HVAC Tax Credits & Rebates in 2026: The Federal Credit Is Gone. Here's What's Left.

For three years, the federal credit was the first line of every HVAC sales pitch. It was real money: a qualifying heat pump earned up to $2,000 back at tax time, and many contractors built the credit into their quotes. Then Congress ended it. The credit was originally scheduled to run through 2032; the budget law signed on July 4, 2025 cut it off at the end of 2025, and no replacement was created.

That leaves a lot of out-of-date information on contractor websites, in sales scripts and in older articles (including an earlier version of this one). Here is what actually changed, what is still available, and how to tell when a quote is leaning on an incentive that no longer exists.

What changed: 2025 vs. 2026

Under 25C, all items except heat pumps shared a $1,200 annual cap, and heat pumps had their own $2,000 cap, for a maximum of $3,200 a year. None of that applies to equipment installed in 2026.

The date that matters is installation, not payment

The 25C credit is gone for property placed in service after December 31, 2025. For the 25D credit (which covered geothermal heat pumps), the law says an expenditure is made when the original installation is completed. Either way, the test is when the system was installed and running, not when you signed or paid.

• Installed and running by Dec 31, 2025: claim it on your 2025 return with IRS Form 5695.
• Paid in 2025, installed in 2026: does not qualify.
• Leftover credit: 25C can't be carried forward. Unused 25D credit for a geothermal system installed by the deadline can be carried forward to later years.

What's still available in 2026

1. State heat pump rebates (HEEHRA)

The Home Electrification and Appliance Rebates program (HEEHRA) was funded by the 2022 Inflation Reduction Act and is run by state energy offices. It survived the end of the federal tax credits. It is a point-of-sale discount through an approved contractor, not a tax credit, and it is limited to households at or below 150% of area median income (AMI).

Federal maximums. States can set lower amounts. Rebates are also capped at a share of project cost, typically 100% for lower-income and 50% for moderate-income households.

Who has it: availability depends entirely on your state. More than 20 states had launched programs by mid-2026. California's single-family funding ran out in February 2026 and moved to a waitlist, and large states including Texas and Florida had not launched as of early 2026. Check your state energy office before you get quotes, because funds usually have to be reserved before installation.

Central AC owners, note: HEEHRA is built around heat pumps. A cooling-only air conditioner is not a heat pump, so don't count on a HEEHRA rebate for one.

2. HOMES whole-home rebates

The second IRA program, HOMES, pays based on the energy savings of a whole-home retrofit rather than a single piece of equipment. It is also state-run, and each state sets its own rules, so it's worth asking about if you're combining a new system with insulation and air sealing.

3. Utility rebates

For most people buying a central AC in 2026, the electric utility is now the main source of incentive money. Programs vary widely: some pay per ton or by SEER2 tier, some only pay for heat pumps, and many require the unit to be ENERGY STAR certified or above a minimum SEER2. Look on your utility's website under "rebates" or "energy efficiency," or search by ZIP code in the ENERGY STAR Rebate Finder.

4. Manufacturer and seasonal promotions

Manufacturers run rebates and financing offers, usually in spring and fall when installers are less busy. These are real but temporary, and they come off a price you should still compare across at least three quotes.

Does ENERGY STAR still matter?

Yes, though for a different reason than before. The federal credits used to require ENERGY STAR-level efficiency. Now it mostly matters for utility rebates. The program itself is still running in 2026: it was nearly eliminated in 2025, and in March 2026 primary management began moving from EPA to the Department of Energy.

To be ENERGY STAR certified, a split central air conditioner needs at least 15.2 SEER2 and 12.0 EER2. That's well above the federal minimum of 13.4 SEER2 in northern states and 14.3 SEER2 in the Southeast and Southwest. See our SEER vs. SEER2 guide for how the two rating systems compare.

What this means for your buying decision

• Judge efficiency on the electricity it saves. Without a federal credit, a high-SEER2 system has to pay for itself through lower bills (and any utility rebate). At high electricity rates that's often easy; at low rates it may not be. Run your own numbers with the SEER savings calculator.
• The heat pump question changed. In 2025 a heat pump carried up to $1,400 more in federal credit than a central AC. That advantage is gone unless you qualify for a state HEEHRA rebate, in which case a heat pump can become the much cheaper option.
• Get the rebate in writing first. Utility and state rebates often require pre-approval, specific equipment or an approved contractor. Confirm before installation, not after.

Frequently asked questions

Sources

• IRS — FAQs on the accelerated termination of energy credits under P.L. 119-21 (Aug. 2025)
• Congressional Research Service — Expiration and carryforward rules for the Residential Clean Energy Credit (IN12611)
• U.S. Department of Energy — 2023 central air conditioner and heat pump standards FAQ
• ENERGY STAR — Rebate Finder
• DSIRE — Database of State Incentives for Renewables & Efficiency

This is general information, not tax advice. Incentive programs change; confirm current rules with the IRS, your state energy office and your utility before you buy.