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 weatherization.energy.gov/find-a-provider or call 211 (United Way's social services line).
Four things you can do today, regardless of your state's status.
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.
Last verified: July 2026. Program status changes as states launch, pause, or exhaust funding — we re-verify monthly.