The 25C tax credit is gone.
Here's what actually replaced it.
The federal heat pump tax credit expired December 31, 2025. Two new federal rebate programs took its place — worth up to $8,000 each. Here's what they are, who qualifies, and what's actually available in your state right now.
The federal heat pump tax credit expired December 31, 2025. For real this time.
The Section 25C Energy Efficient Home Improvement Credit — which covered 30% of a heat pump's cost up to $2,000 per year — was permanently terminated by the One Big Beautiful Bill Act, signed into law on July 4, 2025. Any heat pump installed on or after January 1, 2026 does not qualify.
If you installed a qualifying heat pump before December 31, 2025, you can still claim the credit on your 2025 federal tax return using IRS Form 5695. If you haven't filed yet, that credit is still available to you for 2025 installs.
For 2026 installations, the picture is different — and in some ways better for income-qualifying households. Two new federal rebate programs have replaced the tax credit, offering point-of-sale discounts rather than annual credits, and with higher dollar amounts for qualifying households.
HEAR: up to $8,000 for a heat pump. Income-based. Point of sale.
The Home Electrification and Appliance Rebates program — HEAR — is a $4.5 billion federal program administered by each state individually. When your state launches its HEAR program, the rebate appears as a discount at the point of sale, applied by your contractor. You don't file a tax form — the price is simply lower when you pay.
Heat pump water heater: up to $1,750
Electrical panel upgrade: up to $4,000
Total per household: up to $14,000
Heat pump water heater: up to $875
Electrical panel upgrade: up to $2,000
Total per household: up to $7,000
Four things to know before applying
HOMES: up to $8,000 for whole-home efficiency. No strict income cap.
The Home Efficiency Rebates program — HOMES — is a $4.3 billion federal program that works differently from HEAR. Instead of rebating specific equipment, HOMES rebates are based on how much energy your whole home saves as a result of improvements — measured or modeled as a percentage reduction.
Up to $8,000 (≤80% AMI)
Up to $16,000 (≤80% AMI)
Key differences from HEAR
Unlike HEAR, HOMES has no strict income cutoff for basic eligibility — households above 150% AMI can still qualify. The rebate amount scales with income for low-income households, but middle and higher-income households aren't excluded entirely.
HOMES and HEAR cannot fund the same piece of equipment in the same project — but they CAN cover different parts of the same project. For example: HEAR for the heat pump, HOMES for the insulation and air sealing. This is the most powerful stacking scenario available.
What HOMES requires
A whole-home energy audit by a certified professional to establish your baseline energy use. The improvement project must achieve the modeled savings before the rebate is issued. A registered contractor handles this process.
Free weatherization — the program most people have never heard of.
The Weatherization Assistance Program — WAP — doesn't get the attention HEAR and HOMES do, but it's the most immediately accessible federal program for low-income households. It's been running for decades, it's in every state, and it doesn't require your state to launch anything new.
What it covers
Free insulation, air sealing, HVAC improvements, health and safety upgrades, and energy efficiency improvements for qualifying households. Work is done by trained contractors at no cost to you.
Who qualifies
Households at or below 200% of the federal poverty level. This is a broader income threshold than HEAR — more households qualify. A family of 4 earning under approximately $62,000 in most areas typically qualifies.
How to find it
WAP is administered through local community action agencies — nonprofit organizations in your area. To find yours, visit energy.gov — how to apply for weatherization assistance or call 211 (United Way's social services line).
Four things you can do today, regardless of your state's status.
Massachusetts, Connecticut, Rhode Island, Maine, and New Hampshire launched a coordinated $450 million Heat Pump Accelerator in February 2026 — one of the largest regional heat pump initiatives in US history.
The Accelerator supplements each state's existing programs with additional installer training, supply chain support, and consumer rebates. It is designed to work alongside (not replace) existing programs like Mass Save, Energize CT, Efficiency Maine, and ConnectedSolutions.
If you're in any of these five states, you may be eligible for both your state's existing rebates AND Accelerator-funded incentives. Ask your installer specifically about the Heat Pump Accelerator when requesting quotes.
More information at each state's energy office website.
Source: NuWatt Energy Connecticut guide, August 2026.
Texas HEAR/HOMES
$690 million is allocated to SECO (the Texas State Energy Conservation Office). The program is currently in procurement — an administrator is being selected and no launch date is confirmed. Monitor status at seco.cpa.texas.gov.
Active utility rebates — live now, don't wait for SECO
Austin Energy — Heat pump rebates of $400–750 depending on efficiency rating. Income-qualified households can get additional assistance through Austin Energy's CAP program. Austin Energy customers only. (City of Austin service territory.) Verify at austinenergy.com.
CPS Energy (San Antonio) — REAP program for income-qualified heat pump installations. CPS Energy customers only. (San Antonio and surrounding area.) Verify at cpsenergy.com.
