Heat Pump Tax Credit (25C)
A federal tax credit of up to $2,000 per year for qualifying heat pump installations (air source and geothermal) under IRA section 25C. Covers the cost of the heat pump plus installation labor.
Why It Matters
The annual $2,000 heat pump credit can be claimed each year you install qualifying equipment, allowing you to spread HVAC electrification across multiple tax years.
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Related Terms
25C Tax Credit
The federal Energy Efficient Home Improvement Credit (IRC §25C) providing 30% of the cost of qualifying energy efficiency upgrades: heat pumps ($2,000), insulation ($1,200), HPWH ($2,000), and more.
Heat Pump
An efficient HVAC system that transfers heat rather than generating it, providing both heating and cooling. Air-source heat pumps are most common; ground-source (geothermal) are most efficient.
Cold-Climate Heat Pump (ccASHP)
A heat pump specifically designed to maintain high heating capacity at very low outdoor temperatures (typically rated to -13°F/-25°C or lower).