energy
Federal 25C expired: what still pays on a 2026 heat-pump bid
Section 25C is done for anything placed in service after 2025. How to file last year's Form 5695, what 25D and 30C also lost, and which dollars can still show up on a 2026 quote.
If the bid subtracts $2,000 for a “federal tax credit,” look at the install date. The IRS Energy Efficient Home Improvement Credit (that’s 25C on the forms) does not apply to property placed in service after December 31, 2025. A heat pump that starts running in October 2026 does not get that line.
Start with how to check your utility rebates when you need a living program. Use this guide when a 2026 envelope still has last year’s IRS language in it.
Heat pump vs furnace is whether to buy. The quote checklist is whether the bid measured this house.
What ended, and on which day?
The IRS published a table of accelerated termination dates after Public Law 119-21. You need the dates, not the nickname.
25C, home improvements. No credit for property placed in service after December 31, 2025. That covered heat pumps, heat-pump water heaters, insulation, windows, doors, a qualifying panel, and a home energy audit.
25D, clean energy. No credit for expenditures made after December 31, 2025. That covered solar, batteries, geothermal heat pumps, and small wind. The IRS treats an expenditure as made when the original installation is finished. Paying in 2025 does not save a job completed in 2026.
30C, home EV chargers. No credit for property placed in service after June 30, 2026. If you are reading this in October 2026, that window is already closed.
IRS: FAQs on the modified energy credits
IRS: Energy Efficient Home Improvement Credit
IRS: Residential Clean Energy Credit
IRS: Alternative Fuel Vehicle Refueling Property Credit
Form 5695 is still the form for 25C and 25D. The 2025 instructions say you cannot claim those credits for work after those dates. You can still use the form for 2025 work. 25D still has a carryforward line for unused credit from earlier years.
IRS: Instructions for Form 5695 (2025)
What does “placed in service” actually mean?
For 25C, the IRS cares when the equipment is ready and available for use, not when you signed or when the check cleared. If the outdoor unit sat on a pallet in December and the crew came back in January to charge it and turn it on, that is a 2026 start.
For 25D, the FAQ is even blunter. IRS FAQ 7 says an expenditure is treated as made when the original installation of the item is completed. If solar or a battery finishes after December 31, 2025, paying in 2025 does not preserve the 30% credit.
New construction is a different clock. If the system is part of building or reconstructing a house, 25D treats the expenditure as made when you first use the finished structure. A house you move into in 2026 misses the cutoff even if the array went on the roof in 2025.
Ask the contractor for a placed-in-service date in writing. “We’ll try for December” is not a date.
What was 25C actually worth, if you installed in 2025?
The credit was 30% of qualifying costs, with caps. It was not a check in the mail. It cut the tax you owed. If you owed less than the credit, 25C did not refund the rest.
The yearly ceiling most people quoted was $3,200. That was two buckets, not one pile.
Up to $1,200 for envelope work and some equipment, which is insulation, air sealing, windows, doors, a home energy audit, and some panel work.
A separate $2,000 for qualifying heat pumps, heat-pump water heaters, and biomass stoves or boilers.
You could hit both buckets in one year if the invoices supported it. You could not stack two $2,000 heat-pump credits in the same year.
Utility rebates often reduced the basis. The IRS still says public utility subsidies come off qualified expenses. So a contractor who subtracted both the utility rebate and the full $2,000 from the same sticker was doing your taxes on a napkin.
If the unit went in during 2025 and you have not filed, that is a 2025 Form 5695 problem. Keep the invoice and the manufacturer certification. It is not a 2026 bid problem.
Can I still file Form 5695 in 2026?
Yes, for 2025 work. You file it with the 2025 return, which most people send in 2026. The form still exists. The 2025 instructions still walk 25C and 25D. They also say you cannot claim those credits for expenditures or property after December 31, 2025.
25D leftover credit can still carry forward. If you claimed residential clean energy in 2024 or 2025 and had unused credit because you did not owe that much tax, the 5695 worksheet still has a line to carry it into later years. That is leftover credit you already earned. It is not a reason to subtract 30% from a 2026 solar bid.
25C did not work that way. Unused 25C did not become a bank you could spend on a 2026 heat pump.
