Time Is Running Out on Key HVAC Tax Credits
A major new piece of legislation, the “One Big Beautiful Bill”, has some important consequences for homeowners planning HVAC upgrades. While it includes promising changes for the skilled trades, it also eliminates some of the most homeowner-friendly tax credits for energy-efficient systems.
If you’ve been thinking about installing a new heat pump or upgrading to high-efficiency HVAC equipment, here’s what you need to know before these benefits disappear.
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What’s Going Away After 2025?
Two popular tax credits are being phased out for residential upgrades:
- Section 25C: This provides homeowners up to $1,200 annually for energy-efficient home improvements like insulation, air conditioners, and furnaces.
- Section 25D: This covers 30% of the cost for geothermal heat pumps and solar systems with no annual cap.
Both of these credits will no longer apply to projects started after December 31, 2025. That means time is limited to plan and complete qualifying upgrades.
Why These Credits Matter
Home energy upgrades often come with a significant upfront investment. These federal incentives were designed to ease that burden and encourage homeowners to choose more efficient, lower-emission systems. For many in Montana, the Section 25D credit made geothermal heat pumps much more affordable in our cold climate.
With these incentives ending, the cost of going green while staying warm or cool will rise noticeably in 2026.
Act Now to Maximize Your Savings
To take full advantage of current tax credits:
- Schedule a system evaluation: We’ll assess your current equipment and recommend qualifying upgrades.
- Choose ENERGY STAR-certified products: These are typically required to qualify for Section 25C.
- Complete installation before year-end 2025: Only projects started before December 31 will qualify for the credits.
- Keep documentation: Save receipts, manufacturer certifications, and installer invoices for your tax return.
What If You Wait?
If you wait until 2026, you could miss out on:
- Up to $1,200 annually for energy-efficient HVAC upgrades
- A 30% federal tax credit on a geothermal or solar system
- Additional state or utility rebates that may be tied to federal eligibility
Montana-Specific Impact
While heating is a must in our Montana winters, air conditioning and energy efficiency upgrades might feel optional until you look at the long-term math. Replacing older systems with newer, high-efficiency models can significantly reduce your monthly energy bills and improve overall home comfort.
With energy costs continuing to rise, missing out on these tax credits means passing up real savings, both now and for years to come. Investing in efficiency today helps lower your household expenses long after the incentives expire.
Need Help Planning?
At Halcro Heating and Cooling, we can help you take advantage of these programs before they expire. From sizing and selecting equipment to helping you understand what qualifies for credits, we’ll guide you every step of the way.
Schedule a no-obligation consultation and secure your spot before installation calendars fill up.
For details on qualifying equipment and eligibility rules, visit Energy Star’s HVAC Tax Credit Info