What’s Left of the Inflation Reduction Act for Homeowners in 2026

Last verified: June 11, 2026. This post is checked against the IRS FAQs on the One Big Beautiful Bill (Public Law 119-21), the CRS report on Section 25D carryforwards, and the California Energy Commission’s HEEHRA pause notice. Next review: September 11, 2026. State program status changes weekly. Confirm your state on its energy office page before purchasing.

TL;DR. The Inflation Reduction Act’s two main homeowner tax credits both expired December 31, 2025. The Residential Clean Energy Credit (Section 25D) for solar, batteries, and geothermal will not pay for anything installed in 2026 or later. The Energy Efficient Home Improvement Credit (Section 25C) for heat pumps, insulation, and windows is also gone for 2026 work. If you completed installation in 2025, you can still claim on the 2025 tax return you file in 2026. Unused 25D credit can be carried forward indefinitely. State HEAR and HOMES rebate programs are active in 23 states but were federally paused for several months and many states have exhausted initial funding. The federal money is mostly over. The state and utility money is still real but harder to claim.

The elephant in the room: the OBBB killed both credits

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (Public Law 119-21, 139 Stat. 72). Among many other provisions, OBBB accelerated the termination dates of the IRA’s homeowner energy tax credits:

• Section 25C (Energy Efficient Home Improvement Credit) — the IRS confirms the credit “will not be allowed for any property placed in service after December 31, 2025.”
• Section 25D (Residential Clean Energy Credit) — “will not be allowed for any expenditures made after December 31, 2025.”

Both credits were originally scheduled to run through 2032 at the full 30% rate. OBBB cut roughly seven years off the program for residential installations.

The IRS clarified the “placed in service” trigger in its FAQ on Public Law 119-21: for 25D, “an expenditure is treated as made when the original installation of the item is completed.” Contract signed in 2025 but installed in 2026? Not eligible. Paid in full in 2025 but install completed January 2026? Not eligible.

Separately, on January 20, 2025, the President signed Executive Order Unleashing American Energy, Section 7 of which paused federal disbursement of IRA program funds. The HEEHRA (Home Electrification and Appliance Rebates) program was paused by multiple state energy offices in response. California paused its state administration on February 24, 2026, citing the federal funding situation.

So the picture in 2026 is: federal tax credits are gone, state-administered rebates are partially restored but cash-constrained, and what you can still do depends on your installation timing and your state.

What you can still claim on your 2025 tax return

If your equipment was placed in service on or before December 31, 2025, the original IRA credits apply on your 2025 tax return (the one you file in 2026). Nothing about that changed.

For 25D specifically, if your credit exceeds your 2025 federal tax liability, the unused portion carries forward to future tax years indefinitely. Per the Congressional Research Service report on Section 25D, there is no expiration on the carryforward itself, only on new claims. Keep your 2025 Form 5695 and installation paperwork permanently. You will cite both on every future return where you use a piece of the carryforward.

25C does not have a carryforward provision. If you didn’t owe enough tax in 2025 to absorb the credit, the unused portion is gone.

Worked example: solar installed in 2025, partial-use carryforward

You installed an $18,000 solar system, completed November 2025. Your 2025 federal tax liability before credits is $4,000.

• Gross 25D credit: 30% × $18,000 = $5,400
• Applied to 2025 tax: $4,000 (uses your full liability)
• Carried forward to 2026 and beyond: $1,400

You file Form 5695 Part I in 2026, claiming the $5,400 credit and noting the $1,400 carryforward. In any future year where you owe federal tax, you can apply the remaining $1,400 against that liability until it’s exhausted.

What’s gone for 2026 installations

Federal homeowner credits for the following equipment have ended:

• Solar PV (panels and inverters)
• Battery storage 3 kWh or larger
• Geothermal heat pumps (residential)
• Small wind (under 100 kW residential)
• Solar water heaters
• Residential fuel cells
• Air-source heat pumps
• Heat pump water heaters
• Insulation, air sealing
• ENERGY STAR windows and doors
• Electrical panel upgrades
• Home energy audits

The geothermal exception many readers heard about applies only to the commercial Section 48 Investment Tax Credit. That program is still running for businesses installing geothermal but is not available to homeowners installing on a residence.

What survived: state HEAR and HOMES programs

The IRA’s two state-administered rebate programs operate on different rules than the tax credits and were funded with a separate appropriation. They survived OBBB but were affected by the January 2025 executive order pause on federal disbursements. As of mid-2026, programs have resumed in most states, though many have hit funding ceilings.

States with at least one active HEAR or HOMES program (June 2026)

Based on the DOE state rebate tracker as of the last_verified date:

Arizona, California, Colorado, Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, Wisconsin.

