The heat pump tax credit is gone for new installs. The federal 25C credit paid back 30% of the cost of a qualifying heat pump, up to $2,000 a year, but it ended for equipment placed in service after December 31, 2025. Nothing at the federal level has replaced it for most households.
What is left is a smaller and more local mix: income-qualified HEEHR and HOMES rebates in states that run them, plus utility and state programs. Those federal rebates changed again in May 2026, and the change matters most if you heat with gas, oil or propane. If you are still pricing the project, start with our heat pump installation cost guide.
No federal heat pump tax credit applies to installs in 2026. The 25C credit (30%, up to $2,000) ended for heat pumps placed in service after December 31, 2025. You can still claim it for a 2023, 2024 or 2025 install on that year’s return or an amended one. For new projects, the options are HEEHR and HOMES rebates for income-qualified households where a state program is open, and utility rebates. Since May 29, 2026, HEEHR no longer pays to replace a gas, oil or propane system.
Old 25C credit
Up to $2,000
30% of a heat pump’s cost a year, 2023–2025 (IRS)
HEEHR heat pump rebate
Up to $8,000
Income-qualified, where a state program is open (DOE)
Fuel-switching cut
May 29, 2026
HEEHR no longer covers gas, oil or propane swaps (DOE)
In this guide
- What happened to the heat pump tax credit
- You may still be able to claim the 25C tax credit
- What replaced the heat pump tax credit
- HEEHR rebates after the May 2026 changes
- HOMES whole-home rebates
- Which incentives fit your home
- Utility and state heat pump rebates
- How to check what you qualify for
- Frequently asked questions
What happened to the heat pump tax credit
The Energy Efficient Home Improvement Credit, known by its tax code section as 25C, was expanded by the Inflation Reduction Act from 2023. For heat pumps it covered 30% of the cost, including installation, up to $2,000 a year. It sat on top of a separate $1,200 yearly limit for items such as insulation, windows and doors, so one household could claim up to $3,200 in a year, according to the IRS.
The One Big Beautiful Bill Act, signed on July 4, 2025 (Public Law 119-21), moved the end date forward. The 25C tax credit does not apply to property placed in service after December 31, 2025. The same law ended the 25D residential clean energy credit, which covered geothermal heat pumps, for expenditures made after that date.
“Placed in service” means installed and working, not ordered or paid for. A heat pump bought in December 2025 but installed in January 2026 does not qualify for the 25C tax credit. A heat pump installed and running by December 31, 2025 does, even if you paid the last invoice later.
You may still be able to claim the 25C tax credit
The heat pump tax credit ended for new installs, not for the years it covered. If you installed a qualifying heat pump in 2023, 2024 or 2025 and did not claim it, you may still have time.
| Year installed | Heat pump credit | How to claim now |
|---|---|---|
| 2023 | 30%, up to $2,000 | Amended 2023 return (Form 1040-X), generally within 3 years of filing |
| 2024 | 30%, up to $2,000 | Amended 2024 return, generally within 3 years of filing |
| 2025 | 30%, up to $2,000, QMID required | On your 2025 return; extended returns are due October 15, 2026 |
| 2026 or later | None | No federal credit. Look at rebates instead |
The IRS rule for refunds is to file an amended return within 3 years after the date the original return was filed, or 2 years after the tax was paid, whichever is later, according to the IRS energy credits FAQ. For a 2023 return filed by the April 2024 deadline, the window to claim the 25C tax credit runs to about April 2027.
The QMID rule for 2025 installs
For property placed in service in 2025, the IRS allows no credit unless the heat pump was made by a qualified manufacturer and you report its Qualified Manufacturer Identification Number (QMID) on Form 5695. Ask your installer or the manufacturer for the number if it is not on your invoice. A missing QMID is a common reason a claim is rejected.
Good to know
The 25C tax credit is nonrefundable and cannot be carried forward. If you owed $1,400 in federal tax for 2025, a $2,000 credit cuts your bill to zero and the remaining $600 is lost. The old 25D credit for geothermal systems worked differently: unused amounts could be carried forward.
What replaced the heat pump tax credit
No new federal heat pump tax credit replaced the 25C tax credit. Help with a heat pump now comes from three places, and none of them is open to everyone everywhere:
- HEEHR rebates, the High-Efficiency Electric Home Rebates, formerly called HEAR. Up to $8,000 toward a heat pump for income-qualified households.
