What does "placed in service" mean for these credits?

For Section 25D, an expenditure is treated as made when the original installation is completed. If your installation finishes in 2026, it does not qualify — regardless of when you signed a contract or made a deposit.

What incentives still exist in 2026 if federal tax credits are gone?

Utility rebates, city and county programs, and state incentives (where active) are still available. Additionally, HEAR and HOMES rebate programs — funded by the Inflation Reduction Act but administered by states — will launch on a state-by-state basis.

Home / Federal Credits Ended

Federal Heat Pump Tax Credits Ended in 2025 — What Still Works in 2026

Q: Did the federal heat pump tax credit end?

Yes. The Energy Efficient Home Improvement Credit (Section 25C) and the Residential Clean Energy Credit (Section 25D) are not available for property placed in service after December 31, 2025. This was accelerated by the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025.

Q: Are HEAR/HOMES rebates the same as tax credits?

No. HEAR and HOMES are rebate programs, often applied at point of sale or as reimbursement. They are income-based or savings-based, administered by individual states, and are completely separate from the expired federal tax credits.

If you're seeing guides that claim a federal $2,000 heat pump tax credit or a 30% geothermal credit "through 2032" is still available, you're looking at outdated information. Both Section 25C and Section 25D ended for property placed in service after December 31, 2025.

Last updated: February 18, 2026

Quick summary for 2026

✗ Expired (Dec 31, 2025)

Section 25C — Air-source heat pumps, insulation, windows, HVAC
Section 25D — Geothermal, solar, battery storage, fuel cells

✓ Still active

Utility company rebates
City and county programs
State rebates (where available)

⏳ Funded but pending

HEAR rebates (income-based)
HOMES rebates (savings-based)
Launch timing varies by state

What changed (and why so many pages are wrong)

The Inflation Reduction Act of 2022 originally extended these credits through 2032 (25C) and 2034 (25D). Many websites, tools, and even some contractor marketing materials still reflect those original dates.

That changed on July 4, 2025, when the One Big Beautiful Bill Act (OBBBA) was signed into law. It accelerated the termination of both credits.

The IRS confirmed the details in Fact Sheet 2025-05 (August 21, 2025):

Section 25C is not allowed for property placed in service after December 31, 2025
Section 25D is not allowed for expenditures made after December 31, 2025

For 25D specifically, the IRS clarified that an expenditure is treated as made when the original installation is completed. If installation finishes in 2026, you cannot claim the credit — regardless of when you signed a contract or paid a deposit.

Common misinformation to watch for

"The 30% geothermal credit is on a separate track through 2032." This was true under the original IRA schedule. It is no longer accurate. Both air-source (25C) and geothermal (25D) federal credits ended on the same date: December 31, 2025.

Tax credit vs. rebate — an important distinction

This matters because the words get used interchangeably online, and they shouldn't:

Tax credit — Claimed when you file federal taxes. Reduces what you owe. This is what 25C and 25D were. No longer available for 2026 installations.
Rebate — Cash back, often at point of sale or via reimbursement. Utility programs, city programs, and HEAR/HOMES all fall in this category. Many are still active or upcoming.

What homeowners can still use in 2026

Utility rebates

Often the most reliable "right now" incentive. Utility companies run efficiency programs under state regulatory frameworks, and these are independent of federal tax credits. Check your utility's current rebate page directly.

City and county programs

Many municipalities offer their own rebates, grants, or cost-share programs. These can often stack with utility rebates. Check your city or county energy office.

State programs

Some states have active rebate programs separate from HEAR/HOMES. Availability varies widely.

HEAR and HOMES (IRA-funded, state-administered)

These are the rebate programs people often confuse with the expired tax credits. Key facts:

Funded by the Inflation Reduction Act
Administered by individual states, not the IRS
HEAR is income-based (up to $8,000 for low-income households)
HOMES is savings-based (tied to energy reduction)
Launch timing is entirely state-by-state — some states have launched, many have not
HEAR rebates generally cannot be applied retroactively — do not install before your state's program launches

Minnesota status

Minnesota's "Save Energy Minnesota" umbrella — which covers HEAR, HOMES, the state heat pump rebate, and residential electrical panel grants — has not launched.

As of February 2, 2026, the Minnesota Department of Commerce states: "Minnesota is waiting for formal approval from US Department of Energy to launch the program. There is no estimated program launch date."

The state heat pump rebate requires HEAR approval first, and HEAR does not allow retroactive rebates. If you install before the program launches, you will not be eligible.

What's active now in Minnesota:

• Utility rebates (Xcel Energy, CenterPoint Energy, Minnesota Power, etc.)
• City programs (varies by municipality)
• Conservation Improvement Program (CIP) incentives

What to do next

1. Plan your 2026 budget without federal residential tax credits.
2. Check utility and city incentives first — these are often the most accessible and immediate.
3. If you may be income-qualified, track your state's HEAR/HOMES launch before signing contracts. Many programs won't reimburse retroactively.
4. Be skeptical of any 2026 marketing that references "$2,000 federal credit" or "30% geothermal credit" — verify the source date.

Frequently Asked Questions

Did the federal heat pump tax credit end?

Yes. Both the Energy Efficient Home Improvement Credit (Section 25C) and the Residential Clean Energy Credit (Section 25D) ended for property placed in service after December 31, 2025. This was accelerated by the OBBBA, signed July 4, 2025.

Is the geothermal (25D) credit still available in 2026?

No. Many sites still claim the 25D geothermal credit runs through 2032 — that was the original IRA schedule. The OBBBA accelerated its termination to December 31, 2025.

What does "placed in service" mean?

For Section 25D, the IRS treats the expenditure as made when installation is completed. If your project finishes in 2026, it doesn't qualify — even if you signed a contract or paid in 2025.

What incentives still exist in 2026?

Utility rebates, city and county programs, state incentives (where active), and upcoming HEAR/HOMES rebate programs. These are separate from federal tax credits and are administered locally or by states.

Are HEAR/HOMES rebates the same as tax credits?

No. They are rebate programs — often applied at point of sale or as reimbursement. They are income-based or savings-based, administered by individual states, and are completely separate from the expired federal tax credits.

Is the Minnesota HEAR/HOMES program available yet?

No. As of February 2, 2026, Minnesota's Save Energy Minnesota program has not launched. The state is waiting for formal DOE approval. There is no estimated launch date, and HEAR rebates cannot be applied retroactively.

Sources

IRS Fact Sheet 2025-05 — OBBBA Energy Credit FAQs ↗

Official IRS guidance on 25C, 25D, and other energy credit termination dates under Public Law 119-21

IRS — Residential Clean Energy Credit (Section 25D) ↗

Confirms credit is not available for property placed in service after December 31, 2025

IRS — Home Energy Tax Credits (Section 25C) ↗

Energy Efficient Home Improvement Credit overview

MN Dept. of Commerce — HEAR Program ↗

Minnesota HEAR status, eligibility, and "no estimated launch date" notice (updated 2/2/2026)

MN Dept. of Commerce — HOMES Program ↗

Minnesota HOMES status and program details

Last verified: February 18, 2026