Federal HVAC Tax Credits Are Gone in 2026

If you’ve Googled “HVAC tax credit 2026” recently, you’ve probably found a tangled mess of outdated articles still telling you to claim the federal 25C credit. Here’s the reality: those credits ended on December 31, 2025.

That doesn’t mean the savings are gone. State, utility, and local programs in Oregon and Washington are still very much active — and for Portland and Vancouver homeowners, they often add up to more than the federal credit ever offered. Here’s what’s still on the table for 2026.

What Happened to the Federal HVAC Tax Credits?

The One Big Beautiful Bill Act, signed into law on July 4, 2025, terminated both the Section 25C Energy Efficient Home Improvement Credit and Section 25D Residential Clean Energy Credit effective December 31, 2025.

What that means in plain English:

If your HVAC project was completed by December 31, 2025 — you can still claim the credit on your 2025 federal tax return using IRS Form 5695. Up to $2,000 for heat pumps and $1,200 for other eligible upgrades.
If your project was installed or will be installed in 2026 or later — the federal credit is no longer available, regardless of equipment efficiency.

The HEAR (Home Electrification and Appliance Rebate) and HOMES (Home Efficiency Rebates) programs, which were funded under the Inflation Reduction Act, are administered through state energy offices — and in Oregon, those are still in development as of early 2026.

Disclaimer: Tax matters are individual. Talk to a licensed tax professional about your specific situation before relying on any tax position.

What Portland Homeowners Can Still Save in 2026

For Oregon residents, the good news is that the state’s incentive infrastructure is genuinely strong — arguably stronger than the federal credit ever was for most heat pump projects.

1. Energy Trust of Oregon — $800 to $3,000+

Oregon’s main rebate program is funded through utility customer charges, not federal money, so it wasn’t affected by the federal credit changes. Current 2026 amounts:

$800 for a qualifying ductless heat pump
$1,000 for a qualifying ducted central heat pump
$1,000–$3,000 for extended-capacity (cold-climate) heat pumps
Up to $3,000 for income-qualified households (Savings Within Reach)

Eligibility requires service from Portland General Electric or Pacific Power, equipment meeting HSPF2 efficiency minimums, and (typically) replacing electric resistance heat. We cover the full process in our Energy Trust step-by-step guide.

2. Oregon HP3 (Heat Pump Purchase Program) — Up to $2,000

The Oregon Department of Energy administers HP3, which is funded by a $24 million federal Climate Pollution Reduction Grant. It offers up to $2,000 per residence and applies to owner-occupied homes, rental properties, and new construction (when category funding is available).

As of early 2026, owner-occupied rounds were heavily reserved, but rental and new construction funding remained available. Status updates regularly — check oregon.gov/energy or ask us during a quote.

3. Portland Clean Energy Fund (PCEF) Gap Funding

For income-qualified homeowners within Portland city limits, PCEF can layer on top of other rebates to close the affordability gap on major efficiency upgrades. Eligibility is based on income relative to area median income.

4. PGE Smart Thermostat Program

Smaller in dollar terms but easy money: PGE offers a $25 enrollment bonus when you sign up your qualifying smart thermostat for their demand-response program, plus $25 per season you participate.

5. Manufacturer Rebates

Equipment manufacturers run periodic promotional rebates that stack with utility programs. Mitsubishi, Daikin, Carrier, Lennox, and Rheem all offer seasonal rebates — usually $300–$1,500 on full-system installations. We track what’s currently active and apply qualifying promotions automatically.

What Vancouver, WA Homeowners Can Still Save in 2026

Washington homeowners aren’t served by Energy Trust of Oregon, but Clark Public Utilities runs its own strong rebate program for Clark County residents.

1. Clark Public Utilities Heat Pump Rebate — $500 to $1,250+

Current Clark Public Utilities heat pump rebates for electrically-heated homes:

$1,000 for converting an electric forced-air furnace to a central heat pump (HSPF2 7.5+)
$1,250 for converting an electric forced-air furnace to a central variable-speed heat pump (HSPF2 7.5+)
$500 for replacing an existing heat pump or electric zonal heat with a central variable-speed heat pump
$800 typical rebate for ductless heat pumps (single or multi-head)

The heat pump must be installed by a contractor in Clark Public Utilities’ Contractor Network. We’re a participating contractor and handle the rebate paperwork directly.

2. Clark Public Utilities Heat Pump Water Heater Rebate — Up to $1,500

If you’re already replacing HVAC equipment, bundling a heat pump water heater can unlock another $1,500 rebate. See our water heater services for more.

