- The federal 25C tax credit expired Dec 31, 2025 — equipment placed in service in 2026 cannot claim it.
- Still live in 2026: utility rebates $100–$1,500+ (everyone) · HEAR up to $8,000 (income-qualified, state-run) · HOMES whole-home rebates · state programs — search your ZIP on dsireusa.org.
- Ask every bidder to itemize each rebate by name on the quote; payback is computed from the net price.
- Stacking is common but the same federal dollars can’t be claimed twice — get the stack in writing.
Your incentive stack at a glance
From your electric or gas utility, tiered by efficiency rating. Your contractor usually files it for you.
Federal money, paid through your state as an instant discount on qualified heat pumps.
Rewards measured whole-home energy savings — best when HVAC pairs with insulation and air sealing.
Mass Save, NYS Clean Heat, Colorado's credit, and more. One search on DSIRE (dsireusa.org) lists yours.
Claim them in three steps
Look up your programs
Search your ZIP on dsireusa.org and check your utility's rebate page. Five minutes, before any quotes.
Make bidders itemize
Ask every contractor to list each rebate by name on the quote — and which ones they file for you.
Financing and manufacturer promotions
Manufacturers and distributors run seasonal promotions — low- or zero-APR financing, instant discounts, extended warranties — and they concentrate on high-efficiency, variable-speed equipment, because that is where brands compete. This works in your favor: the tiers with the largest energy savings and the strongest comfort gains (steadier temperatures, humidity control, quieter operation) frequently carry the best terms. A promotional rate can make the premium tier the lower monthly cost, while its higher efficiency shortens the payback.
Two checks protect the math. First, ask for the cash price and the financed price separately: promotional financing usually carries a dealer fee built into the quote — commonly 5–15% — so “0% APR” is not always free money. Second, confirm the offer is true reduced-APR financing rather than deferred interest, where missing the payoff date applies back-interest to the entire original balance. When the terms are clean, enter the financed total — not the sticker price — in the calculator and let the payback decide.
Program details
Utility rebates — how they actually work
Electric and gas utilities pay rebates tiered by SEER2, HSPF2, or AFUE thresholds — typically $100–$1,500+, sometimes more for heat pumps. Most require a participating contractor and an AHRI matched-system certificate for the exact indoor/outdoor pair installed. They're often why a contractor steers you toward one efficiency tier over another: sometimes one tier higher unlocks a rebate bigger than the equipment upcharge.
HEAR / HEEHRA — the big one, if you qualify
The IRA's Home Electrification and Appliance Rebates survived the 2025 tax law and continue rolling out state by state. Under 80% of area median income (AMI): up to $8,000 toward a qualified heat pump, applied at the point of sale. Between 80–150% AMI: up to 50% of project cost. It runs through state energy offices and approved contractors, so availability and remaining funding vary — your state's program site (or DSIRE) shows current status. Equipment must be ENERGY STAR qualified.
HOMES — whole-home retrofit rebates
HOMES rebates whole-home projects based on modeled or measured energy savings, open to all incomes (larger amounts if income-qualified). It shines when a new system is part of a package with insulation, duct sealing, and air sealing — which is also when the equipment itself performs best. Ask about it if you're doing more than a box swap.
Stacking rules — and the double-dip trap
Utility + state + HEAR can often stack, but the same federal dollars can't be claimed twice, and some programs reduce their payment by other incentives received. When a rebate lowers the purchase price, it also lowers the cost basis other incentives compute from. The clean way through: have your contractor — who files these weekly — put the full stack in writing on the quote, then confirm anything income-qualified with the program administrator.
What happened to the 25C tax credit?
Section 25C (up to $2,000 for heat pumps, $600 for qualifying ACs) was terminated by the One Big Beautiful Bill Act (P.L. 119-21, July 2025) for equipment placed in service after December 31, 2025. "Placed in service" means installed and operational — a 2025 contract with a 2026 install doesn't qualify. If your install was completed by the deadline, claim it on your 2025 return with IRS Form 5695. Be wary of quotes or articles still promising IRS money on 2026 installs.
Timing as an incentive — shoulder-season pricing
Installer schedules slacken in spring and fall, and manufacturer promotions cluster there too. Three quotes in shoulder season routinely price 10–20% below an emergency mid-heat-wave swap — often worth as much as a formal rebate, and it stacks with everything above.
Frequently asked questions
Is there a federal tax credit for heat pumps or air conditioners in 2026?
No. The Section 25C credit expired for equipment placed in service after December 31, 2025. Installs completed by that date can still be claimed on the 2025 return (Form 5695). In 2026 the main federal-money pathway is the state-administered HEAR and HOMES rebate programs, plus state and utility incentives.
What is the HEAR (HEEHRA) rebate and who qualifies?
HEAR provides point-of-sale rebates for electrification measures, including up to $8,000 toward qualified heat pumps for households under 80% of area median income, and up to 50% of cost for 80–150% AMI. It's administered state by state through approved contractors; check your state energy office or DSIRE for launch status and remaining funds.
Can I stack utility rebates with HEAR or state programs?
Often yes, but rules vary: some programs reduce their payment by other incentives received, and the same federal dollars can't be claimed twice. Ask each program administrator directly, and have your contractor — who files these routinely — itemize the stack in writing on the quote.
Do rebates require specific efficiency levels?
Almost always. Utility and state rebates are tiered by SEER2, EER2, HSPF2, or AFUE thresholds, and HEAR requires ENERGY STAR qualification. Sometimes one tier higher unlocks a rebate that more than covers the equipment upcharge — this is exactly the comparison the calculators' option cards make visible.
Is 0% HVAC financing really free?
Not always. Contractors typically pay the lender a dealer fee of roughly 5–15% to offer promotional rates, and that fee is often built into the quoted price. Ask for the cash price and the financed price separately, and confirm the offer is true reduced-APR financing rather than deferred interest, where a missed payoff date applies back-interest to the full original balance. Compare payback using the total you will actually pay.