Is the heat pump tax credit still available in 2026?

No. The federal Energy Efficient Home Improvement Credit (Section 25C), which offered 30% back up to $2,000 for qualifying heat pumps, expired for equipment placed in service after December 31, 2025. It was eliminated by the One Big Beautiful Bill Act. Geothermal heat pumps are on a separate incentive track (Section 25D) that also expired the same date.

Have heat pump sales dropped since the tax credit expired?

No — according to shipment data from the Air Conditioning, Heating, and Refrigeration Institute (AHRI), which represents over 90% of the U.S. HVAC market, air-source heat pump shipments have not declined in 2026 compared to 2025, and the typical winter-to-spring sales ramp has actually been stronger than in prior years. This is notably different from residential solar, where installations have dropped sharply since its federal credit expired.

Is a heat pump worth it without a tax credit?

For many households, yes — especially those replacing an aging electric resistance heating system, in moderate climates, or in areas with relatively high electricity or gas prices. The financial case is weaker without the credit, with payback periods now often 8-14 years rather than 5-8, but heat pumps still typically deliver 2-4x the heating efficiency of resistance heat and can outperform gas in areas with high gas prices.

Is a Heat Pump Still Worth It in 2026 Without the Tax Credit?

The federal tax credit for heat pumps quietly disappeared at the end of 2025. Install one on December 31, and you could claim a $2,000 credit on your taxes. Install the identical system on January 1, 2026, and you get nothing. You'd expect that kind of cliff-edge policy change to tank sales. New industry data suggests it hasn't.

The Surprising Data: Sales Haven't Dropped

Shipment data from the Air Conditioning, Heating, and Refrigeration Institute (AHRI) — a trade group representing more than 90% of the U.S. heating and cooling equipment market — shows no meaningful decline in air-source heat pump shipments through the first several months of 2026 compared to 2025. If anything, the usual winter-to-spring sales ramp has been somewhat stronger in 2026 than in the two prior years, according to an analysis published by UC Berkeley energy economist Lucas Davis on the Energy Institute at Haas blog.

That's a genuinely unexpected result. A $2,000 credit on a roughly $7,000 average installation is a meaningful discount — more than 25% off. If buyers were price-sensitive to that credit, shipments should have dropped noticeably in January 2026. There was also no evidence of a rush to install before the deadline, unlike what happened with California's rooftop solar subsidy phase-out in 2023, which triggered a spike in applications.

Why the Solar Story Is So Different

This is where it gets interesting: the same type of federal credit expiring for residential solar has had close to the opposite effect. U.S. residential solar installations have reportedly declined sharply since their federal credit ended, with industry coverage describing the outlook as weak for years to come — a pattern we've also seen reflected in our own research into 2026 solar economics (see our updated solar cost guide).

Davis's analysis offers a plausible explanation: the solar tax credit had existed in a more generous form for far longer and was much better known among buyers, while the $2,000 heat pump credit only reached that level in 2023 and may not have been well known to begin with. There's also a structural difference — solar installations are more purely discretionary purchases, while heat pump installations are frequently tied to new home construction or replacing equipment that has already failed, which limits the timing decisions available to buyers in the first place.

What This Means If You're Considering a Heat Pump

The practical takeaway isn't "heat pumps are free now" — they're not, and the $2,000 discount is genuinely gone. What the data suggests is that the tax credit was probably not the main reason most people bought heat pumps in the first place. Households appear to be choosing heat pumps for the same underlying reasons they always did: they're replacing a failed furnace or AC, they're building new, or the local economics (climate, electricity rates, gas prices) already favored a heat pump before any credit was factored in.

That's useful context if you're on the fence. The core case for a heat pump hasn't changed just because the credit disappeared:

Efficiency: A heat pump delivers 200–400% efficiency (COP 2–4), meaning 2-4 units of heat per unit of electricity, versus 100% for electric resistance heating. If you currently have baseboard or resistance heat, switching to a heat pump is very likely to lower your bills regardless of any credit.
Dual-purpose: A heat pump replaces both your furnace and your AC with one system, which matters when comparing total replacement cost, not just the heating-only price tag.
Climate fit: Modern cold-climate heat pumps perform well down to 0°F or below, though efficiency does decline in very cold conditions. Areas with mild-to-moderate winters see the strongest economics.

What's Still Available (Even Without the Federal Credit)

The federal 25C credit is gone, but it's not the only source of savings:

HEAR/HEEHRA rebates: Funded separately from the tax code and not affected by the credit's expiration, these income-qualified rebates (up to $8,000 in some states) are still rolling out state by state.
State tax credits: Some states offer their own heat pump incentives independent of the federal program.
Utility rebates: Many electric utilities offer $300–$2,000+ rebates for heat pump installations, particularly in states pushing electrification.

Check dsireusa.org for what's currently available in your state, and see our full incentive guide for more detail on HOMES/HEEHRA eligibility.

Run Your Own Numbers

Whether a heat pump makes financial sense for your specific home depends heavily on your current heating fuel, local electricity and gas rates, and climate. Use our Heating vs Cooling Cost Calculator to compare your current system's costs, or read our heat pump vs. furnace breakdown for a fuller comparison. If you're currently on electric resistance heat or propane, the case for switching remains strong even at full price — the math is closer if you're comparing against cheap natural gas.