Inflation Reduction Act HVAC Incentives (2026 Update)
This page was updated in July 2026 to reflect the current status of federal tax credits and Illinois-administered rebate programs. Incentives can change based on federal law, IRS guidance, state program approvals, and funding availability. Always verify eligibility before purchase and installation. Under current law, most federal residential HVAC tax credits do not apply to systems placed in service after December 31, 2025, but Congress and the IRS could change these rules in the future.
Quick Answer: What changed for heat pumps and boilers in 2026?
- Federal residential tax credits for most HVAC upgrades are not available for systems placed in service after December 31, 2025 under current law. This includes the Energy Efficient Home Improvement Credit (25C) for air‑source heat pumps and the Residential Clean Energy Credit (25D) for geothermal heat pumps for most homeowners installing equipment in 2026. IRS: Energy Efficient Home Improvement Credit (25C) IRS: Residential Clean Energy Credit (25D) IRS: OBBB/PL 119-21 FAQ (termination dates)
- Heat pump and electrification rebates may still be available in Illinois because rebates are state-administered and funded separately from the ended federal tax credits. Program timing and availability depends on Illinois implementation and remaining funding. Illinois EPA: Home Energy Rebate Programs and U.S. Treasury explainer: DOE rebates vs tax credits
- Boilers generally do not receive a federal tax credit in 2026. Boiler upgrades may still qualify for utility rebates or other state/local programs.
What is the Inflation Reduction Act (IRA) and how does it relate to HVAC?
The Inflation Reduction Act (IRA) (2022) created major incentives for energy upgrades, including heat pumps and home electrification. However, federal law changes and IRS guidance updated the timeline for several residential credits. For 2026, the biggest difference is that many federal residential HVAC tax credits ended after December 31, 2025. If you are trying to reduce out-of-pocket cost in 2026, you will typically be looking at:
- Illinois and local rebate programs (often income-based or program-specific)
- Utility rebates (ComEd, Ameren, municipal utilities, and others)
- Manufacturer incentives
Start here for Illinois-specific guidance: HVAC Rebate Center and our Illinois Tax Credit and Incentive Guide.
IRA Rebates vs. Federal Tax Credits (what people keep confusing)
- Federal Tax Credits (IRS): Claimed on your tax return. Many residential IRA-era credits for HVAC ended after 2025. Reference: IRS: About Form 5695 and IRS: Instructions for Form 5695.
- IRA Rebates (State-administered): Funded by the federal government but administered by states. Availability depends on Illinois program rollout and funding. Reference: Illinois EPA: Energy Rebates.
Important: Rebate programs can have income limits, eligible equipment requirements, contractor requirements, and funding caps. If you want the clean version for homeowners, use our: HVAC Rebate Center.
Federal HVAC Tax Credits (2026)
Section 25C: Energy Efficient Home Improvement Credit (Heat Pumps, Boilers, Furnaces, AC)
Status for 2026: Not available for property placed in service after December 31, 2025 under current IRS guidance. This was the main federal credit homeowners used for air‑source heat pumps and certain high‑efficiency HVAC equipment. In 2026, this credit generally does not apply to new installations because most homeowners will be placing systems in service after the December 31, 2025 cutoff date. Official reference: IRS: Energy Efficient Home Improvement Credit (25C) and IRS: OBBB/PL 119-21 FAQ.
Section 25D: Residential Clean Energy Credit (Geothermal Heat Pumps)
Status for 2026: Not available for property placed in service after December 31, 2025 under current IRS guidance. Geothermal heat pumps were commonly credited under 25D, but current IRS guidance reflects law changes that end the credit for systems placed in service after December 31, 2025. Homeowners planning a geothermal project should confirm their installation date and eligibility with a tax professional. Official reference: IRS: Residential Clean Energy Credit (25D) and IRS: OBBB/PL 119-21 FAQ.
Builder and Commercial Incentives (limited relevance for most homeowners)
- 45L New Energy Efficient Home Credit: Termination for qualified homes acquired after June 30, 2026. Reference: IRS: OBBB/PL 119-21 FAQ.
- 179D Commercial Buildings Energy-Efficiency Deduction: Modified with a termination for property where construction begins after June 30, 2026. Reference: IRS: OBBB/PL 119-21 FAQ.
