Most coverage of the Inflation Reduction Act right now falls into one of two camps: either breathless “act now before it’s gone!” panic, or a shrug that the big credits are dead. Both miss the actual picture. The 25C tax credit did expire December 31, 2025, but the HEEHRA rebate money, the Home Electrification and Appliance Rebates portion of the IRA, is still live in most states, still largely unclaimed, and in some combinations worth more than most homeowners spent on their last two HVAC systems combined.

Here’s what’s actually happening in July 2026, and what you should do about it before the window closes the same way California’s did.

What Expired, What Didn’t, and Why the Distinction Matters

The Section 25C energy-efficiency tax credit is dead for new installs. It covered 30% of the cost of qualifying heat pumps and heat pump water heaters, up to $2,000 per year, and it ended with the 2025 tax year. If you installed before December 31, 2025, you can still claim it on your 2025 return filed this year. That’s worth doing. If you missed that window, 25C is gone.

What isn’t gone: HEEHRA. This is the rebate program, not a tax credit, meaning money back at point of purchase or shortly after, regardless of your tax liability. It’s funded through state energy offices using federal IRA appropriations, and states are rolling it out on their own schedules. Some are fully deployed. Some just launched. Some haven’t launched at all as of mid-2026.

The stacking potential here is real. A qualifying low-income household combining HEEHRA rebates with the now-expired 25C credit on a 2025 install could theoretically receive up to $13,600 before any state or utility incentives land on top of that. That number isn’t hypothetical, it’s the ceiling the program was designed around, and plenty of households left it on the table.

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California’s HEEHRA single-family rebates were fully reserved statewide as of February 24, 2026, according to the California Energy Commission. Remaining applicants got waitlisted. A program with substantial federal backing ran dry in the first two months of the year.

This is the pattern that should concern you if your state’s program is open right now. HEEHRA funds aren’t replenished. When they’re gone, they’re gone. California moved faster than almost anyone expected. Your state could follow the same arc, or it could have funding sitting unclaimed for another 18 months. You need to know which situation you’re in.

The way to find out: your state energy office website, or the DSIRE database (dsireusa.org), which tracks active incentive programs by zip code. Don’t rely on a contractor to tell you what’s available. Some contractors know this cold. Many don’t.

The Geographic Lottery Nobody Talks About

This is the part that should make homeowners genuinely frustrated. Because states control their own rollouts, the rebate landscape right now looks almost random depending on your zip code.

StateHEEHRA Status (mid-2026)Additional Incentives
CaliforniaFully reserved, waitlist onlySome utility programs still active
MassachusettsActive$1,250-$10,000+ via Mass Save utility rebates
New YorkActiveNYSERDA driving 37% jump in installs
Several statesNot yet launchedFederal rebates unavailable; utility-only options

Massachusetts homeowners stacking Mass Save rebates with HEEHRA can access over $10,000 on a heat pump install from utility programs alone, per ACDirect’s March 2026 state-by-state breakdown. New York’s NYSERDA incentives have been aggressive enough to drive a 37% increase in heat pump installations. Meanwhile, a homeowner two states over might qualify for exactly nothing beyond what they could have claimed on a 2025 tax return.

This isn’t a reason to give up if you’re in an unlaunched state. It’s a reason to check your state’s timeline and get on a contractor’s schedule now, so you’re first in line when funding opens.

What Heat Pumps Actually Cost, and Where the Math Works

Without any incentives, a whole-home heat pump system, installed, typically runs $8,000 to $20,000 depending on home size, climate zone, and whether you’re replacing ductwork. A heat pump water heater runs $1,200 to $3,500 installed. Those numbers feel steep until you apply available rebates and compare them against alternatives.

The lumber price context matters here too. Lumber hit roughly $916.62 per MBF in Q2 2026, a 5.11% spike marking the ninth consecutive quarter of year-over-year growth, according to Gordian’s May 2026 pricing data. Full renovations are getting more expensive. Electrification upgrades, by contrast, are getting cheaper in net terms as rebate programs mature and heat pump equipment costs continue to fall. The relative value of a $14,000 rebate stack against a $12,000 system cost is obvious math.

For heat pump water heaters specifically, the 25C credit was worth up to $600 on top of the $2,000 heat pump credit. If you installed one in 2025 and haven’t filed yet, that credit is still yours. As Barnett Plumbing noted in their May 2026 update on water heater tax credits, homeowners who installed qualifying equipment in 2025 can still claim 25C when they file, a detail that’s getting buried under all the “it’s expired” noise.

How to Actually Claim What’s Left

Don’t start with a contractor. Start with your state energy office and your utility company, in that order. Here’s the practical sequence:

Find your state’s HEEHRA program status. If it’s live, confirm your income eligibility tier (low-income households get higher rebate ceilings) and get the list of qualifying equipment and approved contractors. HEEHRA in most states requires you to use a program-certified installer.

Check your utility’s rebate programs independently. Mass Save and NYSERDA are the most generous examples right now, but most large utilities run their own incentive programs that stack on top of state and federal money. Utility rebates often don’t require income qualification.

If you installed anything qualifying in 2025 and haven’t filed your return, claim the 25C credit. Heat pump systems and heat pump water heaters both qualify. The IRS hasn’t changed the filing mechanics; it’s still Form 5695.

Get multiple contractor quotes and confirm each contractor is certified for your state’s HEEHRA program. A contractor who isn’t on the approved list means you forfeit the rebate, regardless of the equipment quality.

The homeowners who leave this money behind aren’t the ones who tried and failed. They’re the ones who assumed someone would tell them when to act. Nobody sends you a reminder when the funding runs out. California proved that in February.

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