The 25C and 25D credits ended. Here is what replaced them.
The One Big Beautiful Bill Act terminated both residential energy tax credits for anything placed in service after December 31, 2025. What that means for an Upper Valley project starting today.
What happened
For most of the last three years, an Upper Valley homeowner insulating an attic could count on two pots of money: the state or utility rebate, and a 30% federal tax credit at filing time. The Inflation Reduction Act had extended the section 25C Energy Efficient Home Improvement Credit through 2032, and section 25D covered geothermal at 30% with no cap.
The One Big Beautiful Bill Act, signed July 4, 2025, repealed those extensions. Both credits terminate for property placed in service after December 31, 2025. There is no phase-down and no transition rule for ordinary residential work — the credit simply does not exist for a 2026 install.
The deadline turned on when the equipment or improvement was installed and operational, not when you signed the contract or wrote the deposit check. A heat pump ordered in November 2025 and commissioned in January 2026 does not qualify. If you are close to the line, your invoice needs to state the in-service date.
The full before-and-after
| Federal credit | What it was worth | Status for 2026 |
|---|---|---|
| 25C — insulation & air sealing | 30% of cost, up to $1,200/yr | Terminated after Dec 31, 2025 |
| 25C — heat pumps, HPWH, biomass | 30% of cost, up to $2,000/yr | Terminated after Dec 31, 2025 |
| 25C — windows & skylights | 30%, up to $600 | Terminated after Dec 31, 2025 |
| 25C — exterior doors | 30%, $250 per door / $500 total | Terminated after Dec 31, 2025 |
| 25C — home energy audit | 30%, up to $150 | Terminated after Dec 31, 2025 |
| 25D — geothermal heat pump | 30% of cost, uncapped | Terminated after Dec 31, 2025 |
| NHSaves weatherization | 75% to $6,000–$8,000 | Active in 2026 |
| Efficiency Vermont weatherization | Up to 90% cash back | Active through end of 2026 or while funding lasts |
Why this matters less here than elsewhere
In a state with weak utility programs, losing 25C is devastating. In the Upper Valley it stings considerably less, because the state-side incentives were always the larger number for the work most of these houses need.
Consider a $10,000 dense-pack and air sealing project. Under the old stack, a Vermont homeowner might have received the Efficiency Vermont rebate plus $1,200 from 25C. In 2026, that same homeowner gets up to 90% cash back — roughly $9,000 — and no federal credit. The result is better, not worse. On the New Hampshire side, 75% of $10,000 is $7,500, against a federal credit that was capped at $1,200 a year regardless of project size.
Where the loss genuinely hurts is geothermal. Section 25D was uncapped, which on a $35,000 ground-source installation was worth more than $10,000. Vermont’s $3,000 rebate does not replace that. See geothermal heat pumps for what remains, including the commercial-ownership structures some installers now use.
If your project was finished in 2025
You can still claim it. File IRS Form 5695 with the return for the tax year in which the property was placed in service, and keep:
- The itemised invoice, showing the in-service date
- The manufacturer’s certification statement for the equipment
- Any product identification number required for the credit
- Documentation of any state or utility rebate you also received — rebates generally reduce the cost basis on which the credit is calculated
None of this is tax advice. Talk to your preparer, and check the IRS FAQs on the OBBBA modifications to sections 25C and 25D.
What to do instead in 2026
- Get an energy audit — $100 copay in NH, and the required first step for Vermont’s 90%.
- Do the envelope first. It carries the largest surviving subsidy in both states.
- Check the income-qualified programs before you assume you do not qualify. They cover 100%.
- If cash flow is the obstacle, look at heat loans and on-bill financing rather than waiting.
Figures checked July 2026. Rebate programs change their amounts, caps and equipment requirements during the year