April 16, 2026
AUTHOR Michelle Wan, Brand Manager and Air Quality Writer, Filterbuy | REVIEWED BY David Clark, Licensed HVAC Technician | UPDATED August 31, 2026
The federal heat pump tax credit no longer applies in 2026. Section 25C stopped covering systems placed in service after December 31, 2025, so a 2026 installation can't claim it. Rebate programs are still running, and that's where the remaining savings are. Here's what's open.
Check your state energy office and your electric utility before you shop, because that's where 2026 savings are decided.
A ductless mini split is an air-source heat pump, so it's the same category of equipment these programs cover. Answer a few quick questions and we'll point you to the right system for your space.
Prefer to browse first? See our ductless mini split systems.
The federal heat pump tax credit is gone. Section 25C expired for systems placed in service after December 31, 2025, and Section 25D, which covered geothermal, ended the same day. If your system was up and running by then, you can still claim it on your 2025 return using IRS Form 5695. For anything installed in 2026, the money comes from state programs and your electric utility.
Section 25C, the Energy Efficient Home Improvement Credit, ended for property placed in service after December 31, 2025, under Public Law 119-21.
Section 25D, the Residential Clean Energy Credit that covered geothermal heat pumps and solar, expired on the same date.
A 2025 installation is still claimable on a 2025 federal return, including returns on extension through October 15, 2026.
The IRS requires a Qualified Manufacturer Identification Number on the return for 2025 property. Without it, no credit is allowed.
HEEHRA rebates of up to $8,000 continue for income-qualified households in states that have launched, though funding is finite. Utility rebates are now the most widely available incentive.
No. The federal tax credit for heat pumps ended for systems placed in service after December 31, 2025. The One Big Beautiful Bill Act, Public Law 119-21, signed July 4, 2025, terminated Section 25C of the Internal Revenue Code seven years ahead of its original schedule, so a heat pump installed in 2026 earns nothing back, regardless of when it was ordered, financed, or paid for.
Section 25D went with it on the same date, taking the 30% geothermal and rooftop solar credit that carried no dollar cap. The two are worded differently, since 25C turns on property placed in service after December 31, 2025 while 25D turns on expenditures made after that date, and IRS guidance on the OBBBA energy credit terminations sets out both dates.
For Section 25C, everything hangs on the phrase “placed in service,” which the IRS defines as the day the system is installed, commissioned, and ready to use. A system signed for in November 2025 but commissioned in January 2026 earns nothing.
That catches people out, because plenty of quotes still assume otherwise. Some federal and manufacturer pages continue to show the old December 31, 2032 expiration, including the ENERGY STAR air-source heat pump page, while the statute, the IRS credit page, and the 2025 Form 5695 instructions all say the credit is finished. If a 2026 proposal nets $2,000 against a federal credit, ask for a corrected quote.
Two tax credits ended, but two rebate programs survived, because the rebate money had already gone out to the states rather than running through the tax code.
Sections 25C and 25D were terminated for property placed in service after December 31, 2025 by Public Law 119-21, section 70505. Source: IRS.
You claim it on your 2025 federal return using IRS Form 5695, Part II. The credit is worth 30% of qualified equipment and installation costs, capped at $2,000 for a heat pump, and returns on extension are due October 15, 2026.
Confirm the equipment met the CEE highest efficiency tier in effect at the start of the installation year, not including any advanced tier. That is the statutory test for heat pumps, while ENERGY STAR Most Efficient applied to windows and skylights.
Get the four-character Qualified Manufacturer Identification Number (QMID). For 2025 property, the item must have come from a qualified manufacturer, and the QMID has to appear on your return. The requirement took effect for the 2025 tax year, and it is the one most guides leave out. The IRS Instructions for Form 5695 show where it goes.
Pull the itemized invoice with labor on its own line, since labor counts toward the credit for heat pumps.
Subtract any rebate that counts as a purchase-price adjustment. A public utility subsidy comes off your qualified expenses whether it was paid to you or your contractor. State incentives generally don’t, though some are taxable income.