Status caveats worth knowing:

• California. HEEHRA single-family reservations fully exhausted as of Feb 24, 2026. State paused new income verifications. Waitlist exists.
• Colorado. HEAR Single-Family Region 1 (Front Range) closed to new applications after April 27, 2026.
• Massachusetts, Maryland, New York, Washington. Among the most generous combined federal-plus-state-plus-utility stacks, often crossing $10,000 for income-qualifying households.

Programs continue to launch and exhaust funding throughout 2026. Confirm your state’s status on its energy office page before assuming anything. The DOE tracker at energy.gov/save/home-upgrades is the closest to real-time.

Worked example: heat pump in Massachusetts, 2026 install

You’re replacing a gas furnace with a cold-climate heat pump. Equipment + install: $12,000. Your household income is $85,000 (moderate income tier in your area).

• Federal 25C credit: $0 (program expired)
• Massachusetts HEAR rebate (moderate income tier): up to $4,000
• Mass Save utility rebate (Eversource/National Grid): up to $5,000 (typical for cold-climate heat pumps)
• Net cost: $3,000

Total available: about $9,000. The same project in 2025 would have netted you the $2,000 federal 25C heat pump credit on top, plus the same state and utility rebates. The federal piece is the only one that left.

Worked example: solar in a state with no HEAR

You want 8 kW of solar on a home in a state without an active HEAR or HOMES program. Net system cost: $22,000.

• Federal 25D credit: $0 (program expired)
• State income tax credit (varies): $0 in states without one; up to $5,000 in a few
• Utility rebate (varies): $0 to $3,000
• Net Energy Metering value (varies): real but spread over 20+ years

For a homeowner with no state or utility incentive, solar payback under 2026 conditions stretched from the IRA-era 7–11 years to roughly 12–18 years, depending on local electric rates. Whether the project still makes sense depends on your rate, your roof, and your hold horizon.

Worked example: third-party-owned solar (lease or PPA)

If you sign a lease or Power Purchase Agreement instead of buying, the system is owned by a commercial entity. That entity claims the commercial Section 48E Investment Tax Credit, which survived OBBB at varying rates through 2027 for projects starting construction before that cutoff. The savings are passed through to you as a lower lease payment or PPA price.

You as the homeowner cannot claim 25D under this structure. The lease/PPA market grew sharply in the second half of 2025 partly because the residential credit was ending while the commercial credit kept going.

What to actually do if you’re starting in 2026

A practical priority list:

1. Check your state’s HEAR and HOMES program status today. Search “{your state} home energy rebates” or go directly to energy.gov/save/home-upgrades. If a program is open, apply BEFORE buying. Most require pre-approval.
2. Confirm your utility’s rebates. These vary more than state programs. Search “{your utility name} rebates.” Most have $500–$5,000 available for heat pumps, water heaters, smart thermostats, and insulation.
3. Get the manufacturer’s qualified equipment statement on file even though you can’t claim 25C/25D in 2026. Some state rebates require the same equipment-tier documentation.
4. Decide if a lease or PPA makes sense for solar. The economics changed when 25D died. The third-party-owned model may now be competitive with cash purchase in your market.
5. If you have unused 25D credit from a 2025 install, plan your tax filing to maximize the carryforward. Talk to a tax professional about timing larger income years against your unused credit balance.

Who qualifies for what’s left

You can apply for state HEAR/HOMES if:

• You own a home in a state with an active program
• Your household income falls within the program’s tier (typically below 150% AMI for HEAR)
• The equipment you’re installing meets the program’s efficiency tier
• You apply BEFORE installation (most states require pre-approval)
• Your state hasn’t exhausted its current funding round

You don’t qualify if:

• You rent. Your landlord might, but residential rebate programs typically pay the property owner.
• Your household income is above 150% AMI for HEAR (you may qualify for HOMES on performance basis instead).
• You’re installing equipment that doesn’t meet the state program’s tier. For heat pumps, that usually means CEE Advanced tier or higher.
• Your project is already started or completed (most programs require pre-approval and won’t pay retroactively).

Common mistakes to avoid

• Trying to claim 25C or 25D for 2026 installs. The IRS FAQ is explicit: placement in service after December 31, 2025 disqualifies. No grace period, no transition rule.
• Believing your contractor’s “IRA-eligible” claim. Many contractors are still using sales materials that say IRA credits are available. They’re wrong for 2026. Get the IRS rule in writing and don’t take a contractor’s word for what the federal credit pays.
• Missing a state pre-approval deadline. State HEAR/HOMES programs reject most retroactive applications. Apply before you buy.
• Forgetting the 25D carryforward. If you installed solar in 2025 but didn’t have enough tax liability to use the full credit, the unused portion carries forward indefinitely. Track it on every future return.
• Conflating residential 25D with commercial 48E. A homeowner cannot claim 48E. If your contractor or a lease vendor mentions 48E, that’s their credit, not yours, and the savings should appear in your lease price.

