01
The installation date changes which federal rules apply
A 2026 replacement does not qualify for the expired 25C or 25D tax credits. The current federal rebate pathways are separate DOE programs administered through participating state, territory, or Tribal programs; an announced national maximum does not mean a program is active where you live.
A new 2026 replacement cannot claim 25C or 25D
The IRS says Section 25C is not allowed for property placed in service after December 31, 2025. Section 25D is not allowed for expenditures made after that date. A 2026 HVAC installation does not qualify under either credit merely because the equipment is efficient or was ordered earlier.
Sources: Instructions for Form 5695 (2025) — Internal Revenue Service · FAQs for modifications of Sections 25C and 25D under Public Law 119-21 — Internal Revenue ServiceEligible 2025 work is claimed on the 2025 return
If qualifying property was placed in service and the eligible expenses were paid or incurred in 2025, a homeowner may claim an otherwise eligible Section 25C credit on the 2025 federal return. The 2025 rules and documentation still control.
Sources: Instructions for Form 5695 (2025) — Internal Revenue Service · Updates to FAQs about the Energy Efficient Home Improvement Credit and Residential Clean Energy Property Credit — Internal Revenue ServiceDOE rebate access depends on a local program
HOMES and HEEHR are federal programs implemented by grantees. DOE reports availability in select places and directs households to check program status and requirements with the administering office. Review DOE’s current Home Energy Rebates page and resources for the status or office serving your state, territory, or Tribe.
Sources: Home Energy Rebates Program — U.S. Department of Energy · Home Energy Rebates resources for states, territories, and Tribes — U.S. Department of Energy
02
Section 25C: what may qualify for a 2025 claim
Section 25C was the Energy Efficient Home Improvement Credit. It is relevant now only for qualifying expenses and property from 2025 or earlier within the applicable credit period; it is not an incentive for a new 2026 installation.
The home and project must meet the basic limits
For HVAC property, the credit generally covered qualifying new property installed in or on an existing home in the United States that the taxpayer used as a main home. The IRS rules do not make every replacement eligible, and a landlord or owner who does not live in the home generally cannot claim the 25C home-improvement credit.
Sources: Instructions for Form 5695 (2025) — Internal Revenue Service · Energy Efficient Home Improvement Credit — Internal Revenue ServiceThe annual HVAC caps are category-specific
For 2025, the credit was 30% of qualified costs, subject to annual limits. A qualifying central air conditioner generally had a $600 item cap, and a qualifying gas, propane, or oil furnace generally had a separate $600 item cap; both count within the $1,200 general annual limit. Qualifying heat-pump property had a separate $2,000 annual cap. Where a taxpayer had eligible expenses across both groups, the combined 25C maximum could reach up to $3,200 for that year. That is an annual possible cap, not a lifetime amount or a promised credit.
Sources: Instructions for Form 5695 (2025) — Internal Revenue Service · Energy Efficient Home Improvement Credit — Internal Revenue ServiceEquipment must meet the 2025 efficiency and system rules
Qualifying central air conditioners, furnaces, and heat pumps generally had to meet or exceed the CEE highest efficiency tier in effect at the start of 2025, excluding any advanced tier. For a split-system heat pump, the complete indoor and outdoor system had to be installed and meet the applicable requirements.
Sources: Instructions for Form 5695 (2025) — Internal Revenue Service · Frequently asked questions about energy efficient home improvements and residential clean energy property credits — Internal Revenue ServiceThe 2025 qualified-manufacturer identification rule applies
For specified 2025 property, the product had to come from an IRS-qualified manufacturer and the return had to include its four-character qualified manufacturer identification number (QMID). Keep the equipment records and ask the installer or manufacturer for the exact qualifying model and QMID; do not assume a model is eligible based only on its brand or product type.
Sources: Instructions for Form 5695 (2025) — Internal Revenue Service · Energy Efficient Home Improvement Credit — Internal Revenue Service · Frequently asked questions about energy efficient home improvements and residential clean energy property credits — Internal Revenue ServiceThe credit is nonrefundable and has no carryforward
Section 25C can reduce tax liability but cannot produce a refund beyond that liability. Any unused 25C amount cannot be carried into a later tax year. A credit limit is not a payment estimate or a decision that a particular taxpayer qualifies.