Heat Pumps in 2026: What incentives may still exist?
In 2026, heat pumps may still be eligible for rebates (not federal tax credits) depending on Illinois program status and funding. The most relevant IRA rebate programs are:
- HEAR (Home Electrification and Appliance Rebates, IRA Section 50122): Focused on efficient electrification upgrades (including heat pumps) for low-to-moderate income households. Helpful overview: ENERGY STAR: HEAR program overview.
- HOMES (Home Efficiency Rebates, IRA Section 50121): Whole-home energy savings rebates tied to measured or modeled energy reductions. Illinois status and updates: Illinois EPA: Energy Rebates (HOMES + HEAR).
Want the fast path? Use our internal guide: HVAC Rebate Center and book a heat pump estimate here: Heat Pump Services.
Boilers in 2026: What incentives may still exist?
Boiler upgrades generally do not qualify for a federal residential tax credit in 2026, since the main residential HVAC credit (25C) ended after 2025. That does not mean there are zero savings opportunities. Boilers may still qualify for:
- Utility rebates (varies by utility and boiler efficiency level)
- Local municipal programs (varies by city)
- Manufacturer promotions
If your goal is to reduce long-term energy costs and improve comfort, a properly sized heat pump (or dual-fuel setup where appropriate) can sometimes outperform a boiler upgrade depending on the home, fuel costs, and distribution system. Learn more about our boiler work here: Boiler Services.
ComEd Heat Pump Water Heater Rebates (New July 1, 2026)
As of July 1, 2026, ComEd’s Home Heating & Cooling program is adding heat pump water heaters (HPWHs) to its rebate lineup. Because this is a utility-administered rebate, not a federal tax credit, it is one of the incentives still available to Chicago-area homeowners in 2026 — even though most federal residential HVAC tax credits ended after December 31, 2025. A heat pump water heater (also called a hybrid water heater) moves heat instead of generating it directly, making it far more efficient than a standard electric tank. ComEd rebates qualifying HPWHs based on their Uniform Energy Factor (UEF) — the federal efficiency rating for water heaters. Higher-efficiency units qualify for the rebate.
| Product | Rebate Per Unit | Minimum Efficiency (UEF) |
|---|---|---|
| Integrated HPWH | Up to $750 | UEF ≥ 3.30 |
| Integrated HPWH (120V / 15-amp circuit) | Up to $750 | UEF ≥ 2.20 |
| Split-System HPWH | Up to $750 | UEF ≥ 2.20 |
Key eligibility details:
- The rebate took effect as of July 1, 2026. Installations dated before July 1, 2026 are not eligible.
- The unit must meet the minimum UEF for its category.
- Rebate amounts are listed as “up to $750” and are subject to ComEd’s program terms and available funding.
Eco Temp HVAC installs qualifying heat pump water heaters and can help you select a model that meets ComEd’s UEF requirements before you buy. Explore our water heater services or see all current programs in our HVAC Rebate Center.
How to find rebates in your exact area
- Illinois IRA rebate status (official): Illinois EPA: Energy Rebates
- ENERGY STAR rebate finder: ENERGY STAR: Rebate Finder
For Eco Temp customers, we also track common rebates and current programs here: HVAC Rebate Center
Where can I verify the official federal cutoff dates?
Use the IRS pages below:
- IRS: 25C Energy Efficient Home Improvement Credit
- IRS: 25D Residential Clean Energy Credit
- IRS: OBBB/PL 119-21 FAQ (termination dates)
- IRS: About Form 5695
- IRS: Form 5695 instructions
Related Eco Temp resources
- HVAC Rebate Center
- Illinois Tax Credit and Incentive Guide + Calculator
- Heat Pump Installation, Repair, and Maintenance
- Boiler Installation, Repair, and Maintenance
- Heating Services
Official resources (government and program references)
- IRS: Energy Efficient Home Improvement Credit (25C)
- IRS: Residential Clean Energy Credit (25D)
- IRS: FAQ on changes under Public Law 119-21 (OBBB)
- IRS: About Form 5695 (Residential Energy Credits)
- Illinois EPA: Energy Rebates (HOMES + HEAR)
- U.S. Treasury: DOE rebates vs tax credits explainer
- ENERGY STAR: Rebate Finder
Disclosure: This page provides general information, not tax advice. Eligibility depends on IRS rules, state program requirements, and your specific project details. For tax questions, consult a qualified tax professional.
