If you’re researching heat pump incentives in 2026, you’ve probably run into contradictory information — some sources say incentives are gone, others still cite a “30% credit up to $2,000” as if it’s currently active. Both are partly right and partly outdated. Here’s the accurate, current picture: what’s actually expired, what’s technically still authorized but not yet available in most places, and what genuinely remains active today.
What’s Actually Gone: Section 25C
The federal Energy Efficient Home Improvement Credit (Section 25C) For confirmation of the termination date and the applicable federal tax rules, consult the IRS guidance on changes to federal energy tax credits. — the “30% up to $2,000” credit that applied to qualifying heat pumps — was terminated for any equipment placed in service after December 31, 2025, under the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025. This accelerated the credit’s sunset nearly seven years ahead of its original 2032 schedule under the Inflation Reduction Act.
With the federal tax credit no longer available for new 2026 installations, understanding the upfront cost is especially important. See our guide to how much it costs to install a heat pump for estimated installation prices by system type.
The controlling factor is your installation completion date, not your purchase date. If your heat pump wasn’t fully installed and operational by December 31, 2025, it doesn’t qualify — even if you purchased the equipment or signed a contract earlier. If your installation was completed by that date, you can still claim the credit on your 2025 federal tax return (IRS Form 5695), filed in early 2026.
This same OBBBA legislation also accelerated the termination of Section 25D (which previously covered geothermal heat pumps specifically, among other renewable energy property) to the same December 31, 2025 cutoff, rather than its originally scheduled 2032 phase-out.
What’s Technically Still Alive: HEAR and HOMES
This is the detail most outdated content gets wrong in one direction or another: the High-Efficiency Electric Home Rebate Program (HEAR, originally drafted as HEEHRA, codified under IRA Section 50122) and the HOMES rebate program are not tax credits — they’re separately appropriated federal grant funding, administered by individual state energy offices, not the IRS. Because they’re structured differently from Section 25C, the OBBBA did not repeal them. This funding remains legally authorized through September 30, 2031, or until depleted.
In plain terms: this money still legally exists. The problem, as of mid-2026, is rollout — most states have been slow to actually stand up their programs and begin disbursing funds.
For official updates on the federal Home Energy Rebates programs and state implementation rules, consult the U.S. Department of Energy’s Home Energy Rebates Program guidance. Check your own state’s energy office for current application availability and eligibility requirements.
Important eligibility note: Federal funding, state program approval, and the ability to submit an application are not the same thing. A rebate amount described in program guidance does not mean that funding is currently available to every household. Before including a rebate in your project budget, confirm that your state or local program is accepting applications, that your household and equipment qualify, and that funds remain available.
How HEAR works, in theory
HEAR provides income-based, upfront point-of-sale rebates (not a tax credit you claim later) for qualifying electrification projects, including heat pumps — up to $8,000 for households that qualify based on income relative to their area’s median income (AMI). A household earning under a certain AMI threshold could, in a state with an active program, install a $10,000 heat pump, receive an $8,000 rebate, and pay roughly $2,000 out of pocket.
The real 2026 rollout status by example
Program launch status varies dramatically by state, and this is exactly the kind of detail that changes month to month:
- Texas was allocated the largest sum in the country — roughly $690 million combined across HOMES and HEAR — and as of mid-2026 had not yet disbursed any of it, though the state selected an implementation contractor and was targeting a fall 2026 launch.
- Ohio was allocated roughly $249 million, with no announced launch date as of mid-2026, and separately, the state’s utility-level rebate programs were largely dismantled by legislation in 2019, leaving few active options in the meantime.
- Oregon has an active state-funded program (ODOE’s HP3, funded through a separate EPA grant, offering up to $2,000 per residence) plus existing Energy Trust rebates up to $1,000 — both independent of the federal HEAR rollout, which was still pending as of mid-2026.
- Minnesota had a state program (Save Energy Minnesota) still awaiting federal approval as of mid-2026, with no confirmed launch date.
The pattern across most states is similar: the federal money is real and allocated, but bureaucratic setup — selecting administrators, building application systems, training contractors — has delayed actual disbursement well into 2026 in the large majority of states.
What This Means for You Right Now
- Don’t sign a contract based on an assumed HEAR rebate amount until your state’s program has officially launched and you’ve confirmed your specific eligibility — several state guides explicitly warn against this, since programs have repeatedly slipped past their originally announced target dates.
