If you bought a heat pump or central AC in 2023 through 2025, you could claim a federal tax credit worth up to 30% of the equipment cost — $2,000 for heat pumps, $600 for central air conditioners, and $3,200 total per year. That program is now over. The IRS confirms that "the credit will not be allowed for any property placed in service after December 31, 2025" ([IRS](https://www.irs.gov/newsroom/faqs-for-modification-of-sections-25c-25d-25e-30c-30d-45l-45w-and-179d-under-public-law-119-21-139-stat-72-july-4-2025-commonly-known-as-the-one-big-beautiful-bill-obbb)).
The Residential Clean Energy Credit (Section 25D) — which covered geothermal heat pumps, solar, and battery storage — also expired on the same date. The IRS states: "The credit is not available for any property placed in service after December 31, 2025" ([IRS](https://www.irs.gov/credits-deductions/residential-clean-energy-credit)).
Here's what changed, why, and what's still available if you're buying HVAC equipment in 2026.
What the One Big Beautiful Bill changed
On July 4, 2025, the One Big Beautiful Bill (OBBB, Public Law 119-21) was signed into law. It accelerated the termination dates of several energy tax credits that were originally scheduled to run through 2032 under the Inflation Reduction Act. The IRS's Working Families Tax Cuts page summarizes the key HVAC-relevant expirations ([IRS](https://www.irs.gov/newsroom/working-families-tax-cuts)):
| Credit | What it covered | Original end date | New end date |
|---|---|---|---|
| 25C — Energy Efficient Home Improvement | Heat pumps, central AC, furnaces, boilers, insulation, electrical panels | 2032 | Dec 31, 2025 |
| 25D — Residential Clean Energy | Geothermal heat pumps, solar, wind, battery storage | 2032 | Dec 31, 2025 |
Under the 25C credit, homeowners could claim 30% of project costs up to annual limits: $600 for central air conditioners and furnaces, $2,000 for heat pumps and heat pump water heaters, and a $3,200 combined annual cap. The credit was nonrefundable — you couldn't get back more than you owed in federal taxes — and couldn't be carried forward ([IRS](https://www.irs.gov/credits-deductions/frequently-asked-questions-about-energy-efficient-home-improvements-and-residential-clean-energy-property-credits-energy-efficient-home-improvement-credit-timing-of-credits)).
One exception: the 25D Residential Clean Energy Credit allows carryforward of unused credit to 2026. If you installed geothermal heat pumps or solar in 2025 but couldn't use the full credit, you can carry the remainder forward. The 25C credit does not allow carryforward ([IRS](https://www.irs.gov/instructions/i5695)).
What's still available: DOE Home Energy Rebates
While the federal tax credits are gone, the DOE Home Energy Rebates program — funded at $8.8 billion under the Inflation Reduction Act — continues, but with significant changes. On May 29, 2026, DOE issued Program Notice 26-2 restructuring the High-Efficiency Electric Home Rebate (HEEHR) program ([DOE](https://www.energy.gov/documents/program-notice-26-2)). The key changes:
- No more fuel-switching rebates.The program previously allowed rebates for replacing fossil-fuel equipment with electric alternatives. Under the revised rules, rebates are now limited to "upgrading HVAC and appliances only from existing electric equipment to more efficient electric equipment" ([DOE](https://www.energy.gov/documents/program-notice-26-2)).
- You can keep your existing furnace or boiler.The revised rules "allow dwellings to retain existing fossil-fuel HVAC systems when installing a heat pump, even if the heat pump will not become the primary source of heating and cooling" ([DOE](https://www.energy.gov/documents/program-notice-26-2)).
- Insulation and air sealing required first.The program now requires that homes "utilize rebates for insulation and air sealing prior to installing heating and cooling upgrades, unless they are already appropriately insulated and sealed to a DOE approved, state-specified level" ([DOE](https://www.energy.gov/documents/program-notice-26-2)).
Rebate amounts (unchanged).The maximum rebate amounts per building remain at $14,000 total. Individual caps: up to $8,000 for an ENERGY STAR heat pump for space heating and cooling, $1,750 for a heat pump water heater, $4,000 for an electrical panel upgrade, $1,600 for insulation and air sealing, and $2,500 for electrical wiring. Households at or below 80% of area median income (AMI) qualify for 100% of project costs; households between 80% and 150% AMI qualify for 50% of costs. Households above 150% AMI are not eligible ([DOE](https://www.energy.gov/save/home-upgrades)).
The HOMES rebate program
Separately, the Home Efficiency Rebates (HOMES) program provides rebates for whole-house energy retrofits based on measured or modeled energy savings. This program has no income limit, but offers larger rebates for low-income households ([Treasury](https://home.treasury.gov/news/featured-stories/coordinating-doe-home-energy-rebates-with-energy-efficient-home-improvement-tax-credits-an-explainer)):
| Energy savings | Household ≤80% AMI | Household >80% AMI |
|---|---|---|
| 20% modeled savings | 80% of cost, up to $4,000 | 50% of cost, up to $2,000 |
| 35% modeled savings | 80% of cost, up to $8,000 | 50% of cost, up to $4,000 |
| 15% measured savings | Payment per kWh saved | Payment per kWh saved |
Source: Treasury and DOE guidance ([Treasury](https://home.treasury.gov/news/featured-stories/coordinating-doe-home-energy-rebates-with-energy-efficient-home-improvement-tax-credits-an-explainer))
Stacking rules: what you can combine
Treasury guidance clarifies how rebates and the (now-expired) tax credits interact. The key rule: HOMES and HEAR/HEEHR rebates cannot be combined with each other for the same upgrade. Rebates reduce the purchase price for any remaining tax credit calculation. A federal rebate plus tax credit cannot exceed the total project cost ([Treasury](https://home.treasury.gov/news/featured-stories/coordinating-doe-home-energy-rebates-with-energy-efficient-home-improvement-tax-credits-an-explainer)).
With the 25C tax credit expired, the stacking question is simpler in 2026: you can claim a state-administered rebate under either HOMES or HEAR, but not both for the same project. Check your state energy office's website for program availability — DOE notes that "some states have paused or delayed their programs due to recent uncertainty regarding federal funding" ([DOE](https://www.energy.gov/save/home-upgrades)).
Not an endorsement.This article summarizes federal tax law and DOE program guidance as of August 2026. Tax situations vary — consult a tax professional before making purchasing decisions based on tax treatment. HVAC Zone Inc is brand-neutral. Rebate availability varies by state. This article is informational only.
What it means for HVAC buyers in 2026
If you installed qualifying equipment in 2025 and haven't filed your taxes yet, you can still claim the 25C credit on your 2025 return using Form 5695 — the credit expired for property placed in service after December 31, 2025, not for 2025 installations ([IRS](https://www.irs.gov/credits-deductions/home-energy-tax-credits)).
For 2026 purchases, the federal tax credit is gone. Your options are the DOE Home Energy Rebates program (if your state is participating and you meet income eligibility) and any state or utility-level incentives. The ENERGY STAR Rebate Finder can help identify local programs ([ENERGY STAR](https://www.energystar.gov/rebate-finder)).
Wondering what incentives apply to your specific situation? Request a consultation — we'll help you understand what's available and factor it into your equipment selection.