Heat Pump and Boiler Tax Credits & Rebates FAQ (2026)
Get clear answers on 2026 heat pump and boiler incentives in Illinois, including federal HVAC tax credits, IRA rebates, and local utility programs. These answers reflect current federal guidance and Illinois rebate program details for 2026.
Generally, no. The $2,000 federal heat pump credit under the Energy Efficient Home Improvement Credit (Section 25C) is not allowed for systems placed in service after December 31, 2025 under current law. Most homeowners installing a heat pump in 2026 will not qualify for a federal income tax credit, but may still be eligible for Illinois rebates or local utility incentives.
For homeowners, no. The 30% Residential Clean Energy Credit (Section 25D) is not available for residential geothermal systems placed in service after December 31, 2025. Commercial geothermal projects may still qualify for the federal Section 48 Investment Tax Credit, which remains in place for qualifying business installations. Confirm timing and eligibility with a tax professional before assuming any federal credit will apply.
Generally, no. Under current IRS guidance, the controlling date for the residential credits is when the installation is completed and the system is placed in service — not when you signed a contract or paid a deposit. A system finished in 2026 does not qualify even if the paperwork and payment happened in 2025. If you believe your situation is unusual, review your contract and installation dates with a qualified tax professional, but do not plan your budget around a credit for a 2026 installation.
Yes — through your utility. ComEd and Ameren rebates on qualifying heat pumps are what's actually claimable in Illinois right now. The IRA-funded HEAR and HOMES rebate programs are not yet operational in Illinois — the state's launch is still pending federal approval — and Illinois has said it will not pay rebates retroactively, so you cannot install now and claim a HEAR or HOMES rebate later. When those programs do launch, funding will initially prioritize income-qualifying households. Utility rebates are funding-limited and can pause or end once allocated funds are exhausted.
Federal residential tax credits for boilers are generally not available for systems placed in service in 2026. However, high‑efficiency boiler installations in Chicago may still qualify for utility rebates, manufacturer incentives, or local energy‑efficiency programs, depending on your gas utility, system efficiency, and program year.
Once Illinois's IRA-funded programs launch, in many cases yes. Utility rebates for qualifying heat pumps, boilers, and efficiency upgrades are expected to stack with state‑administered IRA rebates, but stacking rules vary by program. Some incentives cannot be combined, and income‑qualified rebates may have additional restrictions, so it is important to review program rules before you install new equipment. The U.S. Treasury's coordination explainer covers the federal background on how rebates and credits interact.
Sometimes. Certain Illinois and utility rebate programs allow incentives for rental properties and multifamily buildings, while others are limited to owner‑occupied homes. Eligibility depends on the specific rebate program, building type, and income requirements for the occupants — especially under the income-prioritized HEAR and HOMES funding once those programs launch.
In some cases, yes. Certain electrification and “enabling” upgrades such as panel, wiring, or duct improvements may qualify for rebates when installed as part of a qualifying heat pump upgrade or whole‑home efficiency project. Whether these costs are covered depends on program rules and whether the upgrade is required to support the new HVAC equipment.
Once allocated funds are exhausted, Illinois HVAC rebates can pause, change amounts, or end with little notice. Most programs operate on a first‑come, first‑served basis until approved funds are depleted, which is why timing, pre‑approval, and working with a contractor who tracks incentives are so important.
Yes. As of July 1, 2026, ComEd's Home Heating & Cooling program includes rebates of up to $750 for qualifying heat pump water heaters (HPWHs). Because this is a utility rebate rather than a federal tax credit, it remains available even though federal residential HVAC tax credits ended after December 31, 2025. The installation must be dated on or after July 1, 2026 to qualify.
Up to $750 per qualifying heat pump water heater. The same up‑to‑$750 amount applies to integrated HPWHs, integrated 120V/15‑amp models, and split‑system HPWHs, as long as the unit meets the minimum efficiency level for its category. Final rebate amounts depend on the equipment and ComEd's program terms.
