Is the Federal Heat Pump Tax Credit Still Available?
No. The federal Energy Efficient Home Improvement Credit (section 25C), which paid 30% of cost, up to $2,000 a year (heat pumps, heat pump water heaters, biomass stoves and boilers combined), is not allowed for property placed in service after December 31, 2025. The IRS page, last updated April 28, 2026, says you "can claim the credit for improvements made through December 31, 2025." The change came from Public Law 119-21, signed July 4, 2025.
The three credits and their end dates
| Credit | What it covered | Ended |
|---|---|---|
| Energy Efficient Home Improvement Credit (IRC §25C) | Heat pumps, heat pump water heaters, insulation, panels | December 31, 2025 |
| Residential Clean Energy Credit (IRC §25D) | Solar electric panels, Solar water heaters, Wind turbines, Geothermal heat pumps, Fuel cells, Battery storage (from 2023) | December 31, 2025 |
| Alternative Fuel Vehicle Refueling Property Credit (IRC §30C) | Home EV chargers in eligible census tracts | June 30, 2026 |
The geothermal heat pump people sometimes confuse with an air-source unit sat under section 25D, the Residential Clean Energy Credit, at 30% of cost. It ended on the same date: "The credit is not available for any property placed in service after December 31, 2025." The home charger credit under section 30C ran six months longer, to June 30, 2026.
Placed in service, not paid for
The IRS fact sheet FS-2025-05 answers the question most people ask: does a 2025 contract or deposit save the credit? For the clean energy credit, an expenditure "is treated as made when the original installation of the item is completed." A system finished in January 2026 is a 2026 expenditure, and no credit applies. The home improvement credit uses the same placed-in-service test.
What pays instead
Rebates from state programs and utilities did not end with the credits. They are paid as instant discounts, checks or bill credits and do not depend on your tax bill. For a 3-ton system replacing oil heat, with a household that is not income-qualified:
- NH: $750 from NHSaves air-source heat pump rebates (Air-source heat pump).
- MA: $7,950 from Mass Save air-source heat pump rebates (Whole-Home).
- CT: $4,500 from Energize CT residential air-source heat pump incentives (Energy Optimization (displacing fossil or resistance heat)).
- RI: $1,875 from Rhode Island Energy heat pump rebates (Standard).
Each figure is the program's own rule applied to the example size, not a quote. Massachusetts pays the most per ton when the heat pump heats the whole house; New Hampshire's rate jumps when the heat pump replaces electric baseboard heat. Compare every state on heat pump rebates by state or run your own numbers in the calculator.
Inflation Reduction Act rebates are separate
The federal law that ended the credits did not end the Home Energy Rebates that states run with federal money, but in New England they are slow: New Hampshire, Massachusetts, Connecticut and Vermont have not launched them, Maine runs them only for new affordable multifamily housing and mobile homes, and Rhode Island runs a limited pilot. The federal status page and each state page give the current wording.
Sources
- IRS: Energy Efficient Home Improvement Credit, updated April 28, 2026
- IRS: Residential Clean Energy Credit, updated July 4, 2026
- IRS: Alternative Fuel Vehicle Refueling Property Credit, updated May 26, 2026
- IRS FS-2025-05: FAQs on sections 25C, 25D and 30C under Public Law 119-21, August 21, 2025
All checked October 21, 2026. This guide is information, not tax advice.
Questions
Can I still claim the federal heat pump credit for a 2026 installation?
No. The IRS says the Energy Efficient Home Improvement Credit is not allowed for property placed in service after December 31, 2025.
I paid a deposit in 2025 but the install finished in 2026. Does that count?
The IRS fact sheet on Public Law 119-21 says an installed item counts as an expenditure when installation is complete, so paying earlier does not keep the clean energy credit.
What still pays toward a heat pump in New England?
State and utility rebates such as Mass Save, NHSaves, Energize CT, Efficiency Maine, Efficiency Vermont and Rhode Island Energy, listed on each state page of this site.