- HOMES rebates, the Home Owner Managing Energy Savings program. Pays for measured or modeled whole-home energy savings.
- Utility and state programs, which vary by ZIP code and often have no income limit.
Both federal rebate programs are funded by the Inflation Reduction Act but run by your state energy office, which decides when to open, which contractors take part and how the money is paid. Unlike the 25C tax credit, the discount usually comes off the contractor’s invoice, so you do not wait for a tax refund.
HEEHR heat pump rebates after the May 2026 changes
HEEHR rebates are the biggest source of money for a heat pump now that the heat pump tax credit is gone, but only for households under 150% of area median income (AMI). Below 80% of AMI it can cover up to 100% of eligible costs; between 80% and 150%, up to 50%. Each item has its own cap, and the total per household is $14,000, according to the Department of Energy.
| Upgrade | HEEHR maximum |
|---|---|
| Heat pump for heating and cooling | $8,000 |
| Electrical panel (load center) upgrade | $4,000 |
| Electrical wiring | $2,500 |
| Heat pump water heater | $1,750 |
| Insulation, air sealing and ventilation | $1,600 |
| Electric stove or heat pump clothes dryer | $840 |
| Total per household | $14,000 |
What changed on May 29, 2026
The Department of Energy’s Program Notice 26-2, effective May 29, 2026, renamed the program from HEAR to HEEHR and changed what it pays for:
- No more fuel switching. Heat pump rebates are now only for replacing existing electric equipment with more efficient electric equipment, or for new construction. Replacing a gas, oil or propane furnace or boiler with a heat pump no longer qualifies.
- Insulation first. Homes must use rebates for insulation and air sealing before heating and cooling upgrades, unless they already meet a state-set level.
- You may keep the old system. A home can keep its existing fossil-fuel heating when it adds a heat pump, even if the heat pump is not the main source of heat.
The notice gave states with launched programs three months to make the changes, and states that had not yet launched must follow the new rules from the start. Rebate reservations approved under the old rules can still be completed. North Carolina, for example, applied the new rules to every application not yet reserved from September 1, 2026, and now allows heat pump rebates only to replace electric equipment, according to the North Carolina State Energy Office. Federal funds for the programs had been held up since early 2025; the guidance also restarted their release, as Inside Climate News reported in June 2026.
Watch out
Many rebate guides written before June 2026 still say HEEHR rebates pay up to $8,000 to swap a gas furnace for a heat pump. That is no longer true. Check the date on anything you read, and confirm with your state program before you sign a contract. Our guide to the cost to replace a furnace with a heat pump shows what that switch costs and how the 2026 rebates fit in.
HOMES whole-home rebates
HOMES pays for energy savings rather than for specific equipment. A contractor models or measures how much energy your home will save after a set of upgrades, and the rebate grows with the savings. For a single-family home, savings of 20% to 35% earn up to $2,000, and 35% or more earns up to $4,000, each capped at half the project cost. Households under 80% of AMI can get up to $4,000 and $8,000, according to the Department of Energy.
A heat pump can be part of a HOMES project, usually alongside insulation and air sealing. Fewer states have opened HOMES than HEEHR, and the paperwork is heavier, so ask your state energy office whether it is available and which contractors take part. You cannot use HOMES and HEEHR rebates for the same upgrade.
Which heat pump incentives fit your home
After the May 2026 rules, the heating system you have today decides most of what you can get. The chart sums it up for the three most common situations.
- You heat with electricity. Baseboards, an electric furnace or an old heat pump are the clearest case for HEEHR rebates, and resistance heat is also the costliest to run. See what electric backup heat costs per hour.
- You have a gas furnace and central air. Replacing a worn-out electric air conditioner with a heat pump and keeping the furnace as backup is a dual-fuel setup. The new rules let homes keep fossil-fuel heating, so this may qualify. Ask your state program before counting on it.
- You heat with gas, oil or propane and have no central air. The HEEHR heat pump rebate is off the table, but insulation and air sealing rebates, HOMES and utility rebates may still apply.
