HVAC Tax Credits and Rebates in 2026: What Expired, What's Still Available, and How to Save on a New System

If you've been researching a new heat pump or HVAC system and reading about a "$2,000 federal tax credit," we need to start with an important correction: that credit no longer exists for 2026 installations.

The federal Section 25C Energy Efficient Home Improvement Credit — which offered up to $2,000 for qualifying heat pumps and up to $3,200 in combined annual credits — expired on December 31, 2025. It was terminated by the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. The Section 25D Residential Clean Energy Credit (covering geothermal heat pumps, solar, and battery storage) was terminated on the same timeline. Any HVAC equipment placed in service on or after January 1, 2026 does not qualify for either federal credit — no grandfathering, no transition relief.

A lot of articles online haven't caught up, and unfortunately, some contractors are still advertising "tax credit eligible" systems for 2026 installs. That's outdated at best and misleading at worst.

But here's the part that matters: the federal tax credits were never the only money on the table — and meaningful savings still exist in 2026. Income-qualified households can access up to $8,000 in federal HEAR/HEEHRA rebates. State and utility rebate programs remain active and, in many cases, well-funded. And the biggest savings of all — lower operating costs from high-efficiency equipment purchased at direct pricing — never depended on a tax form.

This guide covers exactly what expired, what's still available in 2026, how the remaining programs work, and how to get the lowest real out-of-pocket cost on a new HVAC system.

Table of Contents

1. What Expired: The Federal Tax Credits That Ended December 31, 2025
2. The "Placed in Service" Rule (And Who Can Still Claim for 2025)
3. What's Still Available in 2026: The Complete List
4. HEAR / HEEHRA Rebates: Up to $8,000 for Income-Qualified Households
5. HOMES Rebates: Savings Based on Whole-Home Energy Reduction
6. State and Utility Rebate Programs
7. Georgia-Specific Savings Opportunities
8. The Savings That Never Expired: Efficiency and Direct Pricing
9. How to Stack What's Left: A Practical Strategy
10. Beware of Outdated "Tax Credit" Marketing
11. Frequently Asked Questions
12. The Bottom Line

1. What Expired: The Federal Tax Credits That Ended December 31, 2025

Two major federal incentive programs terminated for equipment placed in service after December 31, 2025:

Section 25C — Energy Efficient Home Improvement Credit. This was the big one for HVAC: 30% of project costs up to $2,000 per year for qualifying heat pumps and heat pump water heaters, plus up to $600 for central air conditioners, $600 for qualifying furnaces, and a combined annual cap of $3,200 when stacked with insulation, windows, and other improvements. Gone for 2026 installs.

Section 25D — Residential Clean Energy Credit. This covered 30% of the cost of geothermal heat pumps, solar panels, and battery storage with no dollar cap. Also terminated for property placed in service after December 31, 2025. (If you claimed 25D for a pre-2026 install and have unused credit, existing IRS carryforward rules still apply to that earlier claim — talk to your tax professional.)

Both terminations came from the One Big Beautiful Bill Act (OBBBA, Public Law 119-21), the budget reconciliation law signed July 4, 2025, which ended most of the residential clean-energy tax credits created and expanded under the Inflation Reduction Act.

2. The "Placed in Service" Rule (And Who Can Still Claim for 2025)

The controlling date for eligibility is when the equipment was "placed in service" — meaning installed, operational, and ready to use. Not when you signed the contract. Not when you paid the deposit. Not when the equipment shipped.

What this means in practice:

• System installed and running on or before December 31, 2025: You can still claim the 25C credit on your 2025 federal return (IRS Form 5695), filed during the 2026 tax season. Keep your itemized invoice and the manufacturer's certification statement.
• System installed January 1, 2026 or later: No federal credit applies — even if you purchased the equipment or signed the contract in 2025.

If you completed a qualifying 2025 installation and haven't filed yet, don't leave that money on the table. And if a contractor or retailer told you a 2026 install would qualify, get a second opinion before relying on it.

3. What's Still Available in 2026: The Complete List

Here's the honest 2026 savings landscape for HVAC:

The rest of this guide walks through each active program.

4. HEAR / HEEHRA Rebates: Up to $8,000 for Income-Qualified Households

The Home Electrification and Appliance Rebates program (HEAR — also known as HEEHRA) is the largest remaining federal incentive for heat pumps in 2026. Created by the Inflation Reduction Act and funded through state energy offices, HEAR survived the OBBBA cuts and continues operating in states that have launched their programs.

