Federal Tax Credits for Energy Efficiency

Federal Heat Pump Tax Credit (25C) - Ended

Name: Xcel Energy Rebates
Brand: Xcel Energy
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The federal 25C tax credit for heat pumps ended December 31, 2025. The $2,000 annual heat pump credit was eliminated by the One Big Beautiful Bill Act signed into law in 2025.

If you installed a heat pump before 2026, you can still claim the credit on your 2025 tax return (or the year of installation).

By: Editorial Staff
Updated February 6, 2026

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The 25C Federal Tax Credit Has Ended

This was a tax credit, not a rebate. You claimed it when filing your federal return. It reduced your tax liability dollar-for-dollar. The credit was originally part of the Inflation Reduction Act (2022) and was scheduled to run through 2032. Congress ended it early through the One Big Beautiful Bill Act.

If You Installed in 2025 or Earlier

You can still claim the 25C credit for qualifying installations completed before January 1, 2026. Click below to see our full guide on claiming the heat pump 25C tax credit for 2025.
The rules for 2025:

– Installation must have been completed before January 1, 2026

– Equipment must have met ENERGY STAR or CEE efficiency requirements at time of installation

– Must be your primary residence (not rental or second home)

– Credit applies to the tax year the installation was completed, not when you paid

Need the full step-by-step guide for filing Form 5695?

What About the IRA Rebates (HEAR)?

The Inflation Reduction Act funded two programs. They’re different from the 25C tax credit and did not end in 2025. They actually mostly got started in 2025 for Colorado!

HEAR (Home Electrification and Appliance Rebates) is still available. It’s funded through a separate pool of IRA dollars allocated to Colorado and is not affected by the One Big Beautiful Bill Act.

HEAR provides up to $8,000 for heat pumps (up to $14,000 for lower-income households). Unlike the 25C credit, HEAR is applied at the time of purchase — not on your tax return.

✅ Available

HEAR Rebates

Income restricted federal incentives.

Learn More

What Rebates Are Still Available?

The federal credit is gone, but Colorado still has significant heat pump rebates in 2026:

Program	Rebate	Who Qualifies
Xcel Energy	$2,250/heating ton	Xcel Gas Customers
HEAR	Up to $14,000	Income under 150% AMI
Colorado State Tax Credit	$1,000	All Colorado residents
Power Ahead / DRCOG	TBD	Denver metro (launching mid-2026)
United Power	Varies	United Power customers
EnergySmart	Varies	Boulder County residents
Xcel IQ	25-100% of cost	Specific areas, income-qualified
Xcel Mountain Energy	$7,500/heating ton	Specific Mountain communities

Can I still get the federal heat pump tax credit in 2026?

No. The 25C credit ended December 31, 2025. There is no federal heat pump tax credit for installations in 2026.

I installed a heat pump in 2025. How do I claim the credit?

File IRS Form 5695 with your 2025 tax return. You’ll need the manufacturer certification and your contractor invoice. The credit is up to $2,000 for heat pumps and applies to the year the installation was completed.

Why did the federal tax credit end?

The One Big Beautiful Bill Act, signed in 2025, eliminated the 25C Energy Efficient Home Improvement Credit. It was originally scheduled to run through 2032 under the Inflation Reduction Act.

Are HEAR rebates still available?

Yes. HEAR is a separate program from the 25C tax credit. It’s funded through IRA dollars allocated to Colorado and is still active. Check HEAR eligibility

Is the Colorado state heat pump tax credit still available?

Yes. The state credit ($250–$1,000) is a Colorado program and is not affected by federal changes. Details

Are there any remaining federal incentives for heat pumps?

No federal tax credit exists for heat pumps in 2026. HEAR rebates are federally funded but administered at the state level. Check IRS.gov for the latest on any future federal programs.

MORE SAVINGSMORE REBATESMORE SAVINGSMORE REBATESMORE SAVINGSMORE REBATES

✅ Available

Xcel Energy Rebates

For Xcel account holders.

Learn More

✅ Available

CO Heat Pump Credit

For all Colorado residents.

Learn More

✅ Available

HEAR Rebates

Income restricted federal incentives.

Learn More

$5M+

Saved for our homeowners through eligible rebates in 2025

Up to $22,150

In potential savings

12,000+

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