Skip this category entirely if…

• You rent your home. None of these programs pays you directly. Your landlord might, but you cannot file a 25C or 25D claim on a property you don’t own.
• You owe no federal income tax (low or no taxable income, primarily Social Security income). 25C is non-refundable and non-carryforward. 25D carries forward but the credit itself ended. State HEAR programs are a better fit because they’re cash rebates, not tax credits.
• Your only project is something not covered by either federal or state programs (e.g., a pool heater, a non-qualifying gas furnace, decorative windows). Confirm eligibility before assuming a rebate exists.

Tools that help you decide

If you’re working through whether a project still pencils out without the federal credit, these calculators and guides on HEP give you the math:

• Solar Savings Calculator — model your specific roof and bill. Updated to reflect post-25D economics.
• Solar Loan Calculator — what financing actually costs over 10–25 years.
• Home Backup Battery Buying Guide — battery picks now that the federal credit is gone.
• HVAC Tax Credits and Rebates — the current state of state and utility programs for heat pumps.
• Community Solar Guide — the option for renters and shaded roofs.
• How to Sell Your Solar Energy — net metering rules and what they pay in 2026.

What we’ll re-check on September 11, 2026

• Any IRS notices clarifying transition rules for late-2025 installations
• Whether Congress passes any IRA-credit restoration in the year-end omnibus (introduced bills exist but none passed at last_verified date)
• State HEAR / HOMES funding status. Multiple states approaching their initial appropriation
• Status of pending litigation challenging aspects of the OBBB rollback
• Treasury / IRS guidance on Notice 2026-15 (Foreign Entity of Concern restrictions on commercial credits)

Frequently asked questions

Did the IRA actually get repealed? Not formally. The Inflation Reduction Act of 2022 remains on the books. The OBBB, signed July 4, 2025, amended specific sections to accelerate termination dates. Section 25C and Section 25D were not repealed outright but were terminated for new property placed in service after December 31, 2025.

Can I still claim the credit if I signed my installation contract in 2025? Probably not, unless the installation itself was completed by December 31, 2025. The IRS treats Section 25D credits as triggered by “expenditures made,” and per the IRS FAQ, an expenditure “is treated as made when the original installation of the item is completed.” Contract date and payment date don’t matter. Installation completion date does.

What if I have unused solar credit from 2023 or 2024? You can carry it forward. The Section 25D carryforward is indefinite. As long as you have unused credit from a qualifying installation in any prior year, you can apply it against future federal tax liability until it’s exhausted. Keep your original Form 5695 from the install year.

Are utility rebates affected by OBBB? No. Utility rebates are funded by ratepayer programs administered by individual utilities, not by federal appropriations. They were not affected by either OBBB or the January 2025 executive order pause. Check your utility’s rebate page directly.

Does the 30% commercial credit help me as a homeowner? Only indirectly, through a lease or PPA. The Section 48E commercial Investment Tax Credit survives at varying phase-out rates. A solar installer can use it on a system they own and you lease, passing the savings through to your monthly payment. You cannot claim 48E yourself on equipment you own outright.

Sources

1. Public Law 119-21, the One Big Beautiful Bill Act, signed July 4, 2025. IRS One Big Beautiful Bill provisions page
2. IRS FAQs on Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D under Public Law 119-21. IRS newsroom FAQ
3. 26 U.S.C. § 25C, Energy Efficient Home Improvement Credit. uscode.house.gov
4. 26 U.S.C. § 25D, Residential Clean Energy Credit. uscode.house.gov)
5. Congressional Research Service, “Expiration and Carryforward Rules for the Residential Clean Energy Credit,” IN12611. congress.gov
6. Executive Order 14154, “Unleashing American Energy,” January 20, 2025, Section 7 (pause on IRA program disbursements)
7. IRS Form 5695 and instructions (the form for claiming residential energy credits). IRS About Form 5695
8. California Energy Commission HEEHRA pause notice, February 24, 2026. techcleanca.com/about/news/heehra-rebates-paused
9. DOE Office of State and Community Energy Programs, Home Upgrades. energy.gov/save/home-upgrades

Related reading

• Home solar in 2026: the math after the 25D credit ended
• Best cold-climate heat pumps for 2026 — what to buy now that 25C is gone
• Best heat pump water heaters for 2026 — HEAR rebates still apply in most states
• Best Level 2 home EV chargers for 2026 — the 30C charger credit ended June 30, 2026
• HVAC repair vs. replace: the $5,000 rule
• Government incentives and tax credits by state