The federal picture in 2026

Through 2025, 25C paid 30% of project cost up to $2,000 for qualifying heat pumps installed in a primary residence. Equipment had to meet CEE-tier efficiency standards and be claimed on the tax return for the install year.

The credit was a tax credit, not a point-of-sale rebate — homeowners paid full price up front and recovered the amount at tax filing. This is different from HEEHRA / HOMES, which discount the price at the time of purchase.

The credit was not extended past 2025. State-level rebates (TECH Clean California, NYSERDA, Mass Save, Efficiency Maine, etc.) now do most of the federal-incentive-equivalent work for air-source heat pumps.

Unlike 25C, the 25D credit was not affected by the 2025 sunset. Geothermal heat pump installs continue to earn 30% of the full installed cost as a federal tax credit through 2032, with no dollar cap.

For whole-home geothermal projects in the $25,000–$50,000 range, the 25D credit can return $7,500–$15,000 at tax filing. The credit is non-refundable, but unused amounts carry forward to future tax years.

Air-source heat pumps — the most common residential install — do not qualify for 25D. The credit is specifically for ground-source equipment and ground-loop installation.

HEEHRA is one of two IRA point-of-sale rebate programs (the other is HOMES). Funded federally, administered by state energy offices. The rollout has been state-by-state and uneven — some states launched in 2024, others through 2026.

Income tiers determine the maximum rebate: households at 0–80% AMI can claim 100% of project cost up to $8,000; 80–150% AMI claim 50% up to $8,000. Above 150% AMI, the program is not available.

HEEHRA can stack with state-level rebates in most states. The combined total for an income-qualified household installing a heat pump in California, Massachusetts, or Maine can exceed $15,000.

HOMES is the second IRA point-of-sale rebate program, structured differently from HEEHRA. Instead of equipment-specific rebates, HOMES pays based on the projected (or measured) energy savings of the project.

Standard tier: $2,000 for projects achieving 20–35% energy savings; $4,000 for 35%+ savings. Income-qualified tier (<80% AMI): doubled to $4,000 and $8,000 respectively.

HOMES rebates can apply to comprehensive electrification projects that include heat pumps, insulation, air sealing, and electrical upgrades together. The performance-based structure rewards whole-home approaches over single-equipment swaps.