The contractor cannot file your 1040. If they “handled the rebate,” ask what they actually filed. A utility form is not Form 5695.
What still pays on a 2026 job?
Federal tax credits for this stuff are gone for new 2026 installs. Federal rebate programs that states run are a different pot. They did not live in the tax code the same way.
DOE still describes two IRA rebate programs. HOMES can pay up to $8,000 on a whole-home upgrade that models at least 20% energy savings, for all income levels. HEEHR (often called HEAR) can pay up to $14,000 across a heat pump, water heater, panel, wiring, and envelope, for households under 150% of area median income. Those dollars exist only where your state energy office actually opened a portal.
DOE: Home Energy Rebates Program
ENERGY STAR still publishes the HEEHR caps: heat pump up to $8,000, heat-pump water heater $1,750, insulation and air sealing $1,600, panel $4,000, wiring $2,500, combined $14,000. Under 80% AMI can be covered up to 100% of cost. 80% to 150% AMI is capped at 50% of cost. Above 150% AMI you are out of HEEHR.
Your utility and your state may still have 2026 heat-pump and weatherization money. Mass Save, for example, still published 2026 whole-home air-source rebates at $2,650 per ton, capped at $8,500. That is one state. It is not a national coupon.
Mass Save: air source heat pumps
EnergySage’s 2026 marketplace average for a heat pump install is $15,393 before incentives. After the state and local incentives in their tables, the all-types average is $14,153. The federal 25C credit is not in those 2026 after-incentive columns, because it cannot be.
Do not treat any of those as guaranteed savings. A closed portal pays zero. Weatherize first is often a condition of the bigger rebate, not a separate hobby.
Three bids that all get the tax year wrong
Bid A, $12,900 after “federal credit included.” Line items: a 3-ton changeout, “$2,000 IRS 25C,” and an install in 2026. Add the credit back. You are looking at $14,900 for a catalog page, and the load is still missing. Send it back.
Bid B, 2025 install, no Form 5695 plan. The unit went in last November. The contractor “handled the rebate” and handed you a folder with no manufacturer certification and no 5695 worksheet. The credit, if it exists, is yours to claim on the 2025 return. The contractor cannot file your 1040.
Bid C, solar plus battery, “30% federal still applies.” Installation finishes in 2026. IRS FAQ 7 is blunt: if installation is completed after December 31, 2025, the 25D expenditure is treated as made after that date. The 30% is not in the deal. Price the job gross.
A charger bid that still subtracts $1,000 of 30C after June 30, 2026 is the same mistake on a smaller line. Level 2 charger types is the hardware. The tax line for a 2026 charger is zero.
What has to be on the quote?
Get three bids with the same written scope and the same install year.
Ask for, in writing:
- The placed-in-service date. Month and year the equipment will run. 2025 and 2026 are different tax years.
- Which federal credit, if any. 25C, 25D, or 30C, with the IRS termination date next to it. “Federal incentive” is not a name.
- Whether they subtracted it from what you pay them. A tax credit is not cash at closing. If they netted $2,000 off the invoice, they lent you their guess about your 1040.
- The living programs, named. Utility, state, HOMES, HEEHR. Who files, and whether a reservation exists. If that list is empty, start with the rebate checker.
- The gross price if every rebate dies. Funds run out. Inspections fail. You should still want the job at the sticker.
If two bids show a 2026 install with no 25C, and the third is $2,000 cheaper because of “the tax credit,” the third is not cheaper, because it is unfinished.
How do I decide this week?
- Check the install date on every envelope. 2025 work can still be a Form 5695. 2026 work cannot be 25C or 25D.
- Add back any federal credit the contractor already subtracted for a 2026 start date, then compare gross numbers.
- If you installed in 2025, gather the invoice and the manufacturer certification, and talk to the person who files your return. That is not the HVAC salesperson.
- Look up your utility and state programs with the rebate checker, because those are the dollars that can still move a 2026 bid.
- If income might be under 150% of AMI, ask the state energy office whether HEEHR is actually open, not whether ENERGY STAR printed a cap.
- Hire the job you would buy without the dead credit, and treat anything extra as luck.
A 2026 heat pump still costs what it costs. Ask which living rebate is reserved, then hire that number.