Sources: Energy Efficient Home Improvement Credit — Internal Revenue Service · Updates to FAQs about the Energy Efficient Home Improvement Credit and Residential Clean Energy Property Credit — Internal Revenue Service
03
Section 25D matters for qualifying geothermal heat pumps
The Residential Clean Energy Credit is a different credit from 25C. Its HVAC relevance is limited to qualifying clean-energy property such as a geothermal heat pump; it was not a general credit for an ordinary central air conditioner or furnace replacement.
Geothermal heat pumps were qualifying clean-energy property
For qualifying geothermal heat-pump property installed by December 31, 2025, the 25D credit was generally 30% of qualified costs under the 2025 rules. The equipment had to meet the applicable Energy Star requirements. This does not make a standard air-source HVAC replacement a 25D project.
Sources: Residential Clean Energy Credit — Internal Revenue Service · Instructions for Form 5695 (2025) — Internal Revenue ServiceThe 25D deadline has also passed for new expenditures
The credit is unavailable for expenditures made after December 31, 2025. IRS guidance treats the expenditure as made when original installation is complete, so paying earlier does not make a later-completed installation eligible.
Sources: Residential Clean Energy Credit — Internal Revenue Service · FAQs for modifications of Sections 25C and 25D under Public Law 119-21 — Internal Revenue Service
04
HOMES can support a qualifying whole-home upgrade
The Home Owner Managing Energy Savings (HOMES) Rebate Program is for eligible whole-home energy upgrades, not a standalone federal HVAC voucher. A qualifying project may include heating and cooling equipment together with other improvements.
The modeled-savings path starts at 20%
DOE describes HOMES modeled-savings projects as requiring at least 20% modeled energy savings. The applicable program can use more than one pathway, so the administering program determines the assessment, calculation, and documentation for a specific project.
Sources: Home Energy Rebates Program — U.S. Department of Energy · Home Energy Rebates Program Notice 26-1: HOMES Rebate Program — U.S. Department of EnergyHouseholds across income levels may be served
Unlike HEEHR, the DOE overview says HOMES is available to households at all income levels. The current federal program maximum is up to $8,000 for an eligible whole-home project, subject to the qualified project, local program design, applicable project-cost limits, and active program availability. It is not a guaranteed HVAC payment.
Sources: Home Energy Rebates Program — U.S. Department of Energy · Home Energy Rebates Program Notice 26-1: HOMES Rebate Program — U.S. Department of EnergyCheck that the administering program is active
A HOMES rebate is available only through an active program that accepts the project. Before signing a contract, ask the administering office or participating contractor whether the program is open, whether funds and reservations are available, and whether the proposed whole-home scope meets its current requirements.
Sources: Home Energy Rebates Program — U.S. Department of Energy · Home Energy Rebates resources for states, territories, and Tribes — U.S. Department of Energy
05
HEEHR has income tiers, item caps, and local rules
The High-Efficiency Electric Home Rebate (HEEHR) program supports qualified electric upgrades. Its federal headline ceiling is up to $14,000 across eligible upgrades, not $14,000 for HVAC alone.
Income determines the maximum share of qualified costs
For eligible household projects, households below 80% of area median income (AMI) may receive up to 100% of qualified project costs; households at 80% to below 150% AMI may receive up to 50%. Households above 150% AMI are ineligible for the household rebate. The percentages remain subject to eligible measures, per-item caps, the total program limit, and local program rules.
Sources: Home Energy Rebates Program Requirements and Application Instructions — U.S. Department of Energy · Home Energy Rebates Program — U.S. Department of EnergyThe $14,000 ceiling covers multiple upgrade categories
The total is across qualified upgrades and has item-level limits. It may include eligible heating and cooling equipment along with insulation, air sealing, ventilation, wiring, a load service center, or other qualified electric appliances. The actual HVAC amount is determined by the eligible equipment and the administering program, not by the $14,000 national ceiling.