Key facts:

• Up to $8,000 toward a qualifying heat pump for eligible households
• Income-qualified: households under 80% of Area Median Income (AMI) can receive up to 100% of project costs covered; households at 80–150% of AMI can receive up to 50%
• Additional rebates available for related work: electrical panel upgrades (up to $4,000), wiring (up to $2,500), and insulation/air sealing (up to $1,600)
• Rebates are typically applied at the point of sale through participating contractors — not claimed on a tax return
• State-administered: availability, rules, and funding status vary by state, and some states pause programs when funding runs low

How to check your eligibility: contact your state energy office or search your state's HEAR/HEEHRA program page. Income verification is required, and using a registered participating contractor is typically mandatory.

5. HOMES Rebates: Savings Based on Whole-Home Energy Reduction

The HOMES rebate program (Home Efficiency Rebates) is HEAR's sibling — also IRA-funded, also state-administered, also still active in 2026. Instead of rebating specific equipment, HOMES pays based on modeled or measured whole-home energy savings.

If your HVAC replacement is part of a larger efficiency project — new heat pump plus insulation, air sealing, and duct sealing — HOMES rebates can be substantial, with higher amounts for deeper energy savings and for income-qualified households.

Important: in most states you cannot combine HEAR and HOMES on the same project — you pick the better fit. A knowledgeable contractor or your state energy office can help you compare.

6. State and Utility Rebate Programs

Beyond the federal-funded programs, two more layers of savings remain fully active:

State programs. Many states run their own efficiency rebate programs independent of federal funding — often administered through state energy offices or public benefit funds.

Utility rebates. Electric and gas utilities across the country offer rebates for high-efficiency heat pumps, smart thermostats, duct sealing, and more. These are typically the easiest rebates to claim — often a simple form plus your invoice and AHRI certificate — and they stack with HEAR/HOMES in most cases.

How to find them: the ENERGY STAR Rebate Finder and the DSIRE database (Database of State Incentives for Renewables & Efficiency) are the two best free lookup tools. Enter your ZIP code and equipment type, and you'll see every active program in your area.

7. Georgia-Specific Savings Opportunities

For our Georgia customers, here's the local picture in 2026:

• Georgia HEAR/HEEHRA: administered through the Georgia Environmental Finance Authority (GEFA). Check GEFA's current program status for launch details, income tiers, and participating contractor requirements before counting on rebate amounts.
• Georgia Power rebates: Georgia Power has historically offered rebates for high-efficiency heat pump installations and smart thermostats. Program terms change year to year — check their current residential rebate offerings.
• EMC rebates: if you're served by one of Georgia's electric membership cooperatives (Jackson EMC, Walton EMC, GreyStone Power, and others common in the Winder/Buford area), many offer their own heat pump rebates that are often more generous than investor-owned utility programs. Call your EMC's energy services department.
• Dual fuel advantage: several Georgia utilities have historically offered favorable rates or rebates for dual fuel (heat pump + gas backup) configurations — a setup that also happens to be ideal for North Georgia's climate.

Rebate programs change frequently, so verify current terms before purchasing. Our team stays current on what's active in our area — call us at (770) 363-3124 and we'll point you in the right direction.

8. The Savings That Never Expired: Efficiency and Direct Pricing

Here's the perspective worth keeping as the tax credit era ends: the two biggest sources of HVAC savings were never government programs.

Savings source #1: Operating cost reduction. A modern high-efficiency system saves money every month it runs, for 15–20 years. Upgrading from an aging 10 SEER system to a 15.2–17.2 SEER2 heat pump typically cuts cooling energy use by 30–45%. In a Georgia climate with long cooling seasons, that's commonly $300–$700 per year — $4,500–$10,000+ over the equipment's life. No tax form required, no income qualification, no expiration date. (See our complete guide to cutting heating and cooling costs for more.)

Savings source #2: What you pay for the equipment itself. The traditional HVAC purchase path — equipment marked up through a distributor, marked up again by a dealer, bundled into an opaque installed price — routinely adds thousands to a project. Buying your equipment direct at wholesale-style pricing and hiring a licensed contractor for installation labor is how thousands of our customers cut $2,000–$5,000+ from their total project cost. That saving alone frequently exceeds what the old 25C credit was worth.

The combination is the point: direct equipment pricing + right-sized high-efficiency equipment + whatever rebates your state and utility still offer = a total project cost that often beats what a "tax credit eligible" dealer-quoted system cost in 2025.

9. How to Stack What's Left: A Practical Strategy

Here's the 2026 playbook for the lowest real cost on a new system:

Step 1: Size it right. An oversized system wastes money on day one and every day after. Start with our free HVAC sizing tool and insist on a Manual J calculation for the final spec.

Step 2: Check your rebate eligibility before you buy. Look up HEAR/HEEHRA status in your state (income-qualified households first — the $8,000 potential is worth the paperwork), then check the ENERGY STAR Rebate Finder and your utility's residential programs. Note any efficiency thresholds — many rebates require specific SEER2/HSPF2 tiers or ENERGY STAR certification, which may influence which equipment tier you choose.

