Section 25C — Energy Efficient Home Improvement Credit (EXPIRED 2025)
Also known as: IRA 25CEEHICFederal heat pump creditFederal panel upgrade credit
Section 25C of the U.S. Internal Revenue Code was the federal tax credit that paid back 30% of qualifying energy-efficiency home improvements, with annual caps. It covered heat pumps, heat pump water heaters, insulation, air sealing, and an electrical panel upgrade installed to support other qualifying equipment.
The credit expired December 31, 2025. Section 25C(i) now reads: this section shall not apply with respect to any property placed in service after December 31, 2025. It was terminated early by the 2025 reconciliation act — the same act that ended Section 25D. Both residential credits stopped on the same date, and neither was scheduled to.
The trigger is when installation was COMPLETED, not when you signed, paid a deposit, or pulled a permit. Work finished during 2025 qualifies and is claimed on that year's return. Work finished in January 2026 does not, however early it was contracted. Section 25C had no carryforward for unused credit.
Historical caps, for anyone claiming a completed 2025 install: heat pumps and heat pump water heaters shared a separate annual cap, and an electrical panel upgrade qualified at a lower cap only when required to install other 25C-credited equipment. Your tax preparer works from the equipment documentation and the completion date.
A lot of older Santa Cruz homes have 100A panels that can't support a heat pump without an upgrade, and until the end of 2025 part of that upgrade came back at tax time when it enabled a heat pump install. It no longer does. That changes what a job costs — it doesn't change whether the panel needed the work. The reasons to upgrade are capacity, condition, and what you're adding.
A lot of material online still says this credit runs to 2032, because it was scheduled to and the pages were never updated. We had it wrong ourselves until we read the statute rather than a summary of it. If a quote you're given nets a federal credit off the price for 2026 work, ask about it. For a completed 2025 install we can confirm what we installed and when it was energized — what you're entitled to is a question for your tax preparer, not for us.
Met this term in a quote or inspection report?
A free whole-home inspection turns jargon into a written assessment of your actual house — you keep the report either way.