The Federal HVAC Tax Credit Ended After December 31, 2025
The federal residential HVAC tax credit is no longer available for new installations. The Energy Efficient Home Improvement Credit (IRS §25C), which covered qualifying heat pumps, central air conditioners, gas furnaces, and related electrical upgrades, does not apply to equipment placed in service after December 31, 2025. The Residential Clean Energy Credit (§25D), which covered geothermal heat pumps, also ended after that date. A new heating or cooling system installed in 2026 does not qualify for either federal credit.
Installed qualifying equipment between 2023 and 2025? That installation may still matter for the tax return covering the year the equipment was placed in service. See the IRS guidance linked below or talk with a tax professional.
What Savings Are Still Available?
Even without a federal tax credit, there are still ways to save on a new heat pump, ductless system, or other high-efficiency equipment. Many local utilities and the Energy Trust of Oregon offer rebates and cash incentives for qualifying upgrades, and McDowell & Son can help you find out what you qualify for and handle the paperwork. You can also spread the cost of a new system over time with financing.
See our Rebates & Cash Incentives page and our Financing Options page for current programs.
Utility Rebates
Local PUDs & Co-ops
Several local utilities offer rebates for qualifying air-source and ductless heat pump installations. We are an approved contractor and help with the rebate paperwork.
Energy Trust of Oregon
Cash Incentives
Customers of Portland General Electric, Pacific Power, NW Natural, and Cascade Natural Gas may qualify for Energy Trust cash incentives on eligible energy-efficient upgrades.
Financing Options
Flexible Payments
Spread the cost of a new heating or cooling system over time with our financing options.
High-Efficiency Equipment
Lower Energy Bills
A high-efficiency heat pump or ductless system can still help lower your heating and cooling costs, with or without a federal tax credit.
The Former Federal Credit (2023–2025)
For qualifying equipment placed in service from 2023 through 2025, the Energy Efficient Home Improvement Credit covered 30% of the cost, up to $2,000 per year for heat pumps and up to $600 for items such as central air conditioners, gas furnaces, and electrical panel upgrades. It does not apply to equipment placed in service after December 31, 2025.
*Historical information only. The amounts above applied to qualifying 2023–2025 installations and are shown for context. They are not available for new systems installed in 2026 or later.
Watch: How the Former Federal Energy Tax Credit Worked
This short ENERGY STAR video explains how the Energy Efficient Home Improvement Credit worked for qualifying heat pumps, furnaces, and air conditioners placed in service in 2023–2025, and how it was claimed. It does not apply to new systems installed in 2026 or later.
*McDowell & Son does not provide tax advice. If you have questions about claiming a credit for qualifying equipment placed in service in 2023–2025, please review IRS Form 5695 and the IRS Energy Efficient Home Improvement Credit page, or consult a tax professional.