Updated August 2026

The federal HVAC tax credit is over for new systems installed in 2026. That is the most important change—and the part many older articles and product pages now get wrong.

The Energy Efficient Home Improvement Credit under Section 25C ended for property placed in service after December 31, 2025. The Residential Clean Energy Credit under Section 25D also ended for new residential clean-energy installations, including geothermal heat pumps, completed after December 31, 2025.

However, not every incentive created by the Inflation Reduction Act has disappeared. State-, territory- and Tribal-administered rebate programs remain available in selected locations, and some utilities offer separate rebates. Availability now depends heavily on where you live, your household income, the equipment being replaced and the exact program rules in effect when you apply.

The answer at a glance

Potential HVAC incentives by installation situation

Federal HVAC tax credits ended for 2026 installations

The Inflation Reduction Act originally expanded two federal tax credits that were especially important to homeowners replacing heating and cooling equipment:

• Section 25C, the Energy Efficient Home Improvement Credit, covered qualifying air-source heat pumps, central air conditioners, furnaces, boilers and certain supporting electrical work.
• Section 25D, the Residential Clean Energy Credit, covered geothermal heat pumps along with solar, battery storage and other residential clean-energy property.

A federal law enacted in 2025 accelerated the termination dates for both credits. Section 25C is not allowed for property placed in service after December 31, 2025. Section 25D is not allowed for expenditures made after that date, with an installation generally treated as paid when the original installation is completed. Ordering equipment, placing a deposit or taking delivery during 2025 did not preserve the credit if the installation was not completed in time. See the current IRS home-energy credit guidance.

Is there a federal heat pump tax credit in 2026?

No. An air-source heat pump installed and first used in 2026 does not qualify for the former Section 25C federal tax credit.

The same applies to a central air conditioner, furnace or boiler placed in service in 2026. Older articles may still say that the credits run through 2032 or later because that was the original schedule. Current IRS guidance reflects the accelerated December 31, 2025 termination.

What you may still claim for a 2025 installation

Homeowners who completed qualifying installations during 2025 may still be able to claim the former credits on their 2025 federal tax returns.

Principal federal credit limits for qualifying 2025 HVAC improvements

The $600 HVAC items were generally part of a combined $1,200 annual limit. Qualifying heat pumps had a separate $2,000 annual limit, allowing a homeowner to reach as much as $3,200 when an eligible heat-pump project was combined with other qualifying improvements. Eligible HVAC costs could include certain installation labor. Review the 2025 Instructions for Form 5695 for the complete requirements.

These were tax credits, not automatic rebates. The Section 25C credit was nonrefundable, meaning it could reduce federal income-tax liability but could not create a refund beyond that liability. An unused Section 25C amount could not be carried into a later year. The Section 25D credit was also nonrefundable, but an unused eligible amount could generally be carried forward.

What records are needed for a 2025 claim?

A homeowner claiming a 2025 HVAC credit should retain:

• The equipment and installation invoices
• The installation-completion date
• Indoor and outdoor model numbers
• Serial numbers where available
• The manufacturer’s four-character Qualified Manufacturer Identification Number, or QMID, for applicable Section 25C property
• The AHRI certificate or Certified Reference Number for a split-system combination
• Manufacturer efficiency documentation
• Records of any rebates or subsidies received

The 2025 Form 5695 instructions require a QMID for specified property placed in service during 2025. The IRS also recommends retaining purchase receipts, installation records and applicable efficiency documentation.

For split air conditioners and heat pumps, eligibility was based on the complete system—not merely the efficiency shown for the outdoor unit. The outdoor unit, indoor coil or air handler and, when applicable, the furnace had to form a qualifying matched combination. An AHRI certificate documents the certified performance of that specific combination.

A homeowner who omitted an otherwise valid credit from a previously filed return may generally be able to amend it. The usual IRS refund deadline is three years after the original return was filed or two years after the tax was paid, whichever is later, although individual circumstances can change the result.

Inflation Reduction Act rebates may still be available

The Inflation Reduction Act also funded two rebate programs administered through states, territories and Tribes. These are different from the expired federal tax credits.

The Department of Energy reports that rebate programs are available in selected states, while other jurisdictions remain in different stages of implementation. Each participating jurisdiction controls its application process, eligible products, contractor requirements, income verification and funding availability. Start with the Department of Energy’s Home Energy Rebates Program page.

