Heat Pump Tax Credits and Rebates in 2026: What Is Left
The Section 25C federal tax credit for heat pumps, worth up to $2,000, ended for equipment placed in service after December 31, 2025 under the One Big Beautiful Bill Act. In 2026, heat pump incentives come from utility rebates (often $500 to $2,000), state energy programs, and manufacturer promotions. Some programs require pre-approval or a participating contractor, so check before you sign a contract.
If you are shopping for a heat pump in 2026 and expecting a federal tax credit, stop and read this first: the credit is gone. Congress ended it. This guide explains exactly what expired, what survived, and how to find the rebates that are still paying homeowners thousands in 2026.
What expired: the 25C credit
The Energy Efficient Home Improvement Credit (Section 25C) paid 30 percent of the cost of qualifying heat pumps, up to $2,000 per year, including labor. The One Big Beautiful Bill Act, signed July 4, 2025, terminated the credit for any property placed in service after December 31, 2025. The cutoff is the in-service date, not the purchase date: equipment bought in 2025 but installed in 2026 does not qualify.
The related 25D Residential Clean Energy Credit (30 percent for geothermal and solar) ended on the same date. There is no federal replacement on the books. If a contractor's quote or website still advertises the 25C credit for a 2026 install, the marketing is out of date; ask them to update the quote.
What survived: utility rebates
Utility rebates are now the biggest incentive source for most homeowners. Many electric utilities offer $500 to $2,000 for qualifying heat pumps, with higher amounts for cold-climate models and for customers who decommission old electric resistance heat. Examples from 2026 programs include rebates up to $2,000 from major utilities for qualifying cold-climate heat pumps, plus smaller bonuses for pairing the install with insulation or air sealing.
Utility programs have quirks that trip people up. Many require the equipment to meet specific efficiency tiers (often the highest CEE tier), many require a participating contractor, and some require pre-approval before installation begins. Funding is capped annually in several states, and early-2026 application volume already thinned some pools. Check your utility's rebate page and call before you sign anything.
State programs
States run their own programs on top of utility rebates, and they vary enormously. New York's Clean Heat program pays $2,500 to $10,000-plus depending on the utility, equipment, and whether the home is in a disadvantaged community. California layers its TECH Clean California rebates with utility incentives. Several states offer low-interest financing for heat pumps through green banks or energy loan programs, which can matter more than a rebate when the project is $15,000.
The federal HEEHR (High-Efficiency Electric Home Rebate) program, which promised up to $8,000 point-of-sale rebates for low- and moderate-income households, was authorized under the Inflation Reduction Act but its funding and rollout have been snarled by the same 2025 legislation and state-level implementation fights. Treat HEEHR as uncertain in 2026: check your state's energy office for current status rather than budgeting around it.
How to stack what is left
The winning move in 2026 is stacking: a utility rebate plus a state rebate plus a manufacturer promotion on the same project. Start with the DSIRE database (dsireusa.org), the national catalog of state and utility incentives, then confirm details with your utility and your state's energy office. Ask your contractor which programs they participate in; experienced contractors often know about utility bonuses that never make it onto websites.
Document everything. Rebate applications typically want the equipment model numbers, AHRI certificate numbers, efficiency ratings, the paid invoice, and proof of the installation date. Keep copies for at least three years. If a program requires pre-approval, get the approval in writing before the crew shows up.
Watch out for credit confusion
Two traps are catching 2026 buyers. First, installers quoting the old 25C credit as if it still exists; the quote looks $2,000 better than reality. Second, confusing the expired residential credits with commercial ones: Section 179D (commercial buildings) and 45L (new efficient homes) had later phase-outs but do not apply to a homeowner replacing their own heat pump. When in doubt, the IRS guidance and your tax professional outrank any sales brochure.
The bottom line
Budget your 2026 heat pump with zero federal tax credit, then treat utility and state rebates as found money. In many markets the stacked local incentives still total $1,000 to $3,000, which takes real money off a $12,000 project. The paperwork is annoying; the check is worth it.
Figures current as of October 2026. Sources: U.S. Department of Energy (energy.gov), ENERGY STAR, IRS guidance on expired 25C credit.