Federal Incentives: What Ended and What Is Durable

Why this matters

For three years a heat pump quote could lean on a federal credit worth close to a third of the job, and a lot of shops built their sales talk, their quote templates and their web pages around it. Most of that is gone for anything installed from 2026 on. The shops that get hurt now are not the ones who lost a selling point; they are the ones whose paperwork still promises it, and the ones whose customers signed because of a number that no longer exists. This card sorts what ended from what is still standing, as of 2026, and shows how to build a conversion quote that holds up with no incentive at all. It is a status card with an expiry date: re-check every line before you rely on it.

What ended, and the date that decided it

The federal changes came in one law: Public Law 119-21, signed in July 2025 and widely called the One Big Beautiful Bill Act. It did not repeal the credits outright; it moved their end dates forward. Each one ended on its own trigger, and the trigger is the part shops get wrong.

Two things in that table matter on a job site. First, none of these triggers was the contract date, so a signed quote protected nobody whose install finished late. Second, the 30C charger credit outlived the others by six months, which is why some customers heard "the credits ended" and some heard "the charger one is still good", and both were right at different times. As of this card, all four are closed for new installs.

What did not change: a household that completed qualifying work in 2025 still claims the credit on its 2025 return. Expect questions about that through the 2026 filing season, and answer them with the invoice and the install date, not with an opinion. This is not tax advice; send the tax question to the customer's own preparer and give them the paperwork.

See related: What Happens When an Incentive Program Ends, which owns the general lesson about end dates and signed work in the pipeline.

The rebates that were in motion, and why their status is unsettled

The 2022 Inflation Reduction Act also created two rebate programs run through state energy offices rather than the tax code: a whole-home performance rebate and a high-efficiency electric home rebate aimed at lower- and moderate-income households, which could cover heat pumps, heat pump water heaters, induction ranges, panels and wiring. Their status has moved more than once since 2024. Some states launched and paid rebates; some paused; some never started; and federal administration of the money changed in 2025. Do not describe either program to a customer from memory or from a national article. Check your own state energy office's current page the week you quote, and if a program is open, confirm whether your shop has to be enrolled as a participating contractor before the work starts, because most rebate programs require approval before installation, not after.

What is durable

Durable here means "does not depend on one federal statute surviving the next budget." None of it is permanent; it is just less likely to vanish between quote and install.

• Utility programs. Many electric and gas utilities fund heat pump and water heater rebates out of rates under orders from their state utility commission. The layer is state, the money is ratepayer money, and the program changes on the commission's cycle, typically annually. A handful of states (Massachusetts, New York and California among them) have run large programs; many states run little or nothing. Your utility's contractor page is the source, not the customer's neighbor.
• Heating rates. Some utilities offer a lower winter rate for a home heated by a heat pump, or time-of-use plans that make a scheduled water heater cheap to run. These change the operating cost rather than the install price, which makes them a better foundation for a quote than a rebate. See related: Time-of-Use Rates and Equipment Settings.
• State credits and local programs. A few states and cities run their own credits, low-interest loans or on-bill financing. They vary widely and some sunset on fixed dates; treat each one like a federal credit with a closer horizon.
• Low-income weatherization. The federal Weatherization Assistance Program has run since 1976 through state and local agencies and serves income-qualified households, usually with its own crews or contractors. You will rarely sell into it, but knowing it exists lets you point a struggling customer toward envelope work before a heat pump.

Why a quote should never hinge on an incentive

The rule is simple and the reasons are concrete: the quote must make sense at zero incentive, and every incentive appears on it as a separate, conditional line.

The customer's decision should stand on things the shop controls or can measure: the installed price, the comfort the system delivers, the operating cost under the customer's actual rates, and the condition of the equipment it replaces. An incentive sits on top as a possibility. Four reasons:

1. You do not control the money. A processor can reject a claim for a missing photo, a model not on the current list, or an income document. See related: The Promise a Shop Cannot Make About Someone Else's Money.
2. The trigger is usually completion, and completion is not yours alone. A utility transformer, a permit backlog or a back-ordered air handler can push a finish date past a program's close.
3. The customer's tax position is not yours to know. A credit is worth nothing to a household with no tax liability that year, and the shop has no business asking.
4. The resentment lands on you. A customer who expected a share of the price back and got nothing remembers the contractor, not the legislature.

Worked example: rebuilding a quote that leaned on the old credit

A shop's 2025 template for a ducted cold-climate heat pump, replacing a gas furnace, had a bold line under the total: "Eligible for a 30 percent federal tax credit, up to the annual cap." In March 2026 the office pulled the template for a new quote and nearly sent it unchanged.

Call the installed price 100 units, so the arithmetic survives any market. Here is what each version of the quote says to the customer.

The 2025 version, read in 2026. It tells the customer to expect something back that no longer exists. The 25C credit capped the heat pump at a fixed annual amount, which on a job this size was well under the 30 percent the line implied, so even in 2025 the line overstated it. In 2026 it is simply false. Sent unchanged, it is a written statement the shop cannot stand behind.

The rebuilt version. The office checked three sources the same week: the state energy office (the income-qualified rebate program was paused for new applications), the electric utility's contractor page (a heat pump rebate open to any customer, requiring pre-approval and a participating contractor, worth roughly 12 percent of this job's price at the posted amount), and the utility's rate page (a winter heat pump rate available on request). The quote now reads, in this order:

• Installed price: 100 units.
• What the customer gets: the comfort and capacity points from the load calculation, the backup heat arrangement, the warranty.
• Operating cost: the shop's estimate on the customer's current rates, stated as a range with its assumptions, and the winter rate named as something the customer can apply for.
• Conditional line: "Utility heat pump rebate, roughly 12 units if your pre-approval is granted before installation. Not guaranteed. The shop will submit the application; the utility decides."

The customer's planning number is 100, and their best case is 100 minus 12, or 88. If the rebate is denied they pay exactly what they planned to pay, which is the whole point.

What would change the answer. If the state rebate program reopens before install, it joins the quote as a second conditional line, and only after the shop confirms it can stack with the utility rebate: some programs reduce their award by any other rebate on the same equipment, and a few forbid stacking outright. If the customer is income-qualified and the state program is open, the order of operations matters more than the amounts, because the state program may require its own pre-approval and its own contractor list.

The failure mode. The office sends the old template, the customer signs, the install happens, and at tax time their preparer tells them there is nothing to claim. The shop now has a written statement it made, a customer who feels misled, and a review that names the shop. Catching it costs one search through every template, the website, the truck wraps and the sales scripts for the words "tax credit."

How to verify you got this right

• Search every quote template, proposal footer and web page for "tax credit", "30 percent" and "federal." Anything that survives names a date and a status, or comes out.
• Every live quote has a zero-incentive total that the customer can act on, and every incentive below it is labeled conditional with its condition named (pre-approval, participating contractor, income, stacking).
• The office has a dated note of which programs it checked and when, so a customer asking "why didn't you mention the state rebate" gets an answer with a date on it.
• A 2025 customer asking about their credit gets their invoice and install date, and the shop does not interpret their tax position.

References

• Public Law 119-21 (2025), amending Internal Revenue Code Sections 25C, 25D, 30C, 30D and 25E; current IRS guidance on each credit's termination date and trigger
• U.S. Department of Energy, Weatherization Assistance Program, and your state energy office's current page on the home energy rebate programs
• Your electric and gas utilities' contractor program pages and rate schedules, as approved by your state utility commission
• See related: What Happens When an Incentive Program Ends
• See related: The Promise a Shop Cannot Make About Someone Else's Money