Rebates & Incentives · Updated September 2026
Heat Pump Rebates and Tax Credits in 2026:
What's Still Available
The Section 25C federal tax credit ended December 31, 2025. But state HEAR rebates up to $8,000, utility programs, and stacking strategies still make heat pump installation financially compelling for many homeowners.
Section 25C for 2025 Filers: Last Chance to Claim
If your heat pump was placed in service on or before December 31, 2025, you can still claim the 25C credit on your 2025 federal tax return. The credit covered up to $2,000 on qualifying heat pumps under the Inflation Reduction Act.
The Section 25C energy-efficiency tax credit expired December 31, 2025 and was not renewed. The One Big Beautiful Bill Act (OBBBA, Public Law 119-21), signed in 2025, eliminated the IRA's residential clean energy credits including 25C effective for equipment installed after December 31, 2025. Heat pumps installed in 2026 do not qualify.
Verify your installation date with your contractor and check current IRS guidance at irs.gov before filing.
The good news: state HEAR rebates and utility programs operate independently of federal tax credits. For income-qualifying households, these programs are frequently worth more than the 25C credit was.
HEAR State Rebates — Up to $8,000
The HEAR program — Home Electrification and Appliance Rebates, still widely called HEEHRA after the earlier proposed legislation — is a federally-funded program administered by individual states. It provides point-of-sale rebates (not tax credits — you see the savings upfront) for heat pump installation:
- Up to $8,000 for households below 80% of area median income (AMI)
- Up to $4,000 for households between 80–150% AMI
- No income limit — above 150% AMI households may qualify for other state programs
- Covers ducted and ductless (mini-split) heat pumps
- Available for both new installs and replacements
Program availability and rebate amounts vary by state, and many states are still launching or pausing their programs. Check your state energy office or the DSIRE database (dsireusa.org) for current status in your state before planning your purchase.
To claim a HEAR rebate, your contractor typically applies on your behalf at the point of sale — you don't need to file a separate application after installation. Ask your contractor whether they are registered with your state's HEAR program before signing a quote. Request a free quote and local contractors in your area will confirm current rebate availability.
Utility Rebates — Available Nationwide
Most major electric utilities offer rebates on qualifying heat pumps, regardless of state or federal programs. Typical utility rebates range from $200 to $1,500+, depending on:
- System efficiency rating (higher SEER2/HSPF2 = larger rebate)
- Whether you're replacing an electric resistance system vs. a heat pump
- Whether the system is ducted or ductless
- Your utility provider's current promotion calendar
Your HVAC contractor will typically know the current utility offers for your service area — ask them before signing a quote.
Stacking Programs for Maximum Savings
State HEAR rebates and utility rebates are generally stackable. In states with active programs, combined savings can reach $10,000 or more on a heat pump installation. Federal tax implications of rebates can vary — a tax advisor can confirm how stacking affects your return.
Does a Heat Pump Still Make Sense in 2026?
For most homeowners, yes. Heat pumps deliver 2–4 units of heating or cooling per unit of electricity — far more efficient than gas furnaces or electric resistance heat. Even without the federal credit, the combination of lower operating costs, state rebates, and utility incentives makes the math work for most replacement scenarios.
The best time to evaluate a heat pump upgrade is before the season peaks — spring for cooling, fall for heating — when contractors have availability and can provide competitive quotes. Get a free quote today and compare what local contractors can offer, including any current state and utility rebates.