Federal tax credits for various home electrification upgrades will be expiring on Dec. 31. If you’re among the heat-pump or EV-car-charger curious, read on for how to take advantage of the savings that are disappearing.
The Biden administration put these credits in play with the 2022 Inflation Reduction Act, its signature climate policy. The goal was to encourage homeowners to replace gas appliances with electric ones, which can have higher upfront price tags.
When the Trump administration pushed through the expansive legislative package, H.R. 1 last summer, the “Big Beautiful Bill” moved up the expiration date of many of the credits for heat pumps, solar and batteries, electrical panel upgrades, and more from 2032 to the end of this year.
Using gas as a fuel, in appliances like furnaces and water heaters, leads to more planet-warming emissions than using electricity, which instead powers up on California’s greening grid. Gas appliances can also pollute the air inside your home.
California also offers state incentive programs for specific regions and households, which your contractor can usually apply for on your behalf. You can enter your location and other information into the Switch Is On (check out their product and vetted vendor pages) and Rewiring America (they have a “savings calculator”) to get a sense of existing opportunities and find a contractor.
One of the biggest is TECH Clean California, which can cut thousands of dollars off the upfront cost of installing electric heat pump water heaters or heat pump HVAC systems.
Funds are limited and awarded on a first-come, first-served basis, so it’s worth checking soon — reservations open periodically and often fill up within a few months.
What federal tax incentives expire on Dec. 31, 2025?
Up to $2,000 off new heat pump installations
A heat pump can warm or cool a home, and a heat pump water heater warms water. The technology has been around for decades: most refrigerators are heat pumps. The appliances work by capturing heat and moving it to where it’s needed to do its job.
“Heat pumps provide heating and cooling in one appliance,” said Laura Wilson, director of marketing for The Switch Is On, a website and campaign that educates and helps homeowners transition to electric appliances.
Heat pumps are far more efficient than gas furnaces and can significantly cut a home’s carbon pollution as compared to gas furnaces.
Details: These federal tax breaks can get you 30% off of heat pump installation (labor and equipment) up to $2,000, and there are no income limitations.
Up to $600 off electrical panel upgrades
Some people may want to increase the size of their electrical panels as they electrify their homes, but this can be unnecessary, so talk to a trusted electrician.
Details: You can get 30% off the total cost up to $600.
Up to $1,200 off home weatherization
Weatherization — insulation, sealing cracks, upgrading windows and doors — helps keep your home warm in the winter and cool in the summer, and lowers monthly electricity bills.
Details: People can get 30% off of equipment (not labor) up to:
- $1,200 for insulation and air sealing
- $500 for exterior doors (limit $250 per door)
- $600 for exterior windows and skylights
If you’re both weatherizing and upgrading your panel, the total cost cap is $1,200.
Up to $150 on a ‘home energy audit’
A building energy audit is like a “physical for your home,” said Zach Pierce, head of policy at electrification nonprofit Rewiring America. Contractors take a comprehensive look at home energy use, find leaks, and recommend improvements.
Details: People can get up to $150 back.
30% off solar panels, geothermal heat pumps, solar water heaters and back-up batteries
This category includes rooftop solar panels and plug-in solar, which allow you to generate some of your own energy.
Back-up batteries store electricity either from the grid or solar panels. You can use that energy to power your home when the power goes out, or in the case of solar panels, at night when your solar panels are not generating electricity. Batteries must store at least three kilowatt-hours, which could power a home anywhere from 1–6 hours, to qualify.
Geothermal heat pumps heat and cool homes through a loop of piping buried underground or submerged in water, like a pond. Liquid circulates through the loop, absorbing heat from the ground in winter to warm your home and releasing heat back into the ground in summer to keep it cool.
A solar water heater uses sunlight to warm water for your home.
Details: These federal tax breaks cover 30% of total costs, without a cap.
Need-to-knows:
These tax credits reduce the amount of federal income tax you owe; they won’t give you money back beyond that. Rebates reset each year.
If you used them last year, you can take advantage of them again now.
All the work of installation should be done by Dec. 31, 2025; a signed contract for future work won’t cut it.
Many solar and battery residential contractors are reporting being booked through the end of 2025, said Josh Buswell-Charkow, deputy director at the California Solar and Storage Association.
Which federal credits can I still get after Dec. 31, 2025?
Up to $1,000 off EV charger installation
If you live in what’s considered a non-urban or low-income community by the Census Bureau, you’re eligible for 30% off the total cost of installing an electric vehicle charger in your home, with a cap of $1,000.
You must buy and install the charger by June 30, 2026, to qualify for that federal tax break.
