Need to upgrade your heating and cooling system? A heat pump might be the perfect solution. But if you want to install one, you should act quickly. The $2,000 federal heat pump tax credit expires on December 31, 2025!
Neeeco can help you take full advantage of the federal tax credit for heat pump installation before it’s gone. We’re a whole-home energy efficiency expert that’s been helping Massachusetts homeowners save energy and money for years.
Keep reading to learn more about the heat pump tax credit and how to claim it before it’s too late.
What Is the Heat Pump Tax Credit?
The heat pump tax credit is part of a larger tax credit, known as the 25C Energy Efficient Home Improvement Tax Credit. It saves you 30% on your heat pump installation costs, up to $2,000. Ducted heat pumps, ductless mini split heat pumps, and heat pump water heaters are all eligible.
The Energy Efficient Home Improvement Tax Credit has been in place for years, but was recently cut by the “One Big Beautiful Bill” (OBBB). To claim it, you need to install your heat pump by the last day of 2025.
Who Qualifies for the Heat Pump Tax Credit in 2025?
The heat pump tax credit was recently cut by the “One Big Beautiful Bill” (OBBB). But you can still claim it in 2025!
To qualify, you must install your heat pump before December 31, 2025. It’s not enough to sign a contract or even pay for your heat pump by the deadline—it has to be fully installed. If you want to finish on time, you need to get started ASAP. Schedule your free consultation with Neeeco today so you don’t miss out.
You must also meet a few additional eligibility requirements:
- Owe federal income taxes
- Install a qualifying heat pump system at your primary residence in the US
- Install a heat pump in an existing home (new construction doesn’t qualify)
Which Heat Pumps Qualify for the Tax Credit?
Not all heat pumps are eligible for the 25C tax credit. To qualify, your new heat pump must meet or exceed the Consortium for Energy Efficiency (CEE) highest efficiency tier. You can use the ENERGY STAR Product Finder to search for tax credit-eligible heat pumps.
If you’d rather not do all that research, just call Neeeco. We’ll help you choose a heat pump that meets eligibility requirements so you don’t have to spend hours analyzing heat pump efficiency standards.
How Does the Heat Pump Tax Credit Work?
The heat pump tax credit reduces what you owe when you file your 2025 federal income taxes.
For example, say you owe $3,000 in federal income taxes. You install a heat pump and receive the maximum credit of $2,000. When you file your tax return, you will subtract the credit amount from what you owe, bringing your total down to $1,000.
How to Claim the Heat Pump Tax Credit in 2025
Claiming the heat pump credit is simple. You don’t have to apply for the credit—you simply claim it when you file your 2025 taxes.
These are the basic steps you’ll need to follow:
- Step One – Keep all receipts and invoices associated with your heat pump installation.
- Step Two – Complete IRS Form 5695 (skip down to Part Two: Energy Efficient Home Improvement Credit).
- Step Three – Add your tax credit information to your IRS Form 1040.
- Step Four – Make sure you attach Form 5695 when you file.
The most important thing to remember is that you must complete your installation before the end of 2025 to be eligible for the tax credit. Any installations completed after December 31, 2025, will not qualify, even if you already signed a contract.
Disclaimer: We’re energy efficiency experts, not tax experts. Always consult a tax professional about your specific situation
Save More with Mass Save® Heat Pump Rebates
If you live in Massachusetts, you’re eligible for additional heat pump incentives through Mass Save. The Sponsors of Mass Save offer generous rebates for heat pump heating and cooling systems. Incentive amounts vary—to find out how much you can save, schedule a no-cost Home Energy Assessment with Neeeco today. We’ll walk you through all the incentives available and help you claim every dollar you’re eligible for.
*Some restrictions apply. Offers are subject to change or cancellation. Visit MassSave.com/HEA for full details.
*Some restrictions apply. Offers are subject to change or cancellation. Visit MassSave.com/HEA for full details.