Heat pump tax credit 2026 does not exist, the federal credit worth up to 2,000 dollars ended on December 31 2025

Heat pump tax credit 2026 already ended, in December 2025

Heat pump tax credit 2026 is the search many homeowners are typing this year, unsure if the incentive still applies. The direct answer is that it does not. The Energy Efficient Home Improvement Credit, the federal tax break covering heat pumps and other home upgrades, stopped covering any equipment installed after December 31 2025. That cutoff comes from a page published by the Internal Revenue Service, the agency that administers the credit, confirmed separately by ENERGY STAR, the joint program run by the Department of Energy and the Environmental Protection Agency. There is no extension into 2026 and no grace period for a delayed installation.

The Internal Revenue Service page also states a rule that applied only in 2025, the last year the credit existed. Equipment placed in service that year only qualified if it was built by a manufacturer that had registered a qualified product identification number with the agency. A homeowner buying in 2025 from a manufacturer that skipped that registration received no credit, even before the December cutoff.

What the credit paid before it ended

Before the cutoff, the credit covered 2 categories with separate dollar caps. A heat pump, heat pump water heater, biomass stove or biomass boiler qualified for 30% of its cost, up to 2,000 dollars a year. A batch of other upgrades qualified for 30% of cost, up to 1,200 dollars a year combined, including up to 600 dollars for an electrical panel upgrade with a capacity of 200 amps or more, and up to 150 dollars for a home energy audit. Claiming both the full heat pump amount and the full 1,200 dollars for other upgrades in one year reached 3,200 dollars total, according to ENERGY STAR.

The rush that was supposed to happen did not

A common assumption around any expiring incentive is that buyers rush to beat the deadline, then demand falls afterward. An economist at the University of California, Berkeley checked that assumption against shipment data from the heating and cooling industry and found neither half of it true. Lucas Davis, an economist at the Haas School of Business, compared how heat pump shipments changed from December to January in 2025 and 2026 against the same seasonal change in 2 earlier years when the credit was not expiring, a method meant to isolate the effect of the deadline from ordinary seasonal buying. He also compared the outcome to California, where a rooftop solar incentive that phased out in April 2023 produced a large spike in interconnection applications right before it ended. Heat pumps showed no such spike beforehand and no such slump afterward.

In fact, it does not look like U.S. heat pump shipments have declined at all.

Lucas Davis, an economist at the University of California, Berkeley Haas School of Business. Source 5.

The 2025 numbers, in context

Full year 2025 shipments of heat pumps alone came to 3.64 million units, down 11.6% from 4.12 million in 2024, and combined air conditioner and heat pump shipments fell 20% for the year, according to the trade publication ACHR NEWS. Those declines trace to several causes together, the publication reports, including a refrigerant transition required separately from the tax credit, tariffs, high interest rates, and inventory destocking, not the end of the tax credit alone. By December 2025, the last month the credit was in effect, the heat pump only decline had narrowed to 2.4% from a year earlier, even as combined air conditioner and heat pump shipments that month were down 21.4%.