The federal Energy Efficient Home Improvement Credit, known as Section 25C, which offered up to $2,000 for qualifying heat pumps and up to $600 for qualifying central air conditioners, ended under the One Big Beautiful Bill Act. According to the IRS, the credit is not allowed for any property placed in service after December 31, 2025. Systems installed in 2026 do not qualify.
What happened to the HVAC tax credit?
The One Big Beautiful Bill Act, signed July 4, 2025, ended the Section 25C Energy Efficient Home Improvement Credit early. The IRS states that the credit will not be allowed for any property placed in service after December 31, 2025.
If you installed a system in 2025
If a qualifying heat pump or central air conditioner was placed in service in 2025, you may still be able to claim the credit on your 2025 federal tax return using IRS Form 5695. Keep your invoice and the manufacturer certification for your equipment, and talk with your tax professional.
What is still available in 2026
- SRP Cool Cash rebates for SRP customers on qualifying high-efficiency systems
- Financing through Synchrony, subject to credit approval
- Lower monthly energy bills from a more efficient system
A note on tax advice
My AZ Pro is not a tax advisor. This page is general information based on IRS guidance. Please confirm your situation with a qualified tax professional.