Sources: Home Energy Rebates Program — U.S. Department of Energy · Home Energy Rebates Program Requirements and Application Instructions — U.S. Department of EnergyNotice 26-2 narrows HVAC rules in state and territory programs
Under DOE’s May 29, 2026 Notice 26-2 for state and territory HEEHR programs, HVAC rebates generally apply when existing electric equipment is replaced with more-efficient electric equipment. Homes must use HEEHR rebates for insulation and air sealing before a heating or cooling upgrade unless the existing home already meets the DOE-approved, state-specified level. Notice 26-2 also allows an existing fossil-fuel HVAC system to remain when adding a heat pump; do not treat that limited allowance as general eligibility for replacing a gas furnace with a heat pump. Ask the local program to confirm the exact project rules.
Sources: Home Energy Rebates Program Notice 26-2: HEEHR for States and Territories — U.S. Department of Energy · Home Energy Rebates resources for states, territories, and Tribes — U.S. Department of EnergyAvailability is local and the project must be approved
DOE’s national page says rebates are available in select places. State, territory, and Tribal grantees administer their own programs, so the open dates, eligible equipment, contractors, application steps, and remaining funds can differ. Confirm the current status with the official administering office before treating any rebate as part of a project budget.
Sources: Home Energy Rebates Program — U.S. Department of Energy · Home Energy Rebates resources for states, territories, and Tribes — U.S. Department of Energy
06
Confirm documents, local approval, and any incentive overlap
Tax-credit documentation and DOE rebate approval are separate processes. A homeowner should confirm both before relying on an incentive in a replacement budget.
For an eligible 2025 Section 25C claim, use Form 5695
File IRS Form 5695 with the 2025 federal income tax return for an eligible 2025 25C claim. Verify the placed-in-service date, qualifying model and CEE tier, qualified costs, and QMID. Keep receipts, model and serial information, contractor documentation, and other records needed to support the return.
Sources: Instructions for Form 5695 (2025) — Internal Revenue Service · Updates to FAQs about the Energy Efficient Home Improvement Credit and Residential Clean Energy Property Credit — Internal Revenue Service · Frequently asked questions about energy efficient home improvements and residential clean energy property credits — Internal Revenue ServiceAsk the DOE program office before authorizing the project
Use DOE’s Home Energy Rebates page and its program resources to find the status and official administering-office guidance for your state, territory, or Tribe. Confirm whether the program is active, which equipment and contractors qualify, whether a reservation or approval is needed before work, the available item and project caps, and required documentation. Do not assume a contractor’s estimate alone means DOE has approved a rebate.
Sources: Home Energy Rebates Program — U.S. Department of Energy · Home Energy Rebates resources for states, territories, and Tribes — U.S. Department of EnergyDo not assume that rebates and tax credits automatically stack
For the same qualified electrification project, HEEHR rules prohibit combining another federal grant or rebate. Separately, IRS rules treat DOE Home Energy Rebates as rebates that generally reduce the purchase-price cost used for a tax credit; other subsidies may also reduce qualified expenses depending on the facts. The rules differ by program and payment, so ask the administrator and a qualified tax professional how they apply to your project.
Sources: Home Energy Rebates Program Notice 26-2: HEEHR for States and Territories — U.S. Department of Energy · Updates to FAQs about the Energy Efficient Home Improvement Credit and Residential Clean Energy Property Credit — Internal Revenue Service · Residential Clean Energy Credit — Internal Revenue Service
07
Sources and limits
This guide is general federal program information, not tax advice, a rebate approval, or a finding that a homeowner or project qualifies. It does not estimate savings or promise a payment. DOE rebate amounts and requirements depend on the active state, territory, or Tribal administering program, including its project rules and available funds. Tax eligibility depends on the taxpayer’s facts, equipment, dates, expenses, and records. We have not listed state, local, utility, or regional incentives. Check the linked current IRS and DOE materials and consult the relevant administering office or a qualified tax professional for your situation.
