The Inflation Reduction Act tax credits for home energy upgrades, including credits for heat pumps, furnaces, central air conditioners, water heaters, and electrical panels, ended for equipment placed in service after December 31, 2025. Kansas homeowners installing new equipment in 2026 cannot claim them, but state-run home energy rebates funded by the same law are still in development.
If you have been planning a heat pump installation, a new water heater, or an electrical upgrade around these credits, the rules have shifted. Below, we explain what the law originally offered, how it changed, and how Wichita-area homeowners can still plan an upgrade that makes financial sense.
Key Takeaways
- The federal energy efficient home improvement credit does not apply to equipment placed in service after December 31, 2025.
- The residential clean energy credit, which covered geothermal heat pumps and solar panels, ended on the same date.
- Qualifying equipment installed during 2025 is claimed on the 2025 federal tax return using IRS Form 5695.
- The Kansas Home Rebates program, funded by the Inflation Reduction Act, had not opened to households as of October 2026.
- Without federal credits, lower operating costs, utility programs, and financing drive the value of a home comfort upgrade.
What Is the Inflation Reduction Act?
The Inflation Reduction Act (IRA) is a federal law signed in August 2022 that addressed taxes, healthcare, and climate initiatives. For homeowners, the most visible parts were federal income tax credits for energy-efficient home improvements and funding for state-run home energy rebate programs.
Those two benefits work very differently. Tax credits reduce what you owe on your federal income tax return and were available to any qualifying taxpayer. Home energy rebates are discounts administered by each state, with eligibility and amounts based largely on household income.
What Home Efficiency Tax Credits Did the Inflation Reduction Act Offer?
The energy efficient home improvement credit let qualifying homeowners claim 30% of the cost of eligible upgrades on their federal tax return, up to set limits. For equipment placed in service from 2023 through 2025, these were the main credits for heating, cooling, plumbing, and electrical upgrades:
- Central air conditioners: Qualifying installations were eligible for a tax credit of up to $600.
- Furnaces and boilers: High-efficiency natural gas, propane, or oil heating systems qualified for up to $600.
- Air-source heat pumps: Homeowners could claim up to $2,000 for a qualifying heat pump.
- Gas water heaters: Qualifying storage or tankless gas water heaters were eligible for up to $600.
- Heat pump water heaters: The only type of electric water heater that qualified, with a credit of up to $2,000.
- Biomass stoves and boilers: Heating systems that burn biomass fuel qualified for up to $2,000.
- Electrical panel upgrades: Panel improvements of 200 amps or more that supported other qualifying upgrades were eligible for up to $600.
- Home energy audits: A qualifying audit could earn a credit of up to $150.
Geothermal heat pumps fell under a separate program, the residential clean energy credit, which allowed 30% of the installed cost without the annual dollar caps listed above.
Annual Limits on Home Efficiency Tax Credits
The energy efficient home improvement credit had a combined annual limit of $3,200 per household. That total was made up of two separate caps that applied each tax year:
- Furnaces, boilers, central air conditioners, gas water heaters, electrical panels, home energy audits, and building envelope items such as windows, doors, and insulation shared a combined limit of $1,200 per year.
- Air-source heat pumps, heat pump water heaters, and biomass stoves and boilers shared a separate limit of $2,000 per year.
Because the limits reset every year, homeowners could spread projects across multiple tax years to claim more in total. Starting in 2025, the IRS also required that qualifying equipment come from a qualified manufacturer, with the manufacturer’s identification number reported on the return.
When Did the Inflation Reduction Act Tax Credits End?
The Inflation Reduction Act tax credits for home energy upgrades ended for equipment placed in service after December 31, 2025. The One Big Beautiful Bill Act, signed on July 4, 2025, moved up the end dates for several energy provisions, including both the energy efficient home improvement credit and the residential clean energy credit.
According to the IRS page on the energy efficient home improvement credit, homeowners can claim the credit for improvements made through December 31, 2025, and must claim it for the tax year when the property was installed using Form 5695. Equipment installed in 2026 does not qualify, even if it meets every efficiency requirement that applied before.
If you had qualifying equipment installed in 2025 and did not claim the credit, talk with a tax professional about your options. Keep your invoice, the equipment model numbers, and any manufacturer certification documents together, since a tax preparer will need them.
Kansas Home Energy Rebates: What to Know in 2026
The Kansas Home Rebates program is the part of the Inflation Reduction Act that homeowners can still watch for in 2026. The program is administered by the Kansas Energy Office at the Kansas Corporation Commission (KCC) and is separate from the federal tax credits that ended.
