HVAC Tax Credits and Rebates in 2026: 25C Has Expired

Federal Section 25C: expired for new installations after 2025

A heat pump, central AC, or furnace placed in service in 2026 cannot qualify for this credit. Buying equipment or paying a deposit in 2025 does not replace the placed-in-service requirement. Compare current quotes without assumed federal credit savings. The IRS Energy Efficient Home Improvement Credit page explains the historical credit and how to claim it for the installation tax year.

Historical guidance: filing for the 2025 tax year

If qualifying property was placed in service by December 31, 2025, you may still qualify under the 2025 rules. Claim Section 25C on your 2025 federal income tax return using Form 5695, Part II. This is guidance for the 2025 tax year, even if you file the return in 2026; it is not a credit for 2026 installations.

Keep itemized invoices, equipment model information, and records of installation and placed-in-service dates. The 2025 Form 5695 instructions explain equipment eligibility, credit limits, and the qualified manufacturer identification number (QMID) required for specified property. For that historical tax year, utility subsidies and certain rebates can reduce qualified expenses. Check the instructions and seek tax advice for your circumstances.

The historical 25C credit is nonrefundable, and unused amounts do not carry forward. Do not plan future installations across tax years to claim this expired credit.

Section 25D: Residential Clean Energy Credit also ended

The IRS Residential Clean Energy Credit page says the credit is unavailable for property placed in service after December 31, 2025. This includes new geothermal heat pump installations; Section 25D is not an alternative credit for a 2026 installation.

The IRS statutory-change FAQ, questions 1 and 7, specifies that Section 25D is not allowed for expenditures made after December 31, 2025. An expenditure is treated as made when original installation is completed, so paying in advance before the deadline does not qualify an installation completed afterward. For construction or reconstruction, the expenditure is treated as made when the taxpayer begins original use of the structure.

Unused credit from eligible earlier expenditures is a separate issue from eligibility for new installations. The 2025 Form 5695 instructions discuss carrying unused Section 25D credit to 2026. Review those instructions with a tax professional if you have an existing carryforward.

State rebates: HEEHRA / HEAR

The IRA's Home Electrification and Appliance Rebates (HEAR), also referred to as HEEHRA, support home electrification through programs administered by states. These are separate from the expired federal income tax credits. DOE's HEAR program guidance describes the state-run rebate program established by IRA Section 50122.

Availability varies by state. Confirm with your state energy office whether applications are being accepted, funding is available, and your household and project qualify. This guide does not establish that any particular state program is open or promise a rebate amount.

• Check income and household requirements with the program administrator.
• Confirm eligible equipment, required assessments, and contractor participation.
• Find out whether approval is needed before purchase or installation.
• Ask how the rebate is paid and whether it can be combined with other incentives.

Check state, utility, and manufacturer incentives

Start with your state energy office and your electric or gas utility. Ask about current HVAC incentives for your service address and proposed equipment model. Program funding, eligible products, application deadlines, and payment methods vary; confirm the terms before treating an incentive as a discount.

Use DSIRE (Database of State Incentives for Renewables & Efficiency) and the ENERGY STAR rebate finder to identify programs to investigate. Verify each offer with the administrator; a directory entry alone does not confirm eligibility or available funding.

Ask the manufacturer or contractor about any current equipment promotion and read its terms. Do not assume rebates can be combined or that a rebate leaves other benefits unchanged. Get confirmation of combination rules and keep records of the amounts actually paid and received.

Before signing an HVAC quote

1. Compare itemized installed costs and operating costs without an expired federal credit.
2. Confirm each state or utility incentive directly, including any preapproval requirement.
3. Ask who submits the application and what records you must retain.
4. Decide how to finance the project using only confirmed savings and the lender's written terms.