- Instructions for Form 5695 (2025) — Internal Revenue Service
The current 2025 instructions explain the Section 25C cutoff, 30% rate, annual caps, U.S. main-home and existing-home requirements, CEE efficiency tiers, QMID reporting, and how to claim residential energy credits.
Supports: What is available now · Section 25C: 2025 claims · Section 25D: geothermal · Claims and coordination
- Energy Efficient Home Improvement Credit — Internal Revenue Service
The IRS summarizes eligible existing main homes in the United States, annual credit limits, the 2025 qualified-manufacturer and QMID rule, and the nonrefundable credit’s lack of a carryforward.
Supports: Section 25C: 2025 claims · Claims and coordination
- Frequently asked questions about energy efficient home improvements and residential clean energy property credits — Internal Revenue Service
The IRS specifies the highest applicable CEE tier for qualifying equipment and says a split-system heat pump must be installed as a complete indoor-and-outdoor system meeting the requirements.
Supports: Section 25C: 2025 claims · Claims and coordination
- FAQs for modifications of Sections 25C and 25D under Public Law 119-21 — Internal Revenue Service
Current IRS guidance states that Section 25C is unavailable for property placed in service after December 31, 2025, and Section 25D is unavailable for expenditures made after that date.
Supports: What is available now · Section 25C: 2025 claims · Section 25D: geothermal
- Updates to FAQs about the Energy Efficient Home Improvement Credit and Residential Clean Energy Property Credit — Internal Revenue Service
The IRS explains 25C’s nonrefundable status and no-carryforward rule, that qualifying 2025 expenses may be claimed on the 2025 return, and that DOE Home Energy Rebates generally reduce the purchase-price basis used to calculate a tax credit.
Supports: Section 25C: 2025 claims · Claims and coordination
- Residential Clean Energy Credit — Internal Revenue Service
The IRS lists qualifying geothermal heat pumps, states the credit rate and deadline, and explains when subsidies or rebates reduce qualified expenses.
Supports: Section 25D: geothermal · Claims and coordination
- Home Energy Rebates Program — U.S. Department of Energy
DOE describes HOMES and HEEHR, their federal maximum amounts and covered project types, the 20% HOMES modeled-savings minimum, and the need to check active state, territory, or Tribal programs.
Supports: What is available now · DOE HOMES rebate · DOE HEEHR rebate · Claims and coordination
- Home Energy Rebates Program Notice 26-1: HOMES Rebate Program — U.S. Department of Energy
Effective May 29, 2026, this notice updates state and territory HOMES program guidance; remaining project and award requirements continue to apply, with local grantees tailoring their programs.
Supports: DOE HOMES rebate · Claims and coordination
- Home Energy Rebates Program Notice 26-2: HEEHR for States and Territories — U.S. Department of Energy
Effective May 29, 2026, Notice 26-2 limits state and territory HEEHR HVAC upgrades to existing electric equipment replaced by more-efficient electric equipment, requires insulation and air sealing first unless a DOE-approved, state-specified condition is already met, and bars combining another federal grant or rebate for the same qualified electrification project. It also allows existing fossil-fuel HVAC to remain when a heat pump is added.
Supports: DOE HEEHR rebate · Claims and coordination
- Home Energy Rebates Program Requirements and Application Instructions — U.S. Department of Energy
DOE’s HEEHR guidance describes household rebate shares of up to 100% of qualified costs below 80% of area median income and up to 50% from 80% to below 150%, with households above 150% outside the eligibility bands. It also lists item-level caps, including up to $8,000 for a space-heating and cooling heat pump within the $14,000 total. Notice 26-2 updates selected requirements while leaving other program requirements in effect.
Supports: DOE HEEHR rebate
- Home Energy Rebates resources for states, territories, and Tribes — U.S. Department of Energy
DOE’s current resource page links the May 2026 HOMES and HEEHR notices and identifies these as state, territory, and Tribal-administered programs.
Supports: What is available now · DOE HOMES rebate · DOE HEEHR rebate · Claims and coordination
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