3. Clark Public Utilities Smart Thermostat Rebate — $50

Small but easy — $50 back on a qualifying smart thermostat purchase.

4. Washington State HOMES & HEAR Rebates (Coming)

Washington’s HOMES and HER (Home Energy Rebates) programs, funded through the federal Inflation Reduction Act, were being finalized in 2026. Once active, they can provide up to $14,000 for HEAR-eligible electrification projects and up to $10,000 for HOMES-eligible whole-home retrofits, depending on income tier. Check commerce.wa.gov for current status.

How Much You Can Actually Save: A Realistic Example

Let’s run the math on a typical 2026 Portland heat pump install: a 3-ton ducted central heat pump replacing an electric forced-air furnace in a 2,000 sq ft home. Pre-rebate cost: about $9,500.

Energy Trust of Oregon ducted heat pump rebate: −$1,000
Oregon HP3 (if funding available for owner-occupied at the time): −$2,000
Manufacturer promotion (varies): −$500
PGE smart thermostat enrollment: −$25

Out-of-pocket: roughly $5,975. That’s about 37% off the sticker price — without the federal credit ever being part of the picture.

For Vancouver, the same project pre-rebate runs similarly. Clark Public Utilities rebate of $1,000–$1,250 plus a manufacturer promotion typically lands homeowners in the $7,000–$8,000 range out of pocket.

What About Financing if Rebates Don’t Cover Everything?

Even with strong state and utility rebates, replacing a full HVAC system is a real expense. We offer flexible financing options that let you spread the post-rebate cost over time, often with $0 down. Combined with the energy savings from a high-efficiency heat pump, the monthly payment often comes in under what you were spending on your old system’s energy bills.

The Honest Take on 2026

Losing the federal 25C credit is genuinely a setback for some homeowners — particularly those replacing gas furnaces, who can’t access the strongest Energy Trust rebates (which require replacing electric heat). But for the vast majority of Portland and Vancouver homeowners replacing aging electric systems or going all-electric, the state and utility incentives stack into real money. In some cases, more than the federal credit alone would have provided.

The trick is knowing which programs apply to your specific situation and stacking them correctly. That’s where working with a contractor who knows the local rebate landscape pays for itself.

2026 HVAC Tax Credit FAQs

Are federal HVAC tax credits still available in 2026?

No. The federal Section 25C Energy Efficient Home Improvement Credit and Section 25D Residential Clean Energy Credit both expired on December 31, 2025 under the One Big Beautiful Bill Act. Projects completed by that date can still be claimed on a 2025 tax return.

Can I still claim the $2,000 heat pump tax credit?

Only if your heat pump was installed and placed in service on or before December 31, 2025. The credit is claimed on IRS Form 5695 with your 2025 federal return.

What’s the best 2026 replacement for the federal tax credit in Oregon?

For most Portland-area homeowners, Energy Trust of Oregon ($800–$3,000) combined with Oregon HP3 (up to $2,000) provides equivalent or greater savings than the previous federal credit. Stacking with manufacturer promotions makes the gap even smaller.

What rebates can Vancouver, WA homeowners get in 2026?

Clark Public Utilities offers heat pump rebates ranging from $500 to $1,250+, plus separate rebates for heat pump water heaters (up to $1,500) and smart thermostats. Washington state HOMES and HER programs are coming but were not yet active as of early 2026.

Do state rebates affect my federal taxes?

Utility and state rebates that reduce your purchase price generally reduce the basis of the property, not your taxable income — but tax treatment depends on program structure. This is a question for your tax professional based on your specific situation.

What if Congress reinstates the federal credit?

Tax legislation is unpredictable. If a new credit becomes available, we’ll update this guide. For now, the only confirmed federal incentives for 2026 HVAC projects flow through state-administered HOMES and HEAR programs (where active), not the old 25C credit.

Get a Real Number for Your Home

Rebate availability shifts through the year as program funding fills up. The only way to know what you actually qualify for is a quote built around your home, your current system, and the programs available right now.

We offer free in-home estimates and apply all qualifying Energy Trust, HP3, and Clark Public Utilities rebates directly to your invoice — you see the final number before you sign anything.

Portland, OR: (503) 784-1270
Vancouver, WA: (360) 773-1520

Schedule online or learn more about your options:

Last updated: May 2026. Rebate programs and amounts are subject to change. Tax information is general and not a substitute for professional tax advice.

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