FEDERAL ENERGY EFFICIENT HOME IMPROVEMENT CREDIT (25C)
* EXPIRED *
Federal heat pump tax credits
This credit expired on Dec. 31, 2025. If you purchased and installed an eligible heat pump by Dec. 31, 2025, read on for how to apply this credit when you file your taxes in 2026.
View other eligible projects under this tax credit:
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Introduction
Introduction
Disclaimer: The information presented here is for educational purposes only. It is not intended to provide specific tax guidance. For questions regarding your individual tax situation, we suggest consulting with your tax advisor.
Tax Credit
Up to $2,000
Expired Dec. 31, 2025
Which heat pumps qualify?
Heat pumps must meet certain energy efficiency requirements set by the Consortium for Energy Efficiency (CEE).
The 25C tax credit is designed to encourage Americans to purchase high-efficiency equipment. Specifically, eligible heat pumps must meet or exceed the highest efficiency tier (not including any advanced tiers) established by the Consortium for Energy Efficiency (CEE).
Some manufacturer websites list tax credit-eligible equipment, as does the ENERGY STAR Product Finder. For the most comprehensive list of qualifying heat pump models, see CEE’s directory.
One piece of good news: the IRS has said that to claim the credit, you can rely on the manufacturer’s written certification that a product qualifies. So if the manufacturer's website lists a certain heat pump as eligible for 25C, that’s all you need! Make sure you screenshot it and keep it for your records.
For more on the efficiency requirements of other purchases, see this IRS FAQ.
Who qualifies for the heat pump tax credit?
The 25C tax credit can be used by renters and homeowners making upgrades to their primary or secondary home.
Homeowners and renters making upgrades to their existing home
Homeowners can use this tax credit for heat pump water heater projects at homes that are already built. Homeowners can use this tax credit for primary and secondary homes.
Renters are also eligible to use this tax credit.
For more information, see Frequently asked questions about energy efficient home improvements and residential clean energy property credits.
To learn about credits for new homes, see Section 45L New Energy Efficient Home Credit, which offers incentives for Zero Energy Ready homes.
No income requirements
There are no income limitations for the 25C Tax Credit — but like nearly all federal tax credits, you can only use it if you pay federal income taxes, and the amount you can receive is limited by the amount of federal income tax you pay in a year.
What is the heat pump tax credit?
All households who pay federal income taxes are eligible for up to a $2,000 credit for the installation of a qualifying heat pump, as long as purchase and installation was completed by Dec. 31, 2025.
The 25C Energy Efficient Home Improvement Tax Credit provides a tax credit for eligible heat pumps up to 30% of project costs, capped at $2,000. All purchases and installations must be completed by Dec. 31, 2025.
Heat pumps are just one of the home improvements that may qualify for the 25C Energy Efficient Home Improvement Credit, all of which expired on Dec. 31, 2025. Projects like energy-efficient doors, insulation, and heat pump water heaters may qualify as well.
| Project Type | How much funding can you receive from 25C for qualifying projects? |
|---|---|
| Project Type:Electrical components | How much funding can you receive from 25C for qualifying projects?: Up to 30 percent, generally capped at $600 per year, for the items listed below:
|
| Project Type:Heat pumps and heat pump water heaters | How much funding can you receive from 25C for qualifying projects?: Up to 30 percent, capped at $2,000 per year for qualified:
|
| Project Type:Weatherization (insulation, air sealing, and ventilation) | How much funding can you receive from 25C for qualifying projects?: Up to 30 percent, capped at the following amounts for each type of project:
All weatherization projects are combined with electrical panel upgrades for a total project cap of $1,200 per year. |
| Project Type:Home energy audit | How much funding can you receive from 25C for qualifying projects?:Up to $150. Home energy audits must be performed by a certified home energy auditor, and include a full home inspection and report to qualify. |
Source: IRS
The 25C Energy Efficient Home Improvement Credit is limited to $2,000 per year for heat pump water heater installations, and there is a $3,200 yearly cap for all 25C tax credits combined. All 25C tax credits expired on Dec. 31, 2025.
Tax credit limitations
The 25C Heat Pump tax credit may cover up to 30% of your heat pump project costs, capped at $2,000.
Generally, you must subtract any price adjustments from the cost of the item. This can mean rebates, utility subsidies, financial incentives, and anything else that lowers the price point. This part can get a little tricky, so be sure to check the frequently asked questions about energy efficient home improvements and residential clean energy property credits for more information.
The 25C tax credit is “non-refundable,” which means that you can't get back more than you pay in federal income taxes. For example, if 30% of your project’s cost hits the $2,000 cap, but you only owe $1,000 in federal income taxes, you would receive a $1,000 credit.
Remember: heat pump purchases or installations completed after Dec. 31, 2025 are not eligible for the 25C tax incentive.
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