Internal Revenue Service
Federal §25C Energy Efficient Home Improvement Credit: what it paid, and how it ended
Still advertised across Whatcom County. Still worth understanding, because the rules that ended it decide whether your own install qualifies.
$0 — terminated
TerminatedHistorically 30% of cost, up to $2,000/year for heat pumps and heat pump water heaters. Gone. The One Big Beautiful Bill (P.L. 119-21, enacted July 4, 2025) accelerated its termination.
- Administered by
- Internal Revenue Service
- Deadline
- Terminated — property placed in service after December 31, 2025 does not qualify
- Applies to
- ductless mini split · ducted heat pump · heat pump water heater · furnace · insulation · windows
- Paperwork
- You file it yourself
Verified 2026-09-04 against the program's own published terms . Nothing on this page is retyped from an aggregator.
What to claim instead
The live money in Bellingham is the PSE electric-resistance conversion rebate — $1,500, or $2,400 for an income-qualified household. It is a utility program, so the federal termination did nothing to it.
Call (360) 592-3824What ended, and the citation for it
The Federal §25C Energy Efficient Home Improvement Credit did real work. Historically 30% of cost, up to $2,000/year for heat pumps and heat pump water heaters. Gone. The One Big Beautiful Bill (P.L. 119-21, enacted July 4, 2025) accelerated its termination. It was the single largest line item on most heat pump quotes in this county, and it is the reason so many 2025 projects penciled out.
It ended with the One Big Beautiful Bill, Public Law 119-21, enacted July 4, 2025, which accelerated the credit's termination date. The IRS set out the consequences in FS-2025-05 and in its OBBB frequently-asked-questions release . The operative sentence for a homeowner is short — Terminated — property placed in service after December 31, 2025 does not qualify.
Nothing to claim for a 2026 installation. The test is the placed-in-service date, not the contract or payment date — the IRS confirmed that paying before the end of 2025 does not preserve the credit if the install finished afterwards. If your system was placed in service on or before December 31, 2025, Form 5695 for that tax year still applies.
Two practical consequences. Any quote you are holding that shows a federal credit is overstating your net cost by that line — ask for it in writing and watch it disappear. And if your system was placed in service on or before December 31, 2025, the credit for that tax year still exists and is worth filing for. We are not tax advisers; that is a question for yours.
What did not change: Electric Resistance to Air-Source Heat Pump Conversion still pays $1,500 in Bellingham, the Community Energy Challenge still adds up to $2,000 for qualifying households, and manufacturer rebates still come off the equipment price. The full 2026 stack is here →
- WA L&I #BELLIHC808NM Active registration — verify it with the state
- $30,000 bonded Surety bond on file with L&I
- $1,000,000 insured General liability coverage
- Local since 2020 Owner-operated in Whatcom County
- We pull the permit City of Bellingham or Whatcom County, and we meet the inspector
The rule, verbatim in substance
One condition, and it is the one that decides your case.
- No longer available for any property placed in service after December 31, 2025
Who files it, and how the money reaches you
You file it yourself. The paperwork is yours, and so is the deadline. We hand you the completed invoice with the install date, brand, model and amount already on it, because those are the fields the form asks for.
Nothing to claim for a 2026 installation. The test is the placed-in-service date, not the contract or payment date — the IRS confirmed that paying before the end of 2025 does not preserve the credit if the install finished afterwards. If your system was placed in service on or before December 31, 2025, Form 5695 for that tax year still applies.
Federal §25C Energy Efficient Home Improvement Credit — questions we get
- How much does the Federal §25C Energy Efficient Home Improvement Credit pay in 2026?
- $0 — terminated. Historically 30% of cost, up to $2,000/year for heat pumps and heat pump water heaters. Gone. The One Big Beautiful Bill (P.L. 119-21, enacted July 4, 2025) accelerated its termination. Administered by Internal Revenue Service, verified 2026-09-04 against the program's own published terms.
- Who files the Federal §25C Energy Efficient Home Improvement Credit paperwork?
- You file it yourself. Nothing to claim for a 2026 installation. The test is the placed-in-service date, not the contract or payment date — the IRS confirmed that paying before the end of 2025 does not preserve the credit if the install finished afterwards. If your system was placed in service on or before December 31, 2025, Form 5695 for that tax year still applies.
- When does the Federal §25C Energy Efficient Home Improvement Credit expire?
- Terminated — property placed in service after December 31, 2025 does not qualify. Amounts and deadlines on utility and manufacturer programs change without notice, so we re-check the specific program before a project is committed.
Price a project against the rebates that still exist
Tell us how the home is heated now, roughly when it was built, and what you are considering. We will come back with the programs that apply to your address and what each one actually pays.
Program terms verified 2026-09-04 · Internal Revenue Service source page · All Bellingham rebates
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Tell us what you have now and what you want it to do. We will tell you what fits, what it costs, and which rebates you actually qualify for — before anyone comes out.
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