No federal heat pump tax credit applies to systems placed in service in 2026. The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, terminated Sections 25C and 25D for any equipment installed on or after January 1, 2026. If your system was up and running before that date, you may still have a claim. If it wasn’t, the federal credit is gone for that install.
Here’s what to do right now:
- Check your 2025 installation date. If your heat pump was commissioned and operational before December 31, 2025, you can still claim the Energy Efficient Home Improvement Credit on your 2025 return using Form 5695.
- Search your state’s rebate programs. HEEHRA/HEAR-style point-of-sale rebates are the primary federal-to-state incentive pathway still active in 2026. Availability and amounts vary significantly by state.
- Ask your contractor about utility programs. Florida Power & Light and other utilities run their own rebate programs that operate independently of the federal credit.
Pro Tip: If you signed a contract or paid a deposit in 2025 but the system wasn’t fully installed and commissioned until 2026, the IRS uses the “placed in service” date as the controlling threshold. Signing a contract in 2025 does not preserve eligibility. Confirm the actual commissioning date with your contractor before filing.
Key Takeaways
The Section 25C federal heat pump tax credit expired December 31, 2025, and state and utility rebate programs are now the primary savings pathway for homeowners installing heat pumps in 2026.
| Point | Details |
|---|---|
| Federal credit expired | Section 25C and 25D do not apply to heat pumps placed in service on or after January 1, 2026. |
| 2025 installs still eligible | A qualifying system commissioned before December 31, 2025 can claim up to $2,000 via Form 5695 on your 2025 return. |
| State rebates are the main path | HEEHRA/HEAR programs offer up to $8,000 for income-qualified households as a point-of-sale discount. |
| Contractor registration matters | Only participating, certified contractors can process state rebate program discounts at the time of installation. |
| Ultraairswfl next step | Contact Ultraairswfl for a load-calculated quote and rebate eligibility check in Naples, Cape Coral, or Fort Myers. |
Table of Contents
- What the Section 25C credit actually covered from 2023 to 2025
- Which heat pumps and homeowners qualified under Section 25C
- How to claim the credit for qualifying 2023–2025 installs
- Where to find real heat pump incentives in 2026
- How to maximize your savings on a heat pump in 2026
- A local provider’s perspective on the 2026 shift
- Ultraairswfl handles the paperwork so you don’t have to
- Sources
What the Section 25C credit actually covered from 2023 to 2025
The Energy Efficient Home Improvement Credit under Section 25C was one of the most useful residential energy incentives in recent memory. For homeowners who installed qualifying equipment between January 1, 2023 and December 31, 2025, the structure worked like this:
Annual caps by equipment category:
- Air-source heat pumps and heat pump water heaters: up to a capped amount annually
- Insulation, air sealing, windows, doors, and other building envelope improvements: up to a capped amount annually
- Home energy audits: up to a capped amount annually
- Combined annual maximum across all 25C improvements: a capped total annually
The combined cap limited the total credit homeowners could claim for all 25C improvements in a tax year, preventing stacking beyond the annual total limit.
Illustrative calculation: Say you paid $9,000 for a qualifying air-source heat pump installation in 2024. Thirty percent of $9,000 is $2,700. But the heat pump sub-cap is $2,000, so your actual credit would be $2,000, not $2,700. The cap bites before the percentage does on most mid-range installs.
According to ENERGY STAR’s guidance on air-source heat pumps, the 30%/up-to-$2,000 structure applied specifically to qualifying air-source heat pumps, and the annual reset meant a homeowner could claim up to $2,000 each year they installed a qualifying system.
The credit was nonrefundable, meaning it reduced your tax liability dollar-for-dollar but couldn’t generate a refund if your credit exceeded what you owed.
Which heat pumps and homeowners qualified under Section 25C
Not every heat pump on the market qualified. The IRS required equipment to meet specific efficiency thresholds, and the pathway to proving eligibility ran through two main channels: ENERGY STAR certification and Consortium for Energy Efficiency (CEE) tier ratings.
ENERGY STAR and CEE requirements
For air-source heat pumps, qualifying models had to meet ENERGY STAR’s “Most Efficient” designation or the CEE’s highest applicable tier for the climate zone. This wasn’t the standard ENERGY STAR label you see on most units. The “Most Efficient” tier is a separate, more demanding designation that covers a smaller subset of models. ENERGY STAR maintains a searchable product list on its website where homeowners and contractors can verify whether a specific model qualifies.
The QMID requirement
Starting in 2025, the IRS introduced the Qualified Manufacturer Identification Number (QMID) requirement for certain product categories. Manufacturers were required to register qualifying products and provide a QMID, which homeowners then needed to report on Form 5695. If your contractor couldn’t supply the QMID for a 2025 install, that was a red flag worth resolving before filing.
