Are the federal HVAC tax credits from the Inflation Reduction Act gone, and what's left for Minnesota homeowners?
The federal 25C and 25D tax credits ended for equipment placed in service after December 31, 2025, and Minnesota's HEAR and HOMES rebates haven't launched. In 2026, most money for a Minnesota HVAC project comes from Xcel Energy, CenterPoint Energy and co-op rebates. Our heat pumps run $7,500–$14,500 installed.
Key points
- The 25C and 25D federal tax credits ended for equipment placed in service after December 31, 2025.
- Paying a deposit in 2025 doesn't help if the system was installed in 2026.
- Minnesota's IRA Home Energy Rebates (HEAR and HOMES) still hadn't launched as of mid-2026.
- Western Wisconsin's Focus on Energy HEAR program is open to income-qualified households.
- Utility rebates from Xcel Energy, CenterPoint Energy and the co-ops are separate programs and are still running in 2026.
The federal 25C and 25D credits that covered heat pumps, furnaces, central AC, boilers and geothermal ended for equipment placed in service after December 31, 2025, so nothing federal applies to a 2026 install. Minnesota's state rebates under the same law have not launched either, which leaves utility rebates. This page covers what ended, how "placed in service" is judged, and what is left. Western Wisconsin households also have Focus on Energy's HEAR program, which is open to income-qualified homes.
Which federal HVAC tax credits ended, and when?
Two federal credits covered most home HVAC work, and both ended after December 31, 2025.
- The 25C credit ended for any property placed in service after December 31, 2025. The Energy Efficient Home Improvement Credit covered heat pumps, central air conditioners, gas furnaces, boilers and home energy audits.
- The 25D credit ended on the same date. The Residential Clean Energy Credit covered geothermal heat pumps, along with solar and some other equipment.
Both were cut off by Public Law 119-21, signed July 4, 2025. The IRS explains how the credits ended in its FAQ on the new law. We found no federal credit for homeowner HVAC work in 2026.
What does "placed in service" mean for the federal credits?
The deadline turns on when the equipment was installed and ready to use, not when you signed a contract or paid a deposit. For 25D, the IRS says a system whose installation was completed after December 31, 2025 can't be claimed. A furnace ordered in November 2025 and installed in January 2026 falls on the wrong side of the line.
Where does each program stand in 2026?
| Program | Status in 2026 | Who it's for | What to check |
|---|---|---|---|
| Federal 25C credit | Ended for equipment placed in service after December 31, 2025 | Nobody installing in 2026 | Nothing to claim for a 2026 install |
| Federal 25D credit | Ended on the same date | Nobody installing in 2026 | It covered geothermal, which lost it too |
| Save Energy Minnesota (HEAR, HOMES and state heat pump rebates) | Not launched, no launch date | Households at or below 80% or 150% of area median income | The Department of Commerce page |
| Xcel Energy rebates, Minnesota | Open | Xcel customers | Contractor rule and current deadline |
| CenterPoint Energy heating rebates | Open | CenterPoint gas customers | Current deadline and equipment list |
| Dakota Electric and Connexus Energy | Open | Co-op members | Contractor rules; limited funds at Dakota Electric |
| Focus on Energy HEAR, Wisconsin | Open | Households under 150% of area median income | Most rebates need an IRA Registered Contractor |
Are the IRA Home Energy Rebates open in Minnesota or Wisconsin?
The Inflation Reduction Act also funded two rebate programs that states run: HEAR (Home Electrification and Appliance Rebates) and HOMES (whole-home efficiency rebates). They are rebates, not credits, and they're income-limited. That part of the law is still standing, but each state has to launch its own program.
Minnesota's version has not launched. The Department of Commerce is running it under the name Save Energy Minnesota, alongside two state-funded programs from 2023. Commerce says the program is waiting on federal approval with no estimated launch date, so a Minnesota homeowner who is offered this money today is being misled. Our Minnesota heat pump rebate update covers the utility programs that are open.
Wisconsin's version is open. Focus on Energy runs HEAR for income-qualified households, under 150% of area median income, with a higher tier under 80%. Most of its rebates require an IRA Registered Contractor. Focus on Energy's current program page lists which rebate types are still open, and it says projects that get HEAR or HOMES rebates may qualify for its regular rebates too. That's the program to check in Hudson, River Falls, Prescott and the Town of Oak Grove.
What HVAC rebates are left in Minnesota in 2026?
Utility programs now carry the load, and the one that applies depends on who sends your gas and electric bills. In the metro that is usually CenterPoint Energy for gas in Minneapolis and Xcel Energy for gas and electricity in Saint Paul, with co-ops and city utilities serving many other towns.