Qualification is measured by Uniform Energy Factor (UEF). An integrated heat pump water heater needs a UEF of 3.30 or higher. Integrated 120V/15‑amp models and split‑system HPWHs need a UEF of 2.20 or higher. We can confirm a specific model's UEF before installation.
The rebate took effect July 1, 2026 and is available now. ComEd has stated that any installation dated before July 1, 2026 is not eligible for the heat pump water heater incentive, so the installation date on your paperwork is what determines qualification.
The fastest way is to review current Illinois programs and utility rebates, then confirm eligibility during a professional HVAC estimate. You can start with our Illinois HVAC tax credit and rebate tool and then have Eco Temp HVAC verify which heat pump, boiler, and electrical upgrades qualify for incentives at your specific address.
Heat Pump vs Boiler (2026 Comparison)
In 2026, choosing between a heat pump and a boiler comes down to comfort, existing equipment, energy costs, and which Illinois incentives are actually available for your home right now. This comparison is written for Illinois homeowners and reflects current federal guidance plus state and utility realities.
| Category | Heat Pump | Boiler |
|---|---|---|
| Federal tax credits (2026 installs) |
Not available
Most 2026 heat pump installs do not qualify because federal credits
apply to systems placed in service by December 31, 2025 under current law.
|
Not available
Residential boiler installs in 2026 generally do not qualify for a
federal HVAC tax credit.
|
| Illinois IRA rebates |
Not yet launched
Illinois's HEAR and HOMES rebate programs are still pending federal
approval and will not pay rebates retroactively — heat pumps are
expected to be a primary focus once they launch, with income‑qualifying
households prioritized first.
|
Unlikely
HEAR covers electrification only, so boilers are excluded; whole‑home
HOMES rebates have not launched either.
|
| Utility rebates |
Often available
Electric utilities frequently offer incentives for qualifying heat
pump installations that meet efficiency requirements.
|
Sometimes available
High‑efficiency boilers may qualify for gas utility rebates, but
availability and amounts vary by program year.
|
| Efficiency |
Very high
Modern heat pumps can deliver multiple units of heat for every unit
of electricity used when properly sized and installed.
|
Moderate to high
High‑efficiency boilers can reach very good AFUE ratings but still
rely on fuel combustion.
|
| Heating and cooling |
Heating and cooling
One system can handle both air conditioning and heating when designed
for whole‑home comfort.
|
Heating only
Boilers provide heat and sometimes domestic hot water, but not cooling.
|
| Cold weather performance |
Strong (with proper equipment)
Cold‑climate heat pump models paired with a good design can perform
well through Chicago winters, sometimes with backup heat.
|
Excellent
Hydronic boilers are reliable for steady heat in very cold weather.
|
| Comfort feel |
Varies by home
Comfort depends on ductwork, airflow, and room‑by‑room design, but
can be very even when installed correctly.
|
Very comfortable
Radiant and baseboard systems deliver gentle, even warmth with
minimal air movement.
|
| Operating cost drivers |
Electric rate dependent
Costs are driven by local electric rates and equipment efficiency and
can be very competitive with the right setup.
|
Gas price dependent
Fuel costs depend on natural gas pricing and boiler efficiency, often
predictable but subject to rate changes.
|
| Typical install complexity |
Moderate to high
May involve new ductwork, refrigerant lines, and electrical work,
especially in older Chicago homes.
|
Moderate
Often straightforward when replacing an existing hydronic boiler
on a similar fuel source.
|
| Electrical upgrades |
Sometimes needed
Panel capacity, breakers, and wiring may need upgrades for larger
heat pump systems.
|
Not typically
Most boiler replacements reuse existing electrical service.
|
| Best fit |
Homeowners who want efficiency plus cooling
Great for whole‑home comfort and lower emissions when paired with a
good design and insulation.
|
Homes with hydronic baseboards or radiant heat
A strong option if you want to keep the existing system type and
value that radiant style of heat.
|
| Common “best of both” option |
Dual‑fuel or hybrid setups
In some homes, a heat pump handles most heating and cooling while a
boiler or furnace supports extreme cold. An on‑site assessment helps
decide whether a hybrid approach makes sense.
|
|
Incentives are not guaranteed and can change based on program funding, eligibility rules, and installation dates. For a real answer, we recommend a load calculation plus a rebate and tax‑credit check at the time of your estimate.
