By Meraj Uddin Provat · Last reviewed August 28, 2026 · Editorial Standards
The federal 25C tax credit for heat pumps ended December 31, 2025. If you’re pricing a heat pump for 2026, the “30% off, capped at $2,000” credit that made headlines for the last few years no longer applies. What’s actually left is a narrower, state-by-state mix — a federally funded rebate program that’s live in some states and out of money in others, plus whatever your state and utility offer on their own. This guide covers exactly what changed and how to find what you still qualify for.
What happened to the 25C credit?
Section 25C (the Energy Efficient Home Improvement Credit) used to give homeowners 30% of a qualifying heat pump’s cost back, capped at $2,000/year. The One Big Beautiful Bill Act, signed July 4, 2025, ended it for property placed in service after December 31, 2025. If your heat pump was installed and running by that date, you can still claim it on your 2025 return. If it goes in during 2026, there’s no federal tax credit for it — full stop.
Section 25D — the separate, uncapped 30% credit that covered geothermal heat pumps, solar, and battery storage — ended on the same date, for the same reason.
What’s actually left for 2026
- HEEHRA rebates — up to $8,000 income-based rebate, still active but federally funded and finite: several states have already exhausted their allocation, some haven’t launched yet, and a few are stuck in DOE approval. Check before you plan around it.
- State income tax credits — unaffected by the federal repeal; still active wherever your state offers one.
- Utility and state energy office rebates — also unaffected; set independently by each program.
Without the federal 25C credit, the math is meaningfully tighter than the “middle-income household nets $10,000+ in stacked incentives” examples that circulated in 2023–2025. It’s still worth checking your state’s stack — just don’t assume the federal 30% is part of it anymore.
HEEHRA: still real, but check availability first
HEEHRA (the High-Efficiency Electric Home Rebate Program) is a separate program from 25C — it’s a point-of-sale rebate, not a tax credit, funded by the Inflation Reduction Act and administered state by state. It wasn’t touched by the OBBBA the way 25C was, but it comes with real caveats for 2026:
| Income tier | Heat pump rebate |
|---|---|
| <80% AMI | 100% of project cost, up to $8,000 |
| 80–150% AMI | 50% of project cost, up to $8,000 |
| >150% AMI | Not eligible |
- It’s rolling out unevenly. A handful of states are fully live, several more are launching through 2026, and a number are still waiting on DOE approval to start at all.
- Funding runs out. California’s program burned through its full allocation in about ten weeks after launch and moved to a waitlist — demand outpaced the federal allocation. Other high-demand states could follow the same pattern.
- Pre-approval is required. This hasn’t changed — buy the equipment before your rebate is approved and you can forfeit it.
Check your state’s live status before you plan a project around it — don’t assume the money is there.
State and utility incentives — where the math is now decided
With the federal credit gone, these matter more than they used to:
State income tax credits
Massachusetts, New York, Oregon, California, and others offer their own state credits for heat pump installs, unaffected by the federal repeal.
State energy office rebates
NYSERDA (NY), Mass Save (MA), Energy Trust of Oregon, and similar programs offer $500–$3,000 depending on equipment efficiency and your existing system.
Utility company rebates
Your gas or electric utility may offer $300–$2,000 for switching to a heat pump, with higher amounts common in the Pacific Northwest and Northeast for cold-climate-rated systems.
Property tax exemptions
Some states (NV, MN, OR, TX with caps) exempt the added home value from energy improvements from property tax reassessment — a small annual saving that compounds.
How to find your actual stack
- DSIRE database (dsireusa.org) — the federal/state/utility incentive database run by NC State and DOE. Search by ZIP code.
- Energy Star Rebate Finder (energystar.gov/rebate-finder)
- Your state energy office’s website — usually has a page confirming whether HEEHRA is live, waitlisted, or not yet launched in your state.
Combine these with our heat pump vs gas furnace calculator — it no longer assumes a federal 25C credit, so the payback numbers it shows reflect 2026 law, not 2023–2025 assumptions.
Worked example: Massachusetts, HEEHRA-eligible household
Scenario: $14,000 cold-climate heat pump install in MA. Household at 110% of AMI, and MA’s HEEHRA allocation is still live and accepting applications (confirm this before counting on it).
| Incentive | Amount |
|---|---|
| Federal 25C credit | $0 (ended for 2026 installs) |
| HEEHRA rebate (50% of cost, capped $8,000 — if funding available) | $7,000 |
| Mass Save rebate (cold-climate tier) | $1,250 |
| MA state energy credit (15% of post-rebate cost) | ~$862 |
| Total stacked incentives | ~$9,112 |
| Net out-of-pocket | ~$4,888 |
Compare that to ~$3,175 net out-of-pocket for the identical project in 2025 with 25C included — the federal credit’s absence adds roughly $2,000 back onto the bill even in a HEEHRA-eligible state with strong local rebates.
Worked example: Florida, above HEEHRA income limit
Same $14,000 install in FL. Household income above 150% AMI (not HEEHRA-eligible either way).
| Incentive | Amount |
|---|---|
| Federal 25C credit | $0 (ended for 2026 installs) |
| HEEHRA | Not eligible (income) |
| FL state rebate | $0 (FL has no state heat pump rebate as of 2026) |
| Utility rebate (varies; some FL utilities offer ~$300) | $300 |
| Total | $300 |
Net out-of-pocket: $13,700 — up from $11,700 with 25C in the mix. Florida’s mild winters also reduce operating savings versus gas, so payback stretches further without the federal credit cushioning the upfront cost.
Two traps to avoid
1. Assuming the federal credit is still there
A lot of 2023–2025 content (including an earlier version of this page) still describes a 30%/$2,000 federal credit as active. It ended December 31, 2025. Don’t let a contractor’s quote or an outdated blog post bake it into your math.
2. Buying before a HEEHRA rebate is approved
Where HEEHRA is still live, pre-approval is required before equipment purchase. Buy first and you may forfeit the rebate — and given funding is finite, confirm your state’s program is actually accepting new applications before you count on it at all.
What to do this month
- Use our heat pump calculator with your state’s electricity rates and current heating system for your real 2026 payback timeline.
- Pull the DSIRE database for your ZIP code — federal 25C won’t show up anymore, but state and utility programs will.
- Check your state’s HEEHRA status directly — live, waitlisted, or not yet launched — before assuming it’s available.
- If HEEHRA is live in your state, apply for pre-approval before signing an install contract.
- Get 2–3 quotes and confirm the contractor is enrolled in any rebate programs you’re counting on.
Sources: IRS — OBBBA energy credit FAQs. HEEHRA availability changes by state and by month — verify current status with your state energy office before planning a project around it. Not financial or tax advice.