Xcel Energy, CenterPoint Energy and electric co-ops such as Dakota Electric and Connexus each run their own heating, cooling and heat pump programs. Our Xcel and CenterPoint rebate map sorts out which program covers which equipment, our CenterPoint rebate guide covers the furnace side, and our heat pump rebate guide covers heat pumps. Check each utility's current program page for amounts and deadlines.
Some utility and manufacturer pages still mention federal tax incentives next to their rebates. That part is stale, because those credits ended.
How do you check what your project can still get?
- Find your utilities. Look at your gas and electric bills. Each utility runs rebates for its own customers, so the programs open to you depend on who supplies each one.
- Get exact model numbers. A rebate is judged on the matched system's AHRI certificate, which needs the indoor and outdoor model numbers on the quote.
- Read each program's contractor rule. Some Xcel and Dakota Electric rebates need a registered contractor. CenterPoint lets you use the dealer of your choice. Focus on Energy HEAR mostly needs an IRA Registered Contractor.
- Check the deadline. Rebate programs change often, so look up the current deadline on each utility's program page before you install.
- Keep the paperwork. Hold on to the final invoice, the AHRI certificate and the startup sheet until every rebate is paid.
Does this change what you should buy?
Less than you'd think. The old credit nudged some people toward a heat pump they might not have picked otherwise, and a few toward oversized or top-tier equipment chasing a bigger number. Without it, the choice comes back to the house: fuel prices, your electric rate, how long you'll stay, and comfort.
For most Minnesota homes with gas, a dual-fuel system still makes sense: a heat pump for spring, fall and milder winter days, and a furnace for deep cold. Homes on propane or electric resistance heat have the strongest case for a cold-climate heat pump, credit or not. Geothermal lost the most, since 25D ended along with the rest, and our geothermal cost guide covers where it still pencils out.
One practical check: if a quote, ad or financing sheet you get in 2026 still subtracts a federal credit to show a lower net price, ask for the number without it. A net price built on a credit that ended is wrong. The same goes for utility rebates. A good quote lists each rebate as a separate item you'll apply for, with the program named and its contractor rule noted, instead of folding it into the price as if it were guaranteed.
What does a new HVAC system cost now that the tax credit is gone?
Without a federal credit, the installed price is the price, and any utility rebate comes off only after you qualify and apply. Our installed ranges are $7,500–$14,500 for a heat pump, $4,500–$9,500 for a furnace, $5,200–$9,800 for central AC and $4,200–$12,500 for a ductless mini-split, each with a written, flat-rate quote first. Our heat pump installation cost guide explains what moves a heat pump within that range, and our Minneapolis HVAC cost guide shows how a replacement quote breaks down in the city.
What to do next
If you're replacing equipment this year, get a written quote with exact model numbers, then check each rebate program's rules before you sign, including whether it needs a registered contractor. Call 612-429-3465 for a written quote.
Common questions about rebates
Is the 25C credit gone for a heat pump installed in 2026?
Yes. The 25C credit ended for property placed in service after December 31, 2025, under Public Law 119-21, signed July 4, 2025. A heat pump, furnace or central AC installed in 2026 doesn't qualify, whatever date you signed the contract or paid a deposit. Utility rebates are a separate matter, and many of them are still available this year.
What if my system was installed in 2025?
That's a question for your tax preparer, not your HVAC contractor. The IRS pages describe the credit as covering property placed in service from 2023 through 2025, and it ended after that. How it applies to a 2025 install depends on your own tax situation and filing, so bring your final invoice and the manufacturer's certification statement to the appointment.
Can a contractor file my utility rebate for me?
It depends on the program. Some, such as Xcel's heat pump rebates and Dakota Electric's quality-installation rebates, require a registered contractor to file, while CenterPoint's heating rebates let you use the dealer of your choice. We don't claim registered status with any utility, so ask the program who files before you sign.
Can I still claim a credit for a furnace or AC bought in 2025?
Only if it was placed in service by December 31, 2025, and that is a question for your tax preparer. The date that counts is when the equipment was installed and ready to use, not when you paid or signed. A system finished in January 2026 does not qualify, even with a 2025 invoice.
Sources
- Internal Revenue Service: FAQ on the new law irs.gov
- State of Minnesota: Save Energy Minnesota mn.gov
- AHRI Directory of Certified Product Performance ahridirectory.org
- Focus on Energy home energy rebates focusonenergy.com
- Xcel Energy Minnesota heating and cooling rebates mn.my.xcelenergy.com
- CenterPoint Energy energy-efficiency rebates centerpointenergy.com
- Dakota Electric Energy Wise rebates dakotaelectric.com