Definition
The Federal 25C tax credit, the Energy Efficient Home Improvement Credit, was a federal income tax credit for qualifying heat pumps, central air conditioners, furnaces and other efficiency upgrades. Under Public Law 119-21, enacted July 4, 2025, it is not allowed for property placed in service after December 31, 2025, so 2026 installations do not qualify.
Also called: Energy Efficient Home Improvement Credit
Why it matters to you
Older ads and articles still promise a federal credit on a new heat pump or furnace, so building a 2026 purchase in Vancouver or Portland around 25C is a costly mistake. Utility and Energy Trust of Oregon programs, plus financing, are where the remaining help is.
Practical guidance
If qualifying equipment was placed in service in 2025, ask a tax professional about claiming it on IRS Form 5695 with your 2025 return, and keep the invoice, model numbers and AHRI certificate. This is general information, not tax advice.
Can I get the 25C tax credit for an HVAC system installed in 2026?
No, according to IRS guidance. Under Public Law 119-21, the Energy Efficient Home Improvement Credit is not allowed for any property placed in service after December 31, 2025. Consult a tax professional about your own situation.
What if my system was installed in 2025?
Qualifying equipment placed in service in 2025 is claimed on your 2025 federal return using IRS Form 5695, Residential Energy Credits. The date that matters is when the property was placed in service, not when you paid a deposit. A tax professional can confirm whether your equipment qualified.
Is a company still offering a federal HVAC tax credit a red flag?
It is worth questioning. A 2026 sales pitch that counts a federal efficiency tax credit toward the price of a standard residential HVAC install is relying on a credit the IRS says ended after 2025. Ask the company to show current IRS guidance supporting the claim.
What help is still available in SW Washington and Portland?
Utility and nonprofit programs. Clark Public Utilities runs heat pump and ductless heat pump programs for electrically heated homes, and Energy Trust of Oregon runs heat pump and furnace incentives, including its income-qualified Savings Within Reach track for NW Natural customers in Clark, Skamania and Klickitat counties. Eligibility and amounts change, so confirm current terms before you buy.
About this definition
Written by the Home Energy Group team — a family-owned HVAC company celebrating 25 years of comfort & care across SW Washington and the Portland metro, licensed in Washington (WA LIC# HOMEEGI003J7) and Oregon (OR CCB# 184255). Definitions inform; an on-site diagnosis decides.