- Check your state energy office’s website directly for the current status, rather than relying on a generic national estimate, since this genuinely varies state by state and changes over time.
- Look for state-funded programs that are independent of the federal HEAR rollout, like Oregon’s ODOE HP3 or Energy Trust rebates — some states have their own funding sources that are already active regardless of federal program delays.
- Ask your installer directly whether they’re tracking your state’s HEAR launch, since established installers in states with large pending allocations (like Texas and Ohio) are often closely monitoring rollout timing for their customers.
Other Incentive Paths Still Available
Utility rebates
Independent of both the expired federal tax credit and the pending HEAR rollout, many electric utilities offer their own heat pump rebate programs, particularly as utilities increasingly incentivize electrification. Availability varies enormously — some states have robust utility-level programs, while others (like Ohio, following its 2019 utility program rollback) have very little in this category. Check your specific utility’s website directly.
If you’re comparing heating options before applying for a rebate, read our heat pump vs. gas furnace cost comparison to evaluate upfront costs, operating expenses, and potential long-term savings.
State tax credits (separate from federal)
Some states maintain their own state-level tax credits or incentives for heat pumps, entirely independent of federal policy — though states without an income tax (like Texas) have no equivalent state tax credit mechanism regardless of federal changes.
To understand whether switching systems could reduce your energy bills, see our guide on how much you can save switching from gas to a heat pump. Actual savings depend on local electricity and gas rates, climate, and equipment efficiency.
Before choosing a replacement system, compare the upfront and running costs in our full heat pump vs. gas furnace cost comparison.
Third-party ownership (lease/PPA) structures for geothermal
For geothermal heat pumps specifically, a growing 2026 pathway involves a third-party owner (the installer or a financing partner) retaining ownership of the equipment and claiming the separate commercial Section 48 Investment Tax Credit, then passing some of that value to the homeowner through a reduced monthly lease or power purchase agreement payment — similar in structure to a solar lease. This isn’t a credit you claim directly, but it can lower your effective cost if your installer offers this financing structure.
A Simple Summary Table
| Program | Status in 2026 | What it offers |
|---|---|---|
| Federal Section 25C tax credit | Expired Dec 31, 2025 | N/A for 2026 installs |
| Federal Section 25D (geothermal) | Expired Dec 31, 2025 | N/A for 2026 installs, except via commercial §48/lease structures |
| HEAR (federal, state-administered) | Legally authorized, mostly not yet launched | Up to $8,000, income-based, varies enormously by state |
| HOMES (federal, state-administered) | Legally authorized, mostly not yet launched | Whole-home energy savings rebate, varies by state |
| Utility rebates | Active in many areas, varies widely | Varies by utility |
| State-specific programs | Varies significantly by state | Some active (e.g., Oregon ODOE HP3), most limited |
| Geothermal via lease/PPA (§48) | Active | Indirect savings passed through lower lease payments |
How to Check What You Actually Qualify For
- Search “[your state] energy office HEAR rebate” to find your specific state’s official program page and current status.
- Check your household income against your county’s Area Median Income (AMI) if you’re pursuing HEAR specifically, since eligibility and rebate amount both scale with income relative to AMI.
- Contact your utility directly to ask about current heat pump rebate programs, since these aren’t always prominently advertised.
- Ask your installer for a written summary of every incentive they’re applying to your quote, and verify each one independently rather than taking a sales estimate at face value, given how much genuine confusion exists in this space right now.
For the latest information on federal Home Energy Rebates, visit the U.S. Department of Energy’s Energy Savings Hub. Use its Home Energy Rebates resources to check your state’s program status and follow the eligibility and application instructions published by the relevant state administrator.
If you’re also considering a heat pump water heater, our complete guide to heat pump water heaters covers installation costs, energy savings, and additional incentive options.
Final Thoughts
The honest 2026 picture on heat pump incentives is more nuanced than either “there’s nothing left” or “the same credits still apply” — the federal tax credit is genuinely gone, but a separate, substantial pool of federal rebate funding (HEAR and HOMES) remains legally authorized and, in most states, is simply stuck in a slow rollout rather than actually canceled. If you’re planning a heat pump installation and might qualify for HEAR based on income, it’s worth checking your state’s specific launch timeline before assuming either that the money is available now or that it’s gone for good — the real answer, for most states as of 2026, is “not yet, but likely coming.”