Four Federal Tax Credits for Home Energy Work Just Ended

For years, a homeowner replacing a furnace with a qualifying heat pump could count on a federal tax credit worth up to $2,000. A homeowner going solar could count on 30% of the cost back, no cap. As of 2026, both of those are gone, along with two credits that matter more to builders and commercial contractors than homeowners. Here’s what changed and when.

Section 25C, Energy Efficient Home Improvement Credit: ended December 31, 2025. This was the credit behind a lot of NWA heat pump and insulation upgrades: up to $3,200 a year, with a $1,200 cap for insulation, doors, windows, and energy audits, and a separate $2,000 cap for qualifying heat pumps, heat pump water heaters, and biomass stoves. The IRS states plainly that the credit “will not be allowed for any property placed in service after December 31, 2025.” If your install was completed and placed in service in 2025, it’s still claimable on a 2025 return. Anything placed in service in 2026 is not.

Section 25D, Residential Clean Energy Credit: ended December 31, 2025. This was the 30%-of-cost credit for solar panels, solar water heating, geothermal heat pumps, and battery storage, with no annual or lifetime cap, and it originally wasn’t scheduled to phase out until 2033. The 2025 law moved that up by seven years. The IRS says it “will not be allowed for any expenditures made after December 31, 2025.” Note the trigger here is different from 25C: it’s expenditures made, not property placed in service, which matters for a project that straddled New Year’s.

Section 179D, commercial buildings deduction: ends for construction starting after June 30, 2026. This affected commercial mechanical, electrical, lighting, and envelope work. If a commercial job in Rogers, Springdale, or Bentonville broke ground on or before June 30, 2026, it may still qualify. Anything breaking ground after that date does not. “Begins construction” is a defined term with its own tests, so a contractor should confirm with a CPA which in-flight jobs qualify.

Section 45L, new energy efficient homes: ends for homes acquired after June 30, 2026. This one matters most to NWA homebuilders. The trigger is when the buyer acquires the home, not when it was built, so an ENERGY STAR or Zero Energy Ready home that closed on or before June 30, 2026 may still qualify, while one closing in July 2026 or later does not.

Every one of these numbers was pulled directly from the IRS’s own FAQ page addressing the 2025 law (Public Law 119-21, known as the One Big Beautiful Bill). That FAQ page is worth knowing about for a second reason: the IRS’s regular 25C and 25D landing pages, the ones that show up first in a search, have not been updated to reflect the termination. The 25C page still reads as if the credit is live. The 25D page still says it “begins to phase out in 2033.” Anyone, including a contractor, who checks only the main landing page will get outdated information.

Practical takeaway: If you’re a homeowner getting quotes for HVAC, solar, or window work in 2026, ask directly whether the contractor’s price assumes a federal tax credit, and if so, which one and under what section, then verify it against the IRS’s OBBB FAQ page yourself. If you’re a contractor, update your standard project proposals now rather than after a customer catches the error.

Local relevance: This affects nearly every NWA homeowner and contractor who has planned around a federal energy credit in the past several years, and it changes the payback math on solar and heat pump upgrades across the region regardless of any state or utility rebate that might still apply separately.

A note on what to verify: This piece relies on the IRS’s OBBB FAQ page as of the date checked. If you’re reading this well after publication, confirm the FAQ page has not been updated with new guidance, and do not assume a specific 45L per-home dollar figure since that was intentionally left out of this piece pending independent confirmation.