Signed into law in 2022, the Inflation Reduction Act (IRA) introduced a range of energy efficiency incentives for homeowners, including the popular 25C Federal Tax Credit for qualifying heat pump installations. With the passage of the Big Beautiful Bill in July 2025, many of these incentives are scheduled to change.
Here’s what homeowners should know to make informed decisions regarding related home improvement projects.
Under the Inflation Reduction Act, homeowners who install qualifying cold climate heat pumps are eligible for a federal tax credit of 30% of the installation cost, up to $2,000.
Additional tax credits are also available for related upgrades:
Beginning January 1, 2026, the federal tax credit for heat pump installations will no longer be available due to provisions in the Big Beautiful Bill.
The federal tax credits for the following projects are also scheduled to end January 1st, 2026:
and more.
If you’ve been considering a heat pump installation, 2025 is likely the last year to take advantage of the federal tax credit. For those weighing whether to move forward this year (2025) or wait until next, this change may influence your project timeline.
To qualify for a federal tax credit for your heat pump project, your installation must be completed and paid for by December 31st, 2025.
That said, there’s no need to panic or rush your decision. While the federal tax credit will be phased out, Massachusetts residents still have access to valuable local rebates through programs such as Mass Save and municipal energy programs, even in 2026.
As always, we recommend speaking with a trusted contractor who understands both federal and local incentive programs to help you plan your project and get the most out of available savings.
Let us know if you have any questions. We are here to help!
Whether you’re looking for reliable HVAC, electrical or plumbing services,
we’re here to help!
"*" indicates required fields
