The 25C Credit Ended Dec 31, 2025: What NJ Homeowners Can Claim in 2026

If you've seen articles (including older ones from us) about claiming 30% back on a heat pump through the federal Section 25C tax credit, here's the update: that credit expired December 31, 2025, and cannot be claimed for equipment installed in 2026 or later. If your HVAC installation was completed and paid for on or before December 31, 2025, talk to your tax preparer about whether you can still claim it on that year's return. For anyone installing in 2026, here's what's actually available.

Section 25C of the Internal Revenue Code — the Energy Efficient Home Improvement Credit, which had offered a tax credit equal to 30% of the cost of qualifying HVAC equipment and installation, up to $2,000 per year for heat pumps — was not extended past December 31, 2025. There is no federal HVAC tax credit available for equipment installed starting January 1, 2026. This doesn't affect any state or utility rebate — those are separate programs administered by New Jersey and PSE&G, not the IRS, and they're unchanged.

What NJ Homeowners Can Still Get in 2026

The PSE&G / NJ Clean Heat program is still active and is the main incentive available to NJ homeowners replacing a heating or cooling system with a heat pump. Residential customers can receive up to $16,000, and income-qualified (LMI) households can receive up to $18,000. Commercial properties can have up to 80% of a qualifying HVAC upgrade covered through PSE&G's NJ Direct Install program. Neither of these requires filing anything with the IRS — they're applied as rebates through the utility, not tax credits you claim in April.

If You Installed Before the Deadline

If your qualifying HVAC equipment was installed and paid for on or before December 31, 2025, the 25C credit may still apply to that tax year's return — the expiration affects new installs going forward, not installs that were already completed. Keep your invoices, model numbers, and the manufacturer's certification statement, and confirm with a tax professional whether you can still file for it on your 2025 return.