Utility and state heat pump rebates
For most households without access to HEEHR rebates, utility and state programs are now the biggest source of heat pump rebates, and many have no income limit. Amounts vary widely. In Massachusetts, the Mass Save whole-home rebate in 2026 is $2,650 per ton of capacity, up to $8,500, reports Green Newton, which tracks the program. Many electric utilities in colder states pay a few hundred to a few thousand dollars for an ENERGY STAR or cold-climate model.
Utility programs change with less notice than federal ones, and many cut amounts at the start of a year. Some rules are common across programs:
- The equipment must meet an efficiency level, often ENERGY STAR or the cold-climate list from NEEP.
- The installer must be on the program’s contractor list, or the rebate is not paid.
- Some programs need approval before work starts, or a home energy assessment first.
- Utility rebates can usually be combined with HEEHR, but not always for the same dollars.
How to check what you qualify for
- Check past years first. If you installed a heat pump in 2023, 2024 or 2025, make sure the 25C tax credit was claimed, and find the QMID for a 2025 install.
- Find your state program. Search for your state energy office and “home energy rebates”, or start from the Department of Energy’s program page. Note whether HEEHR rebates and HOMES are open and what income limits apply.
- Search your ZIP code. Use the ENERGY STAR Rebate Finder and DSIRE to see utility and state rebates.
- Ask every installer. Get each quote to name the rebates it applies, who files them and the amount, in writing.
- Check before you sign. Many programs will not pay for work that started before approval.
Once you know what you can claim, compare the after-rebate price with the running costs. Our guide to heat pump pros and cons shows where owners save most, and what a heat pump is and how it works covers the basics.
Frequently asked questions
Is there still a federal tax credit for heat pumps in 2026?
No. The 25C heat pump tax credit ended for equipment placed in service after December 31, 2025, under the One Big Beautiful Bill Act. A heat pump installed in 2026 has no federal tax credit. Income-qualified households may get HEEHR or HOMES rebates where their state runs them.
Can I still claim the 25C tax credit for a heat pump installed in 2025?
Yes. Claim it on your 2025 return with Form 5695 and report the heat pump’s Qualified Manufacturer Identification Number (QMID). If you filed for an extension, the return is due October 15, 2026. If you already filed without it, you can amend.
What replaced the 25C tax credit?
Nothing at the federal tax level. The main federal help left is rebates: HEEHR pays up to $8,000 toward a heat pump and HOMES rewards whole-home energy savings, both for income-qualified households in states with open programs. Utility and state rebates fill the rest.
Can I get a federal rebate to replace a gas furnace with a heat pump?
Not through HEEHR since May 29, 2026. The Department of Energy’s Program Notice 26-2 limits HEEHR heat pump rebates to replacing existing electric equipment and to new construction. HOMES, insulation rebates and utility programs may still help.
What is the difference between HEAR and HEEHR?
They are the same program. The Department of Energy renamed the Home Electrification and Appliance Rebates (HEAR) to High-Efficiency Electric Home Rebates (HEEHR) in May 2026 to match the law’s wording, and changed its rules at the same time.
Do I pay tax on a heat pump rebate?
Utility rebates for energy-saving equipment are generally not treated as income for homeowners, and HEEHR rebates and HOMES rebates are paid as point-of-sale discounts. Rules depend on your situation, so check with a tax professional if a rebate is large.
Sources
- IRS: Energy efficient home improvement credit (reviewed April 2026)
- IRS: Energy credits FAQ, timing of credits and amended returns
- IRS: Residential clean energy credit
- U.S. Department of Energy: Home Energy Rebates Program Notice 26-2 (effective May 29, 2026)
- U.S. Department of Energy: Home Energy Rebates programs
- North Carolina State Energy Office: Energy Saver North Carolina program changes (2026)
- Utility Dive: DOE issues guidance ending gas-to-electric appliance rebates (June 2026)
- Inside Climate News: Energy Department restarts home efficiency rebates (June 2026)
- Green Newton: Heat pump incentives for Newton residents in 2026 (January 2026)
About this guide
Published by HomeHeatAdvisor. The tax credit and rebate rules in this guide come from the IRS, the Department of Energy and state program pages listed above, checked in October 2026. Incentive rules change often, so confirm the current terms with your state program, utility and tax professional before you rely on them. This guide is general information, not tax advice. No installer, manufacturer or program pays to be included. Our editorial policy explains how we research, fact-check and update our guides. Spotted an error? Let us know.