Do heat pumps still make sense after federal tax credits expired?

Yes, heat pumps can still make sense even after federal tax credits expired. While the Section 25C tax credit ended in 2025, heat pumps continue to offer long-term energy savings, year-round comfort, and access to Massachusetts incentives that can significantly reduce upfront costs.

TL;DR: Are Heat Pumps Still Worth It?

• Federal heat pump tax credits expired at the end of 2025.
• Heat pumps can still lower heating costs compared to oil or electric resistance heat.
• Massachusetts offers rebates and zero-interest financing that reduce installation costs.
• Heat pumps provide both heating and cooling in one system.

What Changed With Federal Heat Pump Tax Credits

Section 25C of the Inflation Reduction Act offered a non-refundable federal tax credit of up to $2,000 for qualifying heat pump installations. Because the credit was non-refundable, it only reduced federal taxes owed and did not result in a cash refund.

That credit expired at the end of 2025. Homeowners installing heat pumps after that date can no longer claim the federal incentive.

What Did Not Change: Long-Term Energy Savings

Energy efficiency remains the primary financial benefit of heat pumps. Compared to oil or electric resistance heating, heat pumps can significantly reduce energy use by moving heat instead of generating it.

Over time, these efficiency gains can lower heating costs and help offset installation expenses. Unlike cosmetic home upgrades, a heat pump system continues to deliver savings through daily operation.

Massachusetts Incentives Still Matter

Homeowners may still qualify for heat pump rebates in Massachusetts through state and utility programs. These incentives can reduce upfront costs and improve overall project economics.

Zero-interest financing options, such as the Mass Save® Heat Loan, can also help spread costs over time while avoiding interest charges.

Year-Round Comfort in One System

Heat pumps provide both heating and cooling. For homes without central air conditioning, this can improve summer comfort. For homes replacing an older AC system, a heat pump offers higher efficiency and lower operating costs.

Ductless heat pumps and ducted systems can be designed to fit many home layouts and existing conditions.

What If Your Home Uses Natural Gas?

In some cases, replacing a natural gas heating system with heat pumps may not be the most cost-effective option right away. However, heat pumps can still play a useful role.

They may be used during milder weather, to address cold rooms, or as part of a longer-term plan for whole-home electrification.

Efficiency and the Bigger Picture

Heat pumps use electricity to move heat rather than burning fossil fuels. As more renewable energy is added to the electric grid, electric heating systems become increasingly carbon efficient.

This makes heat pumps a long-term option for homeowners interested in reducing energy use and supporting decarbonization.