What costs counted
The “placed in service” date, meaning the date the system was fully installed and operational, determined which tax year the credit applied to. A system delivered in December 2025 but not commissioned until January 2026 falls in 2026 and is not eligible.
Contractor checklist for 2023–2025 installs:
- Model number and manufacturer name
- ENERGY STAR “Most Efficient” certification or CEE tier documentation
- QMID (for 2025 installs where required)
- Itemized invoice separating equipment cost from labor cost
- Installation completion date (the placed-in-service date)
- Manufacturer’s certification statement confirming eligibility
Pro Tip: Keep all of this documentation for at least three years after filing. The IRS doesn’t require you to submit it with your return, but you’ll need it if your return is ever questioned.
How to claim the credit for qualifying 2023–2025 installs
If your heat pump was placed in service before January 1, 2026, you can still claim the credit on the corresponding tax year’s return. Here’s the exact process.
Step-by-step filing checklist:
- Confirm your placed-in-service date matches the tax year you’re filing for. A 2024 install goes on your 2024 return; a 2025 install goes on your 2025 return.
- Gather your documentation. You need the contractor invoice (showing model number, equipment cost, and labor cost separately), the manufacturer’s certification statement, and the QMID if your install was in 2025.
- Download Form 5695 from IRS.gov. Part I covers the Residential Clean Energy Credit (Section 25D, which included geothermal heat pumps). Part II covers the Energy Efficient Home Improvement Credit (Section 25C, which covered air-source heat pumps).
- Complete Part II of Form 5695. Enter the qualifying costs for your heat pump. The form walks you through the 30% calculation and applies the $2,000 cap automatically.
- Transfer the credit to Schedule 3, Line 5 of your Form 1040. The credit reduces your tax liability directly.
- File with your return. You don’t attach the manufacturer’s certification or contractor invoice, but keep them on file.
Common filing mistakes to avoid:
- Claiming the credit for a system placed in service in 2026 (not eligible under OBBBA)
- Confusing Part I (25D/geothermal) with Part II (25C/air-source) on Form 5695
- Forgetting to include labor costs in the qualifying expense total
- Missing the QMID for 2025 installs where it was required
- Claiming more than $2,000 for heat pumps in a single tax year
| Filing Step | Form / Document | Where It Goes |
|---|---|---|
| Calculate qualifying costs | Contractor invoice | Form 5695, Part II |
| Apply 30% and cap | Form 5695 instructions | Form 5695, Part II |
| Transfer credit | Form 5695 total | Schedule 3, Line 5 |
| Retain documentation | Manufacturer cert, invoice | Keep on file (do not attach) |
The IRS’s Energy Efficient Home Improvement Credit page has the current version of Form 5695 and its instructions. Always download the version that matches the tax year you’re filing, since the form is updated annually.
Where to find real heat pump incentives in 2026
The federal credit is gone for 2026 installs, but that doesn’t mean you’re out of options. State-administered HEEHRA (High-Efficiency Electric Home Rebate Act) and HEAR (Home Electrification and Appliance Rebates) programs are the primary federal-to-state incentive pathway still running, and for income-qualified households, the numbers can actually exceed what the 25C credit would have provided.
How these rebates work differently from tax credits
A tax credit reduces what you owe the IRS at filing time. A point-of-sale rebate reduces your invoice on the day of installation. You don’t need to wait until tax season, and you don’t need a tax liability to benefit. The rebate is applied by a participating contractor at the time of purchase.
According to ENERGY STAR’s HEEHRA/HEAR program overview, federal maximums for heat pump rebates under these programs can reach up to $8,000 for households at or below 80% of Area Median Income (AMI).
Key facts about HEEHRA/HEAR rebates:
- Administered at the state level; not every state has launched its program yet
- Applied as an upfront invoice reduction, not a tax filing
- Require a participating, certified contractor to process
- Often require a Manual J heating-load calculation as part of the documentation
- Funding can run out; programs are not guaranteed to remain open
As industry trackers confirm, the §25C tax credit expired December 31, 2025, and state rebate programs are now the primary incentive path. Availability varies significantly by state, and some states have not yet launched their programs.
How to find your state’s program:
- Visit ENERGY STAR’s rebate finder at energystar.gov
- Search your state energy office website directly
- Ask your HVAC contractor whether they are registered as a participating contractor for your state’s program
For Southwest Florida homeowners, local utility rebate programs through Florida Power & Light offer another layer of savings that operates independently of state HEEHRA programs.
