If you’ve been considering a heat pump upgrade, you’ve probably heard about the 25C Energy Efficient Home Improvement Tax Credit. This popular incentive has helped millions of American households cut the cost of energy-efficient upgrades like heat pumps, insulation, and energy audits. However, with recent policy proposals in play, the future of the 25C tax credit has become less certain.
Let’s break down:
- What the 25C tax credit is and how it works
- The latest 2025 updates and potential changes
- Who still qualifies, and how long 25C is scheduled to last
- How MyNewHeatPump.com helps homeowners stack rebates and tax credits for maximum savings
Dive into the facts with the experts at MyNewHeatPump so you can make informed decisions about your home upgrades.
What Is the 25C Tax Credit?
The 25C Energy Efficient Home Improvement Credit, expanded under the Inflation Reduction Act (IRA), was designed to help households afford energy-efficient improvements.
Here’s how it works:
- Covers 30% of the cost of qualifying projects, up to $3,200 per year
- Applies to improvements like heat pump installations, energy audits, insulation, and air sealing
- Claimed by filing IRS Form 5695 with your annual taxes
- Scheduled to run through 2032 under current law
For example, if you spent $6,000 on a qualifying heat pump in 2024, you could claim a $1,800 credit on your taxes (30%).
25C Tax Credit Update 2025: What’s Changing
In May 2025, a new tax package introduced in the U.S. House of Representatives proposed repealing 25C at the end of 2025. While this proposal is not final, it has created uncertainty for homeowners planning upgrades.
Some key facts:
- The proposed repeal would shorten the program’s lifespan by 7 years (originally set to last until 2032).
- More than 2.3 million households claimed the 25C credit in 2023, averaging nearly $900 per household.
- The debate is ongoing, with industry leaders and organizations advocating for the credit to remain.
- The U.S. Senate will also review and may revise the proposal, meaning the final outcome is not yet determined.
👉 Bottom line: As of now, the 25C credit is still active for 2025. But the proposed repeal means homeowners may want to act sooner rather than later.
Can I Still Get the 25C Credit in 2025?
Yes—for now. If you install a qualifying ENERGY STAR heat pump or complete another eligible project in 2025, you can still claim the credit when you file your taxes next year.
However, there are two important caveats:
- Rebates vs. Credits: If your IRA rebates cover the full cost of the project, you cannot also claim the 25C credit. It only applies to out-of-pocket costs.
- Example 1: $12,000 heat pump project, $9,000 covered by rebates → You can claim the 25C credit on the remaining $3,000.
- Example 2: $12,000 project, $12,000 covered by rebates → No out-of-pocket expense, so no 25C credit.
- Professional Installation: DIY doesn’t count. To qualify, your project must be installed by a qualified contractor.
This is where MyNewHeatPump.com steps in. We help you braid together 25C credits, IRA rebates, and even local utility programs so you get the maximum savings possible on your home upgrades.
How Long Will the 25C Credit Last?
As of today, the 25C tax credit is set to last through December 31, 2032. However, if the current legislative proposal passes unchanged, it may expire as early as December 31, 2025.
Industry experts are pushing for the program to continue, citing its proven impact on energy savings, job creation, and household affordability. Until there’s an official change, homeowners should treat 2025 as a key year to take advantage of the program while it’s available.
How MyNewHeatPump Helps Maximize Your 25C Credit
Navigating tax credits and rebates isn’t simple, but we do it every day. At MyNewHeatPump.com, we:
- Verify eligibility for your household and zip code.
- Connect you with certified contractors who meet state and federal requirements.
- Bundle rebates and credits (federal, state, and utility) to cover the largest share of your project.
- Guide you through Form 5695 so you don’t leave money on the table.
For many homeowners, this can mean saving thousands more than trying to navigate the system alone.
FAQs About the 25C Tax Credit
What home improvements qualify for the 25C credit?
Qualifying improvements include heat pumps, home energy audits, insulation, air sealing, and specific HVAC upgrades such as central air conditioners and furnaces. To be eligible, these systems must meet ENERGY STAR efficiency guidelines and the latest Consortium for Energy Efficiency (CEE) tiers.
Homeowners should verify efficiency ratings before purchasing, since only systems that meet these standards qualify. Partnering with MyNewHeatPump makes this process easier as we connect you with contractors who know exactly which systems check all the boxes.
Can I combine the 25C tax credit with IRA rebates?
Yes, this is where homeowners see the biggest savings. If rebates cover only part of the project, you can claim the 25C tax credit on your remaining out-of-pocket costs.
The credit covers 30% of your share, up to $2,000 for heat pumps and $1,200 for other upgrades. MyNewHeatPump specializes in stacking and braiding rebates with the 25C credit to maximize savings, so you don’t leave money on the table.
How do I claim the 25C tax credit?
To claim the credit, you’ll need to confirm your system meets eligibility requirements, save all receipts and documentation, and file IRS Form 5695 with your tax return. Most homeowners complete this during regular tax season, but it’s best to prepare your paperwork as soon as your project is done.
Our team helps homeowners navigate the entire process, from verifying efficiency to making sure the right documentation is submitted. With our guidance, claiming the credit is simple, accurate, and stress-free.
What happens if the 25C tax credit is repealed after 2025?
If the proposed repeal takes effect, only projects completed and installed before the cutoff date will be eligible. That means if you delay, you could miss out on thousands in savings.
This uncertainty is one reason why many homeowners are moving quickly in 2025 to complete their upgrades. MyNewHeatPump is helping households fast-track projects so they don’t risk losing access to the credit.
Can renters or multifamily households benefit from 25C?
Typically, the credit goes to the property owner who pays for the qualifying upgrade. However, renters can benefit indirectly through lower energy bills if their landlord installs a qualifying system.
The impact can be even greater for multifamily buildings. When combined with IRA rebates, 25C can make large-scale projects more affordable. MyNewHeatPump works with both individual homeowners and multifamily property managers to maximize incentives across multiple units.
Why You Should Act Now
The 25C tax credit update 2025 shows how quickly policies can shift. Right now, homeowners can still claim up to $3,200 per year, but the window may be closing sooner than expected.
At MyNewHeatPump.com, we braid together 25C tax credits, IRA rebates, and state-level incentives to stretch every dollar and get you the money you deserve. If you’ve been waiting for the right time to upgrade to a heat pump or tackle energy-efficient improvements, 2025 is the year to make it happen!
Take Advantage of Government Rebates and Tax Incentives Before It’s Too Late
With the future of 25C uncertain, taking action now locks in both rebates and tax credits while they’re still available. The expert team at MyNewHeatPump is here to guide you through the entire process. Start today by filling out our free questionnaire!