Oncor (Dallas–Fort Worth) — $600 heat pump rebate. Oncor customers only. (Largest Texas electricity delivery company.) Verify at oncor.com.
CenterPoint (Houston) — $500 heat pump rebate. CenterPoint customers only. (Houston metro service territory.) Verify at centerpointenergy.com.
Check your utility bill first. These rebates are tied to a specific utility — your bill shows which one serves your address. A Houston CenterPoint customer cannot claim the Oncor rebate, and vice versa.
Note: Texas has no state income tax — federal incentives were the primary driver before 25C expired December 31, 2025. Utility rebates are now the primary incentive mechanism for Texas homeowners.
What's actually available where you live.
Program status varies significantly by state — and within states, sometimes by region. Select your state below to see exactly what's active, what's launching soon, and what stacking scenarios apply to your utility and income level.
California's single-family HEAR (HEEHRA) allocation is fully reserved as of February 24, 2026. No new income verification requests are being accepted. All pending unapproved applications are on a waitlist.
HOMES program status: verify separately at energy.ca.gov — HOMES rollout is separate from the HEEHRA single-family waitlist.
California's SGIP (battery storage) and community solar programs remain active and do not depend on HEAR/HEEHRA status.
The California Energy Commission has warned that fraudulent contractors are contacting homeowners claiming to represent IRA rebate programs. Only TECH Clean California certified contractors can process HEEHRA rebates. Verify any contractor at techcleanca.com before signing anything.
Program nuances worth knowing
A green status pill doesn't always mean "everything is available to everyone." These are the ones that trip people up most often.
Washington state — two separate programs
Read before applyingState HEAR (Climate Commitment Act): active now. $103.6M available for households at or below 150% of area median income, administered through the state program.
Federal HARP/HEAR (IRA funded): not yet launched. Step 5 of 7 in preparation, awaiting DOE approval before homeowner applications open.
These are two different programs with different funding sources. The state program is open now. The federal IRA program is not. Don't assume you're covered by one when you've applied to the other.
Source: HomeEnergyBasics Washington state guide, July 2026; EnergyRebateCalculator Washington, August 2026.
New Mexico — limited scope
Equipment limitsHEAR is active, but in most cases it covers only:
- Heat pump water heaters
- Heat pump clothes dryers
It does not cover full HVAC heat pump systems in most cases. Verify current equipment eligibility with the New Mexico Energy, Minerals and Natural Resources Department before planning a full HVAC project.
Washington DC — active via Pepco
ActiveHEAR is active in Pepco territory. DC residents who saw the documented $21/month bill increase from PJM capacity market pricing have particularly strong incentive to act — DC sits in PJM territory, where data center demand has driven capacity prices up 11x.
DC Sustainable Energy Utility — dcseu.com →Rhode Island — active
ActiveHEAR is active. ConnectedSolutions, the region's VPP program, is also active for battery owners — so a heat pump and a battery can both earn here.
Participating utilities: National Grid Rhode Island.
Massachusetts Mass Save — 2026 amounts
Updated August 2026- Air-source heat pump: verify current amount at masssave.com
- Ground-source (geothermal): up to $15,000 standard · up to $25,000 for income-qualified households
- Air-to-water heat pump: up to $16,000
Mass Save is allocating over $3.4 billion over three years for direct customer incentives — one of the most generously funded efficiency programs in the US. A Mass Save participating contractor is required to access these rebates.
Source: acdirect.com 2026-2027 incentives analysis, November 2025, citing Mass Save three-year plan documentation.
Mass Save — find a contractor →Connecticut Smart-E Loan — 1.99% APR
Updated August 2026The Smart-E Loan is 1.99% APR (as of August 1, 2026). The 0.99% rate you may still see quoted elsewhere ran through March 2026.
Smart-E Loan terms are revised periodically. Confirm current rate at ctgreenbank.com/smarteloan before applying — rates may have changed.
Energize CT heat pump rebates 2026: Standard tier $250 per ton · Energy Optimization tier $1,000 per ton (up to $10,000 combined). An HPIN certified contractor is required for Energy Optimization tier rebates — find HPIN contractors at energizect.com.
Connecticut Green Bank — ctgreenbank.com/smarteloan →North Carolina — Energy Saver NC
ActiveNorth Carolina DEQ launched Energy Saver NC to administer the state's $208 million federal HOMES and HEAR allocation. The program offers point-of-sale rebates for income-eligible households on energy efficiency and electrification upgrades.
Duke Energy PowerPair stacks with it. PowerPair pays up to $9,000 for solar + battery, which can sit alongside HEAR rebates for a heat pump. Verify current details and eligibility at ncdeq.gov/energysavenc.
NC DEQ — Energy Saver NC →Source: acdirect.com 2026-2027 incentives analysis, citing NC DEQ program launch.
Last verified: August 2026. Program status changes as states launch, pause, or exhaust funding — we re-verify monthly.