As of October 2026, the program website, kshomerebates.gov, stated that the KCC had submitted its applications to the U.S. Department of Energy and that no launch date had been set. These are the key details the program has shared so far:
- Two rebate paths: The Home Efficiency Rebates (HER) and Home Electrification and Appliance Rebates (HEAR) programs cover upgrades such as heat pumps, insulation, air sealing, ventilation, and electrical panel and wiring upgrades.
- Income-based amounts: The highest rebates are reserved for lower-income households, and households above 80% of area median income should expect to cover part of the project cost.
- Approved contractors only: Work must be installed by a contractor approved through the Kansas Home Rebates onboarding process, and approval through other programs does not transfer automatically.
- Product list still pending: Kansas is working with the Department of Energy on a qualified products list, and rebate caps had not been finalized.
Because details can change quickly once the program launches, check kshomerebates.gov for the current status before you schedule a project that depends on a rebate.
How to Save on Heating, Cooling, Plumbing, and Electrical Upgrades in 2026
Homeowners can still lower the cost of an upgrade in 2026 by focusing on long-term operating savings, utility programs, and smart timing. A federal credit was a one-time benefit, while an efficient system lowers your utility bills every month it runs.
These strategies still apply after the federal credits ended:
- Operating savings: The Department of Energy reports that heat pumps can reduce electricity use for heating by up to 75% compared with electric resistance heating such as electric furnaces and baseboard heaters.
- Utility programs: Evergy, the electric utility serving the Wichita area, has offered rebates on high-efficiency HVAC equipment and discounted smart thermostats through its energy savings programs, so check current offers before you buy.
- Financing: Spreading the cost over time can make a higher-efficiency system more manageable, and HVAC financing for Wichita homeowners includes standard payment plans and seasonal promotional offers.
- Proper sizing: A system sized with a load calculation for your home runs more efficiently and lasts longer than one chosen by rule of thumb.
- Planned replacement: Replacing aging equipment on your schedule, rather than after a breakdown, gives you time to compare options and pricing.
Is It Still Worth Upgrading Without the Federal Tax Credit?
An energy-efficient upgrade can still be worth it without a tax credit when your current system is aging, unreliable, or expensive to run. The credit made the decision easier, but it was rarely the main reason to replace equipment.
Working in homes across the Wichita area, we recommend comparing the total cost of ownership instead of chasing an efficiency tier that only made sense with a credit attached. A mid-efficiency system that fits your home and budget can be a better investment than a premium model when no credit is available to offset the difference. On the other hand, if your home has long cooling seasons, high utility bills, or no natural gas service, higher efficiency often pays for itself over the life of the system.
A simple way to decide is to weigh three questions: how old your current system is, how much you spend each year to run it, and how long you plan to stay in the home. The longer you plan to stay and the higher your current costs, the more value a high-efficiency upgrade delivers.
Frequently Asked Questions About Inflation Reduction Act Tax Credits
Do Energy-Efficient Windows and Doors Still Qualify for a Tax Credit?
No, windows, doors, insulation, and other building envelope items installed after December 31, 2025, no longer qualify for the federal energy efficient home improvement credit. Items installed during 2025 are claimed on the 2025 return, subject to the annual limits that applied that year.
Can I Claim a Credit for Equipment I Bought in 2025 but Had Installed in 2026?
Generally, no, because the IRS ties the credit to the year the property is placed in service, which usually means the year it was installed. A system purchased in late 2025 but installed in 2026 typically does not qualify. Confirm your situation with a tax professional.
Are Heat Pumps Still Worth It in Kansas Without the Tax Credit?
Heat pumps can still be a smart choice in Kansas, especially for homes without natural gas service. The Department of Energy notes that cold climate heat pumps are designed to work in temperatures as low as 5°F, and pairing a heat pump with a gas furnace lets the furnace take over in colder weather.
Do Solar Panels Still Qualify for the Residential Clean Energy Credit?
No, the residential clean energy credit is not available for solar panels or other qualifying property placed in service after December 31, 2025. Systems installed in 2025 or earlier are claimed on the return for the year they were installed.
Will the Kansas Home Rebates Program Cover Water Heaters?
The Kansas Home Rebates program has not yet published its final list of qualifying products. Heat pumps, insulation, air sealing, ventilation, and electrical upgrades are named in the program description, so check kshomerebates.gov once the qualified products list is released.
Planning an Energy-Efficient Upgrade in the Wichita Area
The Inflation Reduction Act tax credits for heating, cooling, water heater, and electrical upgrades ended after 2025, but an efficient system still lowers your monthly bills, and Kansas home energy rebates may open in the future. On Time Plumbing, Heating, Cooling & Electric has helped homeowners across the Wichita area since 2004 with heating, cooling, plumbing, and electrical upgrades, backed by upfront pricing and a 100% Satisfaction Guarantee. To talk through your options, call us at 316-721-5055 or contact our team today.