Last Chance to Claim 30% Off a New Heat Pump: Federal Credit Ends December 31, 2025
- Devra Prywes
- Aug 15
- 4 min read
Updated: Aug 18
A big window of opportunity for homeowners is closing fast. On July 4, 2025, federal legislation moved up the expiration date for several clean-energy tax credits. For heat pumps, the 30% federal tax credit (originally set to run through 2032) will now end on December 31, 2025.
That means you have less than a year to choose your system, schedule your installation, and have it up and running to qualify.
Wait too long, and you could miss out on thousands in savings.
Here are the details you need to know to make the decision that’s right for you.
What the 2025 Federal Heat Pump Tax Credit Covers
Two key federal tax credit programs in the U.S. Internal Revenue Code apply to heat pumps:
Section 25C: Energy Efficient Home Improvement Credit
Covers 30% of the project cost, up to $2,000, for qualifying air-source heat pumps and heat pump water heaters.
Also applies to other home efficiency upgrades like insulation and windows (separate caps apply).
Ends December 31, 2025.
Section 25D: Residential Clean Energy Credit
Covers 30% of the cost for geothermal heat pumps, solar, and battery storage.
No annual cap.
Ends December 31, 2025.
See IRS Form 5695 instructions for eligibility and claim details - or give us a call
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Who Benefits Most: Is This You?
If you’ve been thinking about upgrading your heating and cooling system, or your furnace or boiler has been limping along, this is your moment. This is especially smart for homeowners who:
High fuel costs: Heating with oil or gas and tired of unpredictable bills.
Aging system: Furnace or boiler is 12–15 years old (oil) or 15–20 years old (gas).
Frequent repairs: More than two service calls in the past year.
Major part replacement: e.g., blower motor, heat exchanger, or burner in the last 12 months.
Uneven comfort: Hot and cold spots or long run times to maintain temperature.
Want better air quality: Lower bills, more comfort, and healthier indoor air.
Waiting until your current system quits means you could be stuck replacing it in 2026, without the credit, and paying full price.
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How Much Can You Save?
For many Long Island homeowners:
Air-Source Heat Pump Installation Cost: $12,000–$18,000 (ducted) or $7,500–$12,000 (ductless mini-split)
Federal Tax Credit: Up to $2,000 (Section 25C)
PSEG Long Island Rebates: $2,000–$3,000
NYS Clean Heat Program Rebates: Often $500–$2,000+
Geothermal Installations: 30% uncapped federal credit + state and utility rebates
Potential combined rebates and credits: Up to $7,000+ for qualifying systems.
What Determines Your Rebate Amount
PSEG Long Island Rebates ($2,000–$3,000)
Based on system type (ducted vs. ductless)
Efficiency ratings: SEER2 for cooling, HSPF2 for heating
Total BTU capacity
Number of zones served
Seasonal bonus rebates may be available from PSEG
NYS Clean Heat Program Rebates ($500–$2,000+)
Based on heating load coverage: whole-home vs. partial-load
System efficiency: ENERGY STAR and NYS standards may qualify for higher tiers
Utility territory: rebate amounts can vary
Incentive stacking: some installers combine PSEG and Clean Heat rebates, splitting the total between programs
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Why Acting Early Matters
System must be installed and operational by December 31, 2025 “In service” means tested and running — not just ordered or scheduled.
Demand will spike As the deadline approaches, contractor schedules will fill quickly, and late planners risk being pushed into 2026.
Miss the date, miss the money Without a legislative change, any installation completed after December 31 will not be eligible for the federal credit.
Your Next Steps
Book a Free Estimate now - and reserve your installation slot.
Sign Contracts Early - lock in pricing and avoid the year-end rush.Check Eligibility - make sure your chosen system meets federal efficiency standards.
Save Your Paperwork - keep receipts, contracts, and manufacturer certificates for IRS Form 5695.
Bottom Line
If your oil or gas heating system is creeping toward retirement age, replacing it in 2025 could save you thousands in federal, state, and utility incentives — and protect you from a full-price emergency replacement just a few months later.
Book your free heat pump estimate today to secure your spot and lock in every available rebate before the deadline.
Frequently Asked Questions
When does the federal heat pump tax credit end?The 30% federal tax credit for qualifying heat pumps ends on December 31, 2025. Your system must be installed, tested, and operational by that date to qualify. Ordering equipment is not enough.
What is Section 25C and how does it apply to heat pumps?Section 25C, the Energy Efficient Home Improvement Credit, covers 30% of the cost for qualifying air-source heat pumps, up to $2,000. It also applies to other efficiency upgrades like insulation and windows, with separate caps.
What is Section 25D and who qualifies for it?Section 25D, the Residential Clean Energy Credit, covers 30% of the cost for geothermal heat pumps, solar, and battery storage, with no annual cap. To qualify, the system must meet IRS and manufacturer eligibility requirements.
What rebates are available for heat pumps on Long Island?Most homeowners can claim PSEG Long Island rebates of $2,000–$3,000 and NYS Clean Heat Program rebates of $500–$2,000+, in addition to the federal credit. Exact amounts depend on system type, efficiency, and installation details.
How much can I save if I install a heat pump in 2025?Many Long Island homeowners save up to $7,000 or more by combining federal tax credits, state incentives, and local utility rebates. Geothermal systems may qualify for even higher uncapped savings.
Should I replace my heating system before the 2025 deadline?Yes, if your furnace or boiler is 12–15 years old (oil) or 15–20 years old (gas), has needed frequent repairs, or has had major parts replaced recently. Replacing it before the deadline ensures you get all available incentives.
How can I avoid missing the federal credit deadline?Book your estimate early, sign contracts in advance, and confirm your system meets efficiency requirements. Installation backlogs are expected in late 2025, so waiting could push your project into 2026 and make it ineligible.
Can I combine the federal heat pump credit with PSEG and NYS rebates?Yes. In many cases, you can stack all three incentives, although the total may be split between programs. Your installer can help maximize combined savings.
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