Heat pumps and smart thermostats: 2026 rebates and what they save

The federal 25C heat pump credit ended on Dec 31, 2025

The Energy Efficient Home Improvement Credit, known by its tax code section 25C, paid 30% of the cost of a qualifying heat pump, up to $2,000 a year, plus up to $1,200 a year for items such as insulation, windows and a home energy audit. The IRS page for the credit states that it can be claimed for improvements made through December 31, 2025. The 2025 budget law signed on July 4, 2025 moved the end date forward from 2032.

What this means in October 2026:

• A heat pump installed and running by December 31, 2025 could be claimed on the 2025 return with IRS Form 5695.
• A heat pump installed in 2026 gets no 25C credit, even if it was bought in 2025.
• For 2025 claims, the IRS also required the Qualified Manufacturer Identification Number for each item, which sits on the product paperwork.

The separate Residential Clean Energy Credit (25D), which covered geothermal heat pumps and solar, ended on the same date. A tax professional can confirm what still applies to a specific return.

State HEEHR rebates: amounts and who qualifies

The rebates that remain come from two programs funded by the 2022 Inflation Reduction Act and run by each state energy office. The Department of Energy calls them HOMES, for whole-home upgrades, and HEEHR, the High-Efficiency Electric Home Rebate program, which was called HEAR until 2026. The law sets these HEEHR limits:

HEEHR is income based. A household under 80% of area median income can have the full project cost covered up to those limits. Between 80% and 150% of area median income, the rebate covers up to half the cost. Above 150%, HEEHR does not apply, although HOMES is open to all incomes and pays up to $8,000 based on modeled energy savings of at least 20%.

The DOE page says the rebates are available in select states only. Each state sets its own launch date, contractor list and paperwork, so the state energy office is the place to check.

The 2026 rule change: mostly electric to electric

On May 29, 2026, the DOE issued Program Notice 26-2. It removed rebates for fuel switching, which means replacing a gas, oil or propane furnace or water heater with an electric heat pump. HEEHR rebates now cover upgrading existing electric equipment to more efficient electric equipment, plus new construction. States had three months to adopt the change. North Carolina, for example, says all HEAR applications that had not reached a rebate reservation by Sept. 1, 2026 must follow the new rules.

The notice also:

• Requires insulation and air sealing before a heating or cooling upgrade, unless the home already meets the state's level.
• Lets a home keep its fossil fuel system when a heat pump is added, even if the heat pump is not the main source of heat.
• Encourages point-of-sale rebates at retail and online stores, and allows rebates on do-it-yourself purchases, except for HVAC system installs.

For a home with electric baseboard heat or an old electric furnace, the rebate is still open where the state program is running. For a home with gas heat, the HEEHR heat pump rebate is likely off the table unless the state uses leftover funds for it later.

Smart thermostats: what they save and what they cost

ENERGY STAR says almost half of an average household's energy bill goes to heating and cooling, more than $900 a year. Its figure for an ENERGY STAR certified smart thermostat is about $50 a year in savings, and up to $100 a year in homes with high heating and cooling bills. The savings come from setting the system back when nobody is home or asleep, so a thermostat left on one fixed temperature saves little.

Prices at Home Depot on Oct 18, 2026:

The Google Store listed the Nest Learning Thermostat at the same $279.99. At $50 a year, a $130 thermostat takes about two and a half years to pay for itself. Many utilities offer a thermostat rebate, and the ENERGY STAR Rebate Finder lists them by ZIP code. Check that the thermostat works with the system: many need a C-wire, and ecobee sells a $24.99 adapter kit for homes without one.

Heat pump prices at Home Depot in October 2026

Home Depot sells ductless mini-split heat pumps and heat pump water heaters online. Prices listed on Oct 18, 2026:

Two rebate points apply here. The DOE notice excludes do-it-yourself HVAC installs from rebates, so a DIY mini-split would need a contractor on the state's list to qualify. And a heat pump water heater replacing an old electric tank fits the new electric-to-electric rule, while one replacing a gas tank no longer does under HEEHR. Utility rebates have their own rules and may still cover a swap from gas.

How to pay less at Home Depot and Lowe's

Home Depot rarely runs sitewide codes. PickedBox lists two active Home Depot codes, and shopper reports on them are mixed, so planned savings should come from programs and sales:

• Price match: Home Depot matches a lower price on an identical, in-stock item from a competitor that sells and ships to the same area.
• Credit card offer: new Home Depot Consumer Credit Card accounts get $25 off $25, $50 off $300 or $100 off $1,000 on the first purchase, with 6-month financing on $299 or more.
• Email sign-up: new subscribers get a $5 off offer by email.
• Sales: Black Friday savings usually run from early November to early December and include appliances.

Most Home Depot items can be returned within 90 days, but major appliances have shorter windows. Lowe's sells many of the same thermostats and water heaters. Its 90-day return policy is similar, and its free MyLowe's Rewards program adds free standard shipping on eligible items. Current offers are on the Home Depot coupon page and the Lowe's coupon page.

The row below is the same row as on the Home Depot page. The code appears after the click; Home Depot opens in a new tab.

10% off 10% off your order Code · Worked Oct 10, 2026 · listed since Oct 2026 Show code Opens Home Depot in a new tab. The code appears here.

A sensible order for a 2026 upgrade

1. Look up the state energy office page to see whether HOMES or HEEHR is open, and which income limits apply.
2. Check the utility's rebate page or the ENERGY STAR Rebate Finder for thermostat and heat pump rebates, which are separate from the federal money.
3. If a rebate needs a contractor from the state's list, get the quote and reservation before buying equipment.
4. Do insulation and air sealing first where the program requires it.
5. Buy the equipment during a sale, and use price match if another store lists the same model for less.

Who it is for: a smart thermostat makes sense for almost any home with central heating or cooling that is not already on a schedule. A heat pump rebate in 2026 mostly helps lower and middle income households replacing old electric heat in a state where the program is live.

How we checked this

On Oct 18, 2026, PickedBox read the IRS page for the Energy Efficient Home Improvement Credit, the DOE Home Energy Rebates page, DOE Program Notice 26-2, the rebate limits in 42 U.S.C. 18795a, North Carolina's program change notice and the ENERGY STAR smart thermostat pages. Thermostat, mini-split and water heater prices were read from homedepot.com search pages and the Google Store on the same day. Store programs match the PickedBox Home Depot and Lowe's pages checked in October 2026. No product was bought or installed for this article.

• IRS: Energy Efficient Home Improvement Credit
• IRS: Residential Clean Energy Credit (25D)
• DOE: Home Energy Rebates Program
• DOE: Program Notice 26-2 (HEEHR), effective May 29, 2026
• 42 U.S.C. 18795a, High-efficiency electric home rebate program (Cornell LII)
• NC DEQ: Energy Saver North Carolina program changes
• ENERGY STAR: Smart thermostats
• ENERGY STAR: Smart thermostat savings
• ENERGY STAR Rebate Finder
• Home Depot: smart thermostats search
• Home Depot: MRCOOL DIY heat pumps search
• Home Depot: heat pump water heaters search
• Google Store: Nest Learning Thermostat (4th gen)
• Home Depot price match policy

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