Home Owner Managing Energy Savings rebates

The Home Owner Managing Energy Savings program, commonly called HOMES, supports whole-home projects that produce a measurable or modeled reduction in household energy use.

A HOMES project might include several coordinated improvements, such as:

• Air sealing and insulation
• Duct sealing
• Heating and cooling equipment
• Water-heating equipment
• Other measures needed to reach the required whole-home energy savings

HOMES is not usually a simple coupon for buying one piece of HVAC equipment. The project must meet the participating program’s energy-savings requirements, which may involve an assessment, energy model, approved scope of work and post-project verification. The Department of Energy describes rebates of as much as $8,000 for qualifying projects, although the actual amount depends on the savings achieved, project cost, household income and local program design.

High-Efficiency Electric Home rebates

The High-Efficiency Electric Home Rebate program, or HEEHR, provides income-qualified rebates for eligible electric equipment and related home improvements. Some program pages and older materials still use the earlier name, Home Electrification and Appliance Rebates, or HEAR.

Under the statutory limits, a qualifying household may be eligible for rebates of up to:

Maximum HEEHR rebate amounts before local program restrictions

Households below 80% of the program’s area median income threshold may receive up to 100% of eligible project costs, subject to the individual and household caps. Households between 80% and 150% may receive up to 50% of eligible costs. The jurisdiction administering the program determines the actual income-verification method, available measures and any narrower eligibility rules. See the ENERGY STAR program summary.

An important HEEHR change took effect in 2026

The Department of Energy changed the HEEHR guidance for state and territory programs effective May 29, 2026.

For new rebate reservations under those programs, HEEHR funds are now generally directed toward replacing existing electric HVAC or appliances with more efficient electric equipment. The program no longer broadly allows rebates for “fuel-switching”—replacing a non-electric appliance simply because the replacement is electric. New-construction equipment remains potentially eligible.

The Department of Energy also directed state and territory programs to require insulation and air sealing before a heating and cooling upgrade unless the home already meets a state-specified level. Programs that had already launched were instructed to update their requirements, while previously approved reservations under the earlier rules could still be completed. Review Home Energy Rebates Program Notice 26-2 for the full change.

This distinction matters. A household replacing electric resistance heat with a heat pump may fit the current state or territory HEEHR direction. A household expecting an automatic $8,000 rebate for replacing a gas, oil or propane furnace should not assume the project qualifies. Tribal program requirements may differ.

The exact answer may also depend on the rest of the existing system. For example, a home may have an electric air conditioner and a gas furnace. The program administrator must determine whether the proposed heat-pump project meets its current replacement and equipment rules.

Confirm eligibility before choosing or purchasing the system.

Can HVAC equipment purchased online qualify for a rebate?

Potentially—but an online purchase does not automatically qualify.

The 2026 Department of Energy guidance explicitly encourages states and territories to consider retail, e-commerce, direct-to-consumer and marketplace pathways. It also permits jurisdictions to structure point-of-sale or mail-in rebate options. These are choices available to the program administrator, not a guarantee that every online retailer or transaction will be accepted.

Before ordering equipment online, obtain confirmation of all of the following:

1. The program is active for your address. An announced program is not necessarily open for applications, and available funding may be limited.
2. Your project qualifies under the current rules. Confirm the household-income requirements, existing fuel and equipment requirements, and whether the project belongs under HOMES, HEEHR or a separate utility program.
3. The exact system combination is eligible. Provide both the indoor and outdoor model numbers. For a split system, ask whether an AHRI certificate or specific product-list entry is required.
4. The purchase channel is accepted. Ask whether the program permits an e-commerce purchase, whether the retailer must participate in the program and whether the rebate is applied at checkout or reimbursed later.
5. You have completed every required step before purchase. Treat an energy assessment, application, income verification, contractor selection and rebate reservation as prerequisites unless the program administrator states otherwise in writing.

The Department of Energy gives states and territories flexibility concerning online and direct-to-consumer sales, but the jurisdiction’s published rules control the actual transaction. For HVAC installations, do not assume that a self-installation will qualify; licensing, refrigerant, electrical, permit and building-code requirements still apply.

The equipment must still be right for the home

An incentive can reduce the price of a system. It cannot make the wrong system right.

Before comparing rebate amounts, determine:

• The heating and cooling load of the home
• The climate and winter design temperature
• Whether the home has ducts and whether they can carry the required airflow
• The available electrical service
• Whether backup heat is needed
• Which indoor and outdoor components are compatible
• Whether the installer can commission the system correctly

For split equipment, the efficiency rating belongs to the matched combination. AHRI assigns a Certified Reference Number to an approved indoor-and-outdoor combination and provides a certificate showing its certified capacity and efficiency. That certificate may also be required by a rebate administrator.

A larger system is not necessarily better. Neither is the system with the highest advertised SEER2 rating. Oversizing, poor airflow, incompatible components or an installation that has not been properly set up can erase much of the comfort and efficiency the equipment was supposed to provide.

Choose the system that fits the home first. Then determine which verified incentives apply to that specific system and installation plan.

Where to look for HVAC savings in 2026

Use three sources before making a purchase:

Your state, territory or Tribal energy office

This is the primary source for HOMES and HEEHR availability and rules. The Department of Energy’s Home Energy Rebates page provides the national starting point and directs homeowners to the appropriate local office.

Your electric or gas utility

Utility rebates are separate from the expired federal tax credits and may have different efficiency levels, approved-product lists and contractor requirements.

The ENERGY STAR rebate finder

The ENERGY STAR Rebate Finder provides a ZIP-code-based tool for locating utility and regional offers on qualifying equipment. Always confirm the result directly with the program administrator before relying on it.

Do not assume that two incentives can be combined. Ask each program how other federal, state, utility or manufacturer incentives affect the eligible project cost and whether the same equipment can be counted under more than one program.

Frequently asked questions

I installed a qualifying heat pump in December 2025. Can I still claim the credit?

Potentially. The fact that the credit has ended for new 2026 installations does not prevent a homeowner from claiming an eligible system that was completed and placed in service during 2025. Use the 2025 Form 5695 and retain the required equipment and installation records.

I ordered my system in 2025, but it was installed in 2026. Does it qualify?

Generally, no. For these residential credits, costs are generally treated as paid when the original installation is completed. A 2026 installation therefore misses the December 31, 2025 deadline even when the equipment was purchased or delivered earlier.

Is every high-efficiency heat pump eligible for a rebate?

No. Eligibility can depend on the program, household income, existing equipment, climate-region criteria, ENERGY STAR status, the complete matched system, the installer and the application date. “High efficiency” in a product description is not proof of eligibility.

Can I receive the $8,000 HEEHR heat-pump rebate when replacing a gas furnace?

Do not assume so. Under the May 2026 Department of Energy guidance for state and territory programs, new HEEHR reservations generally cannot be used simply to replace non-electric equipment with electric equipment. The program administrator must evaluate the complete project under its current rules. Tribal program requirements may differ.

Is a rebate guaranteed after the program approves my equipment model?

Not necessarily. Equipment eligibility is only one part of the process. Income qualification, project design, installer requirements, preauthorization, available funding and final installation documentation may all affect payment.

Can Alpine determine whether I qualify?

Alpine can help identify a properly sized, compatible system and provide the model and performance information needed for an incentive inquiry. Final eligibility is determined by the IRS for tax credits or by the agency, utility or program administrator issuing the rebate.

The bottom line

For an HVAC system installed in 2026, do not include the former federal Section 25C or Section 25D homeowner tax credit in your budget. Those credits ended for new installations after December 31, 2025.

Instead, check for an active state, territory, Tribal or utility rebate before purchasing equipment. Confirm the rules for your address, household, existing system, exact equipment combination, retailer and installer. A program advertisement showing “up to $8,000” is a maximum—not a promise that every heat-pump project qualifies.

For a qualifying system completed during 2025, gather the equipment invoice, installation records, model numbers, QMID and AHRI documentation, and review Form 5695 with a qualified tax professional.

The right order is straightforward: determine what your home needs, verify that the components work together, confirm the incentive in writing and then place the order.

Official resources

• IRS: Home energy tax credits
• IRS: 2025 Instructions for Form 5695
• Department of Energy: Home Energy Rebates Program
• Department of Energy: Home Energy Rebates Program Notice 26-2
• ENERGY STAR Rebate Finder
• AHRI Directory of Certified Product Performance

This article is for general informational purposes and does not constitute tax, legal or accounting advice. Taxpayers should consult a qualified tax professional. Rebate applicants should rely on the current written requirements of the agency or utility administering their program.