If you’re searching for 2026 heating tax credits before replacing a furnace or heat pump, there’s an important update most articles on this topic haven’t caught up to yet: the federal tax credit homeowners relied on for the last two years is no longer available for equipment installed in 2026. That doesn’t mean there’s nothing left to claim — it means the real savings this year come from a different combination of programs, and getting them right requires knowing which one actually applies to you.
This guide breaks down exactly what changed, what’s still available in Georgia, and how to stack the remaining programs to save as much as possible on a new furnace or heat pump.
This article is for general information only and isn’t tax advice — confirm eligibility and filing details with a licensed tax professional or CPA before claiming any credit.
What Happened to the Federal Heating Tax Credit?
For several years, the Section 25C Energy Efficient Home Improvement Credit let homeowners claim 30% of the cost of a qualifying heat pump (up to $2,000) or a qualifying furnace/air conditioner (up to $600) on their federal return. That’s the credit most people mean when they search for 2026 heating tax credits — and as of this year, it’s gone. The One Big Beautiful Bill Act, signed into law in July 2025, moved the credit’s expiration date up from 2032 to December 31, 2025. Any furnace or heat pump placed in service after that date no longer qualifies, regardless of its efficiency rating.
In plain terms: if your new system goes in during 2026, Section 25C is off the table. This is the single most important fact in any accurate discussion of 2026 heating tax credits, and it’s why the rest of this guide focuses on what’s actually still available rather than a credit that’s already expired.
Installed in 2025? You Can Still Claim the Old Credit
There’s one exception worth checking before you assume you missed out entirely. The 25C credit is based on when a system was “placed in service” — meaning installed and operational — not when you paid for it or when you file. If your furnace or heat pump was installed and running any time in 2025, you can still claim the credit on the federal return you file in 2026, using IRS Form 5695. If your paperwork shows a 2025 install date, it’s worth having a tax professional confirm you’re capturing this before it’s too late to amend a return.
What’s Actually Available for 2026 Heating Tax Credits and Rebates
With the federal credit gone, the real savings on 2026 heating tax credits and rebates now come from state and utility programs — and Georgia homeowners have more available here than most.
Georgia’s Home Energy Rebates (GEFA). Administered by the Georgia Environmental Finance Authority and funded through the federal Inflation Reduction Act, this program has already delivered more than $25 million in rebates to Georgia households and remains active in 2026. Depending on household income and the energy savings a project delivers, homeowners can qualify for up to $16,000 toward electrification upgrades, including heat pump installations. Unlike the expired federal credit, this is a point-of-sale or post-install rebate rather than something you wait to claim on a tax return, and eligibility is largely income-based, so lower- and moderate-income households see the biggest numbers.
Georgia Power’s Home Energy Improvement Program (HEIP). Georgia Power offers a $1,000 rebate for converting to a qualifying air-source heat pump, plus $75 for a smart, Wi-Fi-enabled thermostat and $50 for a professional HVAC tune-up. These utility rebates can typically be combined with the GEFA program above, since they come from different funding sources.
Manufacturer and dealer promotions. Outside of any government program, most manufacturers run seasonal rebates on qualifying furnace and heat pump models, and we run our own current HVAC specials throughout the year. These change more frequently than state or utility programs, so it’s worth checking what’s active at the time you’re ready to install.
How GEFA’s Income Tiers Work
Because GEFA’s Home Energy Rebates program is funded through the same federal framework used nationwide, it generally follows two income tiers rather than a flat rebate for everyone. Households under roughly 80% of the area median income typically qualify for the largest rebate share, covering the bulk of a qualifying heat pump’s cost up to the program cap. Households between roughly 80% and 150% of area median income usually qualify for a smaller, but still meaningful, rebate percentage. Households above that threshold generally aren’t eligible for the income-based track, though a separate performance-based track can still apply depending on the measured or modeled energy savings a project delivers, regardless of income. Exact thresholds and dollar amounts are set and updated by GEFA directly, so it’s worth confirming your household’s tier before assuming a specific number applies to your 2026 heating tax credits and rebates picture.
How to Stack These Savings
Because the federal 25C credit is gone, the programs that remain don’t overlap the way people expect from prior years, but they can still be combined. The general order that works best: start with the GEFA Home Energy Rebates application if your household is likely to qualify by income, since that’s the largest single amount available; layer the Georgia Power HEIP rebate on top, since it comes from a separate utility-funded budget; and apply any current manufacturer or dealer promotion last, since those are typically point-of-sale discounts rather than rebate applications with a waiting period. None of these current 2026 heating tax credits and rebates require you to pay full price and wait — most reduce the upfront cost directly or process within a few weeks of installation.