File Form 5695, Part II, with the return for the year the system was placed in service.
The credit is non-refundable and doesn’t carry forward, so if your 2025 federal tax liability came in below the credit amount, the unused portion is simply lost.
Section 25D works differently. Unused 25C credit disappears, but unused 25D credit does not, so a 2025 geothermal install that outran your tax liability still reduces what you owe on your 2026 return. It is the one way an expired credit reaches a 2026 filing.
One more line is worth checking. If an electrical panel had to be replaced to run the heat pump, it qualifies separately for up to $600, provided it meets the National Electric Code and carries at least 200 amps. The IRS also allows a safe harbor, so if the panel went in one year and the heat pump the next, both count as installed in the later year.
Heat pump rebates in 2026 come from three places: the federal HEEHRA program, the federal HOMES program, and your state or electric utility. Both federal programs are run by state energy offices, which is why availability varies so much by state.
HEEHRA and HOMES are federally funded and administered by state energy offices. AMI means Area Median Income.
One program, three names: the Department of Energy administers it as the High-Efficiency Electric Home Rebate (HEEHR), many states call it HEAR, and California brands it HEEHRA. Status by state is on the Department of Energy Home Energy Rebates program page.
Availability moves quickly. California reported its single-family HEEHRA rebates fully reserved statewide as of February 24, 2026, with remaining requests waitlisted, while other states haven’t launched. Utility rebates tend to be the steadiest option, because they don’t rely on federal funding.
A heat pump had to meet the CEE highest efficiency tier in effect at the start of the installation year, not including any advanced tier, and go into an existing primary residence. It also had to both heat and cool. The IRS Energy Efficient Home Improvement Credit page lists the standard by category.
In practice that meant two ratings on the AHRI certificate for the matched indoor and outdoor units: SEER2 for cooling and HSPF2 for heating.
Those ratings still matter in 2026, because most rebate programs set their bar using CEE tiers or ENERGY STAR certification. Ask your installer for the AHRI Reference Number and confirm it in the AHRI directory before you sign.
No, and that didn’t change when the credit ended. Section 25C only ever applied to an existing home that was the taxpayer’s primary residence, which left out rentals, vacation homes, and new construction. New construction has its own credit under Section 45L, but a builder claims that one, and it ends for homes acquired after June 2026.
"I checked every source on this page against the statute itself before publishing, and what stopped me was how many still show the old 2032 date, including a federal one. If you are holding a 2026 quote with a $2,000 credit written into it, the install date is the only number that matters."
— Michelle Wan
13% of U.S. households used a heat pump as their main heating equipment in 2020. That sets the scale of who the 2025 credit and surviving rebates reach. Source: U.S. Energy Information Administration, Use of Energy in Homes
9.2 million occupied housing units, 6.9% of the U.S. total, had no air conditioning in 2023. A heat pump covers both, which is why the credit required a system that heats and cools. Source: U.S. Census Bureau, 2023 American Housing Survey
An air-source heat pump can deliver up to three times more heat energy than the electricity it consumes. Without a federal credit, efficiency is where the payback comes from. Source: ENERGY STAR (U.S. EPA), Air-Source Heat Pumps
Yes. File IRS Form 5695, Part II, with your 2025 federal return. Returns on extension are due October 15, 2026. If you already filed and missed it, amend. Filterbuy’s guide to claiming a 2025 heat pump installation
Yes. Section 25D covered geothermal at 30% with no dollar cap and ended on the same date as Section 25C.
Start with your state energy office, then the Department of Energy’s Home Energy Rebates page. Funding is limited and some states have already reserved theirs.
Yes. A ductless mini split is a heat pump, so most utility rebate programs treat it under that category. See Filterbuy’s mini split tax credit and rebate rules
This guide is general information, not tax advice. Filterbuy re-checks it against current IRS guidance and state program status, and the verification date appears at the top. Program rules and funding change during the year. Verify with the IRS and your state energy office, and talk to a licensed tax professional.
