Rebates & Incentives · Updated October 2026
Heat Pump Rebates and Tax Credits in 2026:
What's Still Available
The Section 25C federal tax credit ended December 31, 2025, and the state HEAR rebates changed in 2026: they no longer cover replacing a gas furnace, and funding is gone in some states. Utility rebates and the remaining HEAR programs can still make heat pump installation financially compelling for many homeowners.
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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 per year on qualifying heat pumps, according to the IRS.
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.
State HEAR rebates and utility programs operate independently of federal tax credits, but HEAR has its own 2026 changes, covered next.
What Changed for HEAR in 2026
Gas-to-heat-pump swaps no longer qualify. In Program Notice 26-2, effective May 29, 2026, the U.S. Department of Energy removed fuel switching from the program, which it now calls the High-Efficiency Electric Home Rebate (HEEHR) program. Rebates are limited to upgrading existing electric equipment to more efficient electric equipment. Replacing a gas, oil, or propane furnace with a heat pump no longer earns a HEAR rebate. Homes may still add a heat pump and keep the existing fossil-fuel system in place, which is how a dual-fuel setup works. States were given time to bring their programs into line, so check how your state applies the change (DOE Program Notice 26-2).
Funding has run out in some states. Each state received a fixed allocation, and some have committed all of it:
- California: single-family rebates fully reserved statewide since February 24, 2026; multifamily since September 1, 2026. No new reservations are being accepted.
- Colorado: the Front Range region is fully reserved and will not reopen; the rest of the state was scheduled to close to new projects on August 1, 2026.
- Elsewhere: availability depends on your state and, in some states, your local program administrator.
Sources: TECH Clean California, Southwest Energy Efficiency Project.
HEAR State Rebates: Up to $8,000, Where Still Funded
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. The caps below are from the U.S. Department of Energy and its Home Energy Rebates fact sheet (December 2024); your state's program may set lower amounts:
- Below 80% of area median income (AMI): up to the full project cost, capped at $8,000
- Between 80–150% AMI: 50% of the project cost, up to the same $8,000 cap
- Above 150% AMI: not eligible for HEAR, though other state or utility programs may apply
- Covers ducted and ductless (mini-split) heat pumps
- Replacing electric heat, or adding a heat pump alongside an existing furnace; not replacing a gas, oil, or propane furnace
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 each contractor whether they are registered with your state's HEAR program before signing a quote. Request a free quote and confirm current rebate availability with your state program before you rely on it.
Utility Rebates — Available Nationwide
Many electric utilities offer rebates on qualifying heat pumps, regardless of state or federal programs. Amounts vary widely, so check the ENERGY STAR Rebate Finder for offers at your ZIP code. What a utility pays usually depends 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
Check your utility's current offers, and ask each contractor whether the equipment they quote qualifies, before signing a quote.
Stacking Programs for Maximum Savings
State HEAR rebates and utility rebates are generally stackable where both are available, though program rules vary, so confirm with your contractor before you count on the total. 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 electric resistance heat. Whether one beats a gas furnace on running cost depends on your local electricity and gas prices, which our heat pump vs gas furnace cost by state page compares. Without the federal credit, and with HEAR now closed to gas-furnace swaps, utility rebates and running costs carry more of the decision.
A good 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.