Furnace or Heat Pump: Which One Qualifies?
Both Georgia’s GEFA rebates and Georgia Power’s HEIP program set minimum efficiency requirements, generally tied to ENERGY STAR certification or similar performance tiers, so not every furnace or heat pump on the market qualifies automatically. A qualifying heat pump installation needs to meet the efficiency thresholds set by the specific rebate program, and the same is true for a qualifying furnace installation — the unit itself, not just the installation, has to be on the approved equipment list. This is worth confirming before you commit to a specific model, since the difference between a qualifying and non-qualifying unit can be worth over a thousand dollars in combined rebates.
If you’re still deciding between the two systems rather than which specific model to buy, our comparison of heat pumps vs. furnaces breaks down how each performs in a Georgia climate, independent of any rebate.
What This Looks Like in Real Numbers
Every home is different, but a rough example helps show why these programs are still worth pursuing even without the old federal credit. A typical 3-ton ducted heat pump installation runs somewhere in the $5,800–$10,000 range for equipment and labor, with larger homes or more complex installs (electrical upgrades, ductwork changes) running higher. Stack a $1,000 Georgia Power HEIP rebate with an income-qualified GEFA rebate — which can range from a few hundred dollars up to the program’s $16,000 cap depending on household income and projected savings — and a current manufacturer promotion, and the out-of-pocket cost on a typical install can come down meaningfully even without any 2026 heating tax credits at the federal level. The exact numbers depend entirely on your household income tier, the specific equipment you choose, and which promotions are active at the time of install, so treat this as a rough illustration rather than a quote.
Financing the Difference
Even with rebates applied, a full system replacement is a significant upfront cost, and financing is often what makes the timing work for homeowners who don’t want to wait for a fully depleted system to fail in the middle of winter. We offer flexible financing options that can be paired with any of the rebates above — the rebate reduces the total financed amount rather than replacing the need for financing altogether.
Frequently Asked Questions
Is there still a federal tax credit for a new furnace or heat pump in 2026? No. The Section 25C federal credit expired for any system placed in service after December 31, 2025, under the One Big Beautiful Bill Act. The only exception is if your system was actually installed in 2025, in which case you can still claim it on your 2026 tax filing.
What’s the biggest 2026 heating tax credit or rebate still available in Georgia? For income-eligible households, Georgia’s Home Energy Rebates program (GEFA) offers the largest amount, up to $16,000 depending on income and projected energy savings. It’s a rebate rather than a tax credit, so it doesn’t depend on your tax liability the way 25C did.
Do I need to apply before or after installation? This varies by program. GEFA’s Home Energy Rebates and Georgia Power’s HEIP are generally structured as post-install or point-of-sale rebates rather than something claimed at tax time, so it’s worth confirming the application process with your contractor before installation, not after.
Will federal heating tax credits come back after 2026? Under current law, no new federal 25C credit is scheduled to return. Tax legislation can change, so it’s worth checking the IRS Energy Efficient Home Improvement Credit page for updates before assuming any program’s status without verifying it directly.
Does Georgia offer its own state income tax credit for HVAC upgrades? No. Georgia does not currently have a standalone state income tax credit for furnace or heat pump replacements. The GEFA Home Energy Rebates and Georgia Power’s HEIP are rebate programs, not tax credits, which is one reason they’re structured and applied for differently than the expired federal 25C credit.
How long will Georgia’s rebate funding last? GEFA’s Home Energy Rebates program is funded through a fixed federal allocation under the Inflation Reduction Act, and funds are distributed on an ongoing basis rather than reset annually. Because the program is actively paying out rebates, it’s worth applying sooner rather than later rather than assuming the funding window will stay open indefinitely.
The Bottom Line
Searches for 2026 heating tax credits are still common because the federal 25C credit was a fixture of HVAC shopping for years — but for any system installed this year, it no longer applies. The programs that replace it, primarily Georgia’s GEFA Home Energy Rebates and Georgia Power’s HEIP, can add up to meaningful savings, especially for income-eligible households, but they work differently than a tax credit and need to be applied for the right way. Before assuming what you qualify for, it’s worth a conversation with both a tax professional for anything filing-related and a licensed HVAC contractor who can confirm which specific equipment meets each program’s efficiency requirements.
Serving Milledgeville, Covington, Augusta, and the surrounding Middle Georgia area, our team can walk you through which current rebates and financing options apply to your specific furnace or heat pump replacement.