Federal HVAC incentives
There is currently no federal tax credit for a residential heating or cooling system, because sections 25C and 25D both ended for property placed in service after December 31, 2025. The state-administered Home Energy Rebates under the Inflation Reduction Act remain active, and your state energy office is the authority to check rather than a contractor.
- Federal HVAC credit
- None
- 25C ended
- 2025-12-31
- 25D ended
- 2025-12-31
- State rebates
- Active
Is there a federal HVAC tax credit right now?
No. There is currently no federal tax credit for a residential heating or cooling system.
Sections 25C and 25D were terminated by Public Law 119-21, 139 Stat. 72 (July 4, 2025) for property placed in service after 2025-12-31.
That is worth stating plainly, because much of this industry still advertises “the $2,000 heat pump tax credit” as though it were live. If a contractor's proposal shows that credit as an offset to justify the price, the proposal is using a number that no longer exists — and the difference comes out of your pocket, not theirs.
The two credits that ended
Energy Efficient Home Improvement Credit
Expired
- Code section
- 26 U.S.C. § 25C
- Last eligible date
- 2025-12-31
- Terminated by
- Public Law 119-21, 139 Stat. 72 (July 4, 2025)
While it was in force, 25C covered air-source heat pumps, central air conditioners, furnaces and boilers, plus insulation, windows, doors and home energy audits.
Residential Clean Energy Credit
Expired
- Code section
- 26 U.S.C. § 25D
- Last eligible date
- 2025-12-31
- Terminated by
- Public Law 119-21, 139 Stat. 72 (July 4, 2025)
25D covered geothermal heat pumps — the only HVAC equipment it applied to — at 30% of cost with no dollar cap, alongside solar, wind, fuel cells and battery storage.
Section 25D(e)(8)(A) treats an expenditure as made when the original installation is completed. A geothermal installation finished after December 31, 2025 therefore cannot claim the credit, even if the contract was signed and paid earlier.
What if my installation was completed before it expired?
If your installation was completed on or before December 31, 2025, the credit for that tax year is not affected by the repeal. You claim it on IRS Form 5695 with the return for the year the equipment was placed in service. This page explains the program; it cannot tell you whether you personally qualify — that depends on your circumstances, and a tax professional or the IRS is the right authority.
So what is left?
The Home Energy Rebates under the Inflation Reduction Act are a separate authority from the tax credits, and were still operating as of this page's verification date. They are administered by states rather than by the federal government directly.
Home Electrification and Appliance Rebates (HEAR)
Active
- Administered by
- State and territory energy offices, under U.S. Department of Energy program guidance
- Funding
- $4.275 billion in formula grants to states and territories, plus $225 million for Indian Tribes.
- Household range
- Rebates for home electrification upgrades range from $840 to $14,000 per household, depending on household income, total project cost, and the technologies installed.
This is the program that covers heat pumps for space heating and cooling. It is income-qualified.
Home Efficiency Rebates (HOMES)
Active
- Administered by
- State and territory energy offices, under U.S. Department of Energy program guidance
An HVAC replacement can contribute to a qualifying whole-home savings package, often alongside air sealing and insulation.
These are state-run programs. Whether one is open, what it pays, and who qualifies depends on your state and sometimes on your utility. Check your state energy office and the U.S. Department of Energy's state status page before you assume a rebate applies. Do not let a contractor tell you what you qualify for — verify it with the administering authority.
What about ENERGY STAR?
ENERGY STAR remains an active EPA program, created in 1992 and authorised by the Energy Policy Act of 2005. Products carrying the label are tested in an EPA-recognised laboratory and certified by an EPA-recognised certification body. Because several rebate programs use ENERGY STAR criteria as their eligibility test, the current specification version matters — criteria are revised, and an older article may cite a superseded version.
Sources (6)
- Internal Revenue Service — Energy Efficient Home Improvement Credit (accessed 2026-08-17)
- Internal Revenue Service — Residential Clean Energy Credit (accessed 2026-08-17)
- Internal Revenue Service — FAQs for modification of sections 25C, 25D and others under Public Law 119-21 (OBBB) (accessed 2026-08-17)
- U.S. Department of Energy — Home Energy Rebates Program (accessed 2026-08-17)
- U.S. Department of Energy — Home Energy Rebates Program: Status of State Applications (accessed 2026-08-17)
- ENERGY STAR — Federal Tax Credits for Energy Efficiency (accessed 2026-08-17)