For three years, many heat pump quotes mentioned a federal tax credit of up to $2,000. If your system is installed in 2026, that credit no longer applies, and a quote that still promises it deserves a second look.
What changed
The Energy Efficient Home Improvement Credit (Section 25C) covered 30% of the cost of qualifying heat pumps, up to $2,000 a year, for equipment placed in service from 2023 through 2025. The law signed on July 4, 2025 (Public Law 119-21) ended the credit for property placed in service after December 31, 2025.
The IRS ties the credit to when the equipment is placed in service, which is usually the installation date, not the day you sign the contract.
What it means for your quote
- A federal credit listed as “savings” on a 2026 installation is a red flag. Ask the contractor to show the source for it.
- Do not let a promised credit decide between two quotes. Compare what each quote includes first.
- State, local and utility rebates may still apply. They change often, so check them yourself and get any rebate written into the quote, including who applies for it and when it is paid.
Which state, local and utility rebates still apply, and how to check them, is covered in our guide to HVAC tax credits and rebates in 2026.
This is general information, not tax advice. For your own situation, check with a tax professional.
