and tune-ups. They often require an AHRI certificate number, a participating contractor, and an application before or within a set time after installation. Read the rules before you sign, not after.

Manufacturer and contractor promotions

Manufacturers run seasonal rebates and financing offers. A “rebate” in a contractor’s ad may simply be a discount. Get any promotion on the written quote, with who pays it, when, and what you must submit. For financing offers, ask for the cash price and the financed price and compare them.

How to find yours

• Check your state energy office for HEEHR and HOMES status, income limits and qualified contractors.
• Search the ENERGY STAR Rebate Finder by ZIP code for utility and local offers.
• Search DSIRE, the national database of state and utility incentives.
• Call your utility before signing, and ask whether pre-approval is needed.
• Get the model numbers and AHRI certificate number on the quote.
• Keep the invoice, AHRI certificate and final permit together; most programs ask for them.

Don’t let a contractor promise a tax credit

For work completed in 2026, there is no federal 25C or 25D credit. A quote that nets out a “30% federal tax credit” is wrong. A contractor also can’t promise a state rebate you haven’t been approved for. If a rebate is part of the deal, get the reservation or pre-approval in writing before you sign, and make sure the quote shows the price with and without it.

Questions

Can I still claim the 25C credit? Only for equipment placed in service by December 31, 2025, claimed on your 2025 return. Nothing installed in 2026 qualifies.

Do HEEHR rebates cover replacing a gas furnace with a heat pump? Not in existing homes since DOE’s May 29, 2026 guidance. Heat pump rebates now cover upgrades from existing electric equipment or new construction, though reservations approved earlier can still be paid.

Who qualifies for the $8,000 heat pump rebate? Households at or below 150% of area median income, in a state whose HEEHR program is open, and whose project meets the current rules. Below 80% of median income, it can cover up to 100% of the cost; from 80% to 150%, up to 50%.

Can I combine a utility rebate with a state rebate? Often, but it depends on both programs’ rules. By law, HEEHR can’t be combined with another federal grant or rebate for the same project.

Sources

• IRS: Energy Efficient Home Improvement Credit — https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit
• IRS: FAQs on 25C, 25D and other credits under P.L. 119-21 — https://www.irs.gov/newsroom/faqs-for-modification-of-sections-25c-25d-25e-30c-30d-45l-45w-and-179d-under-public-law-119-21-139-stat-72-july-4-2025-commonly-known-as-the-one-big-beautiful-bill-act-obbb
• IRS: Residential Clean Energy Credit — https://www.irs.gov/credits-deductions/residential-clean-energy-credit
• DOE: Home Energy Rebates FAQ fact sheet (rebate caps and income tiers) — https://www.energy.gov/sites/default/files/2024-12/home-energy-rebates-faq-fact-sheet_925224.pdf
• DOE: Program Notice 26-2, HEEHR changes effective May 29, 2026 — https://www.energy.gov/documents/program-notice-26-2
• DOE: Program Notice 26-1, HOMES changes effective May 29, 2026 — https://www.energy.gov/documents/program-notice-26-1
• DOE: Home Energy Rebates — https://www.energy.gov/home-energy-rebates
• ENERGY STAR Rebate Finder — https://www.energystar.gov/rebate-finder
• DSIRE: Database of State Incentives for Renewables and Efficiency — https://www.dsireusa.org/
• AHRI: How and why of certified products — https://www.ahrinet.org/certification/cee-directory/how-and-why-certified