Pro Tip: State rebate funding is finite and first-come, first-served. Don’t assume the program will still be open in three months. Check availability before you schedule your installation, not after.
How to maximize your savings on a heat pump in 2026
Without the federal 25C credit, the strategy shifts. Here’s how to get the most out of what’s actually available.
Prioritize envelope improvements first
A heat pump sized for a leaky, under-insulated house will underperform and cost more to run. Pairing insulation and air sealing with a heat pump installation often unlocks better rebate tiers and lowers the required equipment size, which reduces upfront costs. Improving your home’s insulation and HVAC efficiency before sizing the new system is a step many homeowners skip and later regret. Some state programs even require envelope improvements as a condition of the heat pump rebate.
Pairing your heat pump project with other home improvements, like new doors or windows, can also improve overall energy performance. Resources like this guide on how interior doors affect energy efficiency illustrate how envelope upgrades compound the savings from HVAC improvements.
Questions to bring to every contractor estimate:
- Are you a registered participating contractor for our state’s HEEHRA/HEAR rebate program?
- Can you supply a Manual J heating-load calculation as part of this project?
- What ENERGY STAR or CEE tier does this model meet, and do you have the documentation?
- What refrigerant does this unit use, and does it meet current GWP (global warming potential) limits for rebate eligibility?
- Will you provide an itemized invoice separating equipment from labor?
Stacking strategies that still work in 2026:
- Combine a state HEEHRA/HEAR rebate with a utility rebate from your local provider
- If your state hasn’t launched its program yet, ask about utility-only rebates as a bridge
- Check whether a heat pump water heater qualifies for a separate rebate in your state, since it’s a distinct product category from an air-source heat pump
Pro Tip: If you have any 2025 installs that haven’t been filed yet, handle those first. The 25C credit for a qualifying 2025 install is worth up to $2,000, and that’s real money sitting on the table until you file your 2025 return.
A local provider’s perspective on the 2026 shift
The pivot from federal tax credits to state rebate programs changes how homeowners in Southwest Florida should approach a heat pump purchase. The federal credit was simple: install a qualifying unit, file Form 5695, get up to $2,000 back. State rebates require more coordination upfront, specifically a participating contractor, proper documentation, and a program that still has funding available.
For SWFL homeowners, the local permitting environment and Florida’s specific efficiency thresholds add another layer. Florida’s climate zone means the efficiency specs that qualify for rebates may differ from what you’d see in a northern state. Refrigerant requirements are also tightening, and not every unit on the market meets the GWP limits that some programs require.
The practical recommendation: get a verified quote from a contractor who is registered with the relevant rebate programs before you commit to any equipment. That contractor registration matters more in 2026 than it did when the federal credit was the primary incentive, because without a participating contractor, you can’t access the point-of-sale rebate at all.
Ultraairswfl handles the paperwork so you don’t have to
Navigating rebate programs, load calculations, and efficiency documentation is exactly where most homeowners lose time and money. Ultraairswfl installs heat pumps across Naples, Cape Coral, and Fort Myers, and handles the documentation workflow that state and utility rebate programs require, including Manual J load calculations, ENERGY STAR verification, and participating-contractor enrollment where applicable.
The heating solutions Ultraairswfl offers are sized to your home’s actual load, not a rule-of-thumb estimate, which matters for both comfort and rebate eligibility. Whether you’re replacing an aging system or installing a heat pump for the first time, the team can confirm which programs are currently funded in your area and what documentation your installation will need to qualify. For a full look at available heat pump and heating system options, the website has a current buyer’s guide. Contact Ultraairswfl to schedule an assessment and get a quote that accounts for every rebate your project may qualify for.
Sources
These are the official and industry-leading pages to consult before making any financial decisions about a heat pump purchase or tax filing.
- Energy Efficient Home Improvement Credit
- Federal Tax Credits for Energy Efficiency
- Heat Pump Rebates by State in 2026: Every Active Program – Heat Pump Network
This article provides general information about federal and state tax incentive programs and is not a substitute for advice from a licensed tax professional. Confirm current program rules and eligibility with the IRS, your state energy office, or a qualified tax advisor before filing or making purchasing decisions.
Recommended
- Tax Credits for New HVAC System 2026 Florida: The Homeowner’s Savings Guide
- High Efficiency AC Unit Tax Credits 2026: Florida & SWFL Homeowner Guide – Ultra Air Heating and Cooling
- Florida Energy Efficiency Tax Credits 2026: The SWFL Homeowner’s Guide – Ultra Air Heating and Cooling
- HVAC Efficiency Standards 2026: What Homeowners Must Know