Step 3: Buy the equipment direct. Choose a matched system that meets your rebate program's efficiency requirements. Our Goodman, Solace, Rheem, Daikin, and MrCool lineups span every tier from federal-minimum 14.3 SEER2 through rebate-qualifying high-efficiency systems.

Step 4: Use a participating contractor where required. HEAR/HEEHRA rebates typically require registered contractors; utility rebates usually just require a licensed installer. Confirm before scheduling.

Step 5: Keep your paperwork. Itemized invoice, AHRI certificate, and equipment model/serial numbers. Every rebate program asks for them, and 2025 installers claiming the final 25C credits need them for Form 5695.

10. Beware of Outdated "Tax Credit" Marketing

A caution worth its own section: because the 25C expiration is recent, the internet is full of stale content — and some sales operations are still using "30% federal tax credit!" and "up to $2,000 back from the IRS!" messaging for 2026 installations.

If a contractor or retailer promises a federal tax credit for a system installed in 2026, that's a red flag — either they don't know the law changed (concerning) or they're hoping you don't (worse). The IRS has confirmed the termination in its published FAQs for Public Law 119-21.

Legitimate 2026 savings claims will reference: HEAR/HEEHRA rebates (income-qualified, state-administered), HOMES rebates, specific state or utility programs by name, manufacturer promotions, or straightforward price competitiveness. Anyone leading with federal tax credits for a 2026 install should be questioned.

11. Frequently Asked Questions

Is there a federal HVAC tax credit in 2026?

No. The Section 25C Energy Efficient Home Improvement Credit expired for equipment placed in service after December 31, 2025, terminated by the One Big Beautiful Bill Act. Systems installed in 2026 do not qualify for a federal tax credit.

I installed my heat pump in December 2025. Can I still claim the credit?

Yes — if the system was installed and operational by December 31, 2025, claim it on your 2025 federal return using IRS Form 5695. Keep your invoice and manufacturer certification statement.

What about the geothermal tax credit (25D)?

Section 25D was terminated on the same timeline for property placed in service after December 31, 2025. Some older articles still describe it as running through 2032 — that was the pre-OBBBA schedule. Confirm current status with your tax professional before counting on it.

What's the biggest HVAC incentive still available in 2026?

For income-qualified households, HEAR/HEEHRA rebates of up to $8,000 for heat pumps — administered by state energy offices, applied at point of sale. For everyone else, state and utility rebates plus direct equipment pricing deliver the largest savings.

Do HEAR rebates work like tax credits?

No — they're point-of-sale rebates, not tax credits. You don't wait for tax season; the rebate reduces your project cost up front through a participating contractor. Income verification is required.

Can I still save money on a new HVAC system without federal credits?

Absolutely. Between direct equipment pricing (often $2,000–$5,000+ below dealer-channel pricing), active state and utility rebates, and 30–45% operating cost reductions from modern high-efficiency equipment, most 2026 buyers can achieve a total cost of ownership comparable to or better than the tax-credit era.

Which equipment should I choose to qualify for remaining rebates?

Check your specific program's requirements first — most specify SEER2/HSPF2 minimums or ENERGY STAR certification. Then match a system to those thresholds. Our team can confirm which Goodman, Solace, Rheem, or Daikin systems meet your program's tier: (770) 363-3124.

Will the federal tax credits come back?

Unknown. Tax law can change with any Congress. Plan your purchase around the incentives that exist today, not ones that might return.

12. The Bottom Line

The federal HVAC tax credit era ended on December 31, 2025 — and any information suggesting otherwise for 2026 installations is out of date. But the savings picture in 2026 is far from empty:

• HEAR/HEEHRA rebates deliver up to $8,000 for income-qualified heat pump installations
• HOMES rebates reward whole-home efficiency projects
• State and utility programs remain active and stackable in most areas — including Georgia Power and EMC programs in our region
• Direct equipment pricing and modern efficiency deliver the largest and most reliable savings of all, no application required

The smart 2026 strategy: size the system correctly, check your rebate eligibility before buying, purchase equipment direct at the tier your programs require, and let 15–20 years of lower operating costs do the rest.

We'll help you with every step. Browse rebate-qualifying systems from Goodman, Solace, Rheem, Daikin, and MrCool at BuyComfortDirect.com, run your home through our free HVAC sizing tool, or call us at (770) 363-3124, Monday–Friday, 8 a.m.–5 p.m.

This article is for general information and reflects federal law as of mid-2026. Tax and rebate programs change; consult your tax professional and verify current program terms before making purchase decisions.

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