Heat Pump Rebates in 2026: What's Left Now That the Federal Tax Credit Is Gone

If you researched heat pump costs any time before 2026, you likely saw a line about a federal tax credit covering up to $2,000. That credit — Section 25C, the Energy Efficient Home Improvement Credit — expired for any equipment placed in service after December 31, 2025, eliminated by the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025. There's no grace period or grandfather clause for a 2026 installation, even if you signed a contract or paid a deposit in 2025.

That's a real loss, but it isn't the whole incentive picture. Two other federal programs survived, and a number of states still offer meaningful support on top of them.

What actually expired, and what didn't

| Program | Status in 2026 | What it covered | |---|---|---| | Section 25C (Energy Efficient Home Improvement Credit) | Expired Dec 31, 2025 | Up to $2,000/year, 30% of heat pump cost | | Section 25D (Residential Clean Energy Credit) | Expired Dec 31, 2025 | 30%, uncapped — covered geothermal heat pumps specifically | | HEAR (Home Electrification and Appliance Rebates) | Active, rolling out state by state | Up to $8,000 for a qualifying heat pump, income-qualified | | HOMES (Home Owner Managing Energy Savings) | Active, rolling out state by state | Up to $8,000–$10,000, performance-based, open to all incomes | | State tax credits and rebates | Unaffected — separate state laws | Varies widely by state | | Utility rebates | Unaffected — separate utility programs | Varies widely by utility |

The reason HEAR and HOMES survived where the tax credits didn't comes down to how they were funded: HEAR and HOMES money was already appropriated and distributed to state energy offices as grants under the original Inflation Reduction Act, rather than delivered as an ongoing IRS tax credit. That structure put the funding outside OBBBA's reach — though it also means each state has to actually stand up its own program before residents can use it, which is why availability varies so much by state and why some programs have already run out of money in 2026.

HEAR vs. HOMES: two different mechanics

| | HEAR | HOMES | |---|---|---| | Structure | Fixed-dollar rebate per appliance | Performance-based, tied to measured whole-home energy savings | | Income requirement | Yes — under 150% of area median income (AMI) | No — open to all income levels, though low/moderate income households can qualify for higher rebate rates | | Heat pump maximum | Up to $8,000 | Up to $8,000–$10,000 depending on measured savings and income tier | | Requires an energy audit? | No | Yes — a certified pre- and post-project audit verifying savings | | Paid how | Point-of-sale discount through a registered contractor | Rebate after the project, tied to verified performance | | Can combine appliances | Yes — up to $14,000 total across heat pump, water heater, panel, wiring, and insulation | Yes, as part of one whole-home project |

Where these programs actually stand as of mid-2026

State rollout has been uneven — some states launched in 2025, some are still pending federal approval, and at least one large state already exhausted its initial funding.

| State example | Status | |---|---| | New York, Colorado, Georgia, Wisconsin, Rhode Island, Vermont | Live — accepting applications as of mid-2026 | | California (HEEHRA) | Exhausted its single-family funding allocation in February 2026; new applications waitlisted | | New Hampshire, Connecticut | Approved but not yet launched as of mid-2026; expected later in the year | | Many other states | Federal funding approved but consumer-facing program not yet live |

Because status changes throughout the year, check your state energy office or the DSIRE database (dsireusa.org) directly before assuming a program is open — and if it is open, confirm whether pre-approval is required before installation, since several programs (including California's) disqualify projects that started before a reservation was approved.

State programs that stack on top

A few state-level programs remain independently strong, separate from the federal HEAR/HOMES rollout:

| State | Program | Typical value | |---|---|---| | Massachusetts | Mass Save Whole Home rebates | Up to $8,500 | | New York | NYSERDA Clean Heat, plus utility bonuses (Con Edison, National Grid) | $5,000–$12,000 | | Colorado | State income tax credit for heat pumps (separate from HEAR) | Roughly $1,000 |

These are state programs, not tax credits — they're unaffected by the federal 25C repeal and can typically be layered with HEAR or HOMES where a state allows stacking, subject to a common rule that total incentives generally can't exceed 100% of project cost.

A worked example: stacking in a strong state

Assume a $14,000 ducted heat pump installation for an income-qualified household (under 80% AMI) in a state with an active HEAR program and a state rebate.

| Layer | Amount | |---|---| | Project cost | $14,000 | | HEAR rebate (heat pump, under 80% AMI) | -$8,000 | | State/utility rebate (varies, example) | -$2,000 | | Net cost | $4,000 |

Compare that to the same project in a state with no launched HEAR program and no state incentive: the full $14,000 is out of pocket, aside from whatever a local utility might separately offer. The gap between "strong incentive state" and "no program yet" is now larger than it's been at any point since the Inflation Reduction Act passed.

FAQ

I installed a heat pump in December 2025 — do I still get the tax credit? Possibly — the credit is tied to the "placed in service" date, meaning the system must have been installed and operational, not just ordered or deposited on, by December 31, 2025. If that's the case, claim it on your 2025 return using IRS Form 5695. A 2026 installation doesn't qualify regardless of when you signed the contract.

Are HEAR and HOMES available everywhere in 2026? No — availability depends entirely on whether your state has launched its program, and even launched programs can exhaust their funding allocation mid-year, as California's did in February 2026. Check current status before planning around it.

Can I combine a state tax credit with HEAR or HOMES? Often yes, since state tax credits are a different mechanism from federal rebate programs — but confirm your specific state's stacking rules, since some programs cap total combined incentives as a percentage of project cost.

Is geothermal treated the same as air-source for these programs? For HEAR and HOMES, yes — geothermal heat pumps fall under the same heat pump rebate category. For tax credits, geothermal previously had its own, separate uncapped 30% credit (Section 25D) rather than the capped 25C credit that covered air-source systems — and that credit expired on the same date.

Where do I check my state's current program status? Start with the DSIRE database (dsireusa.org) or your state energy office's website, both of which track program launches and funding status more current than most general articles, including this one.

Fact-checked by Priya Nadar, P.E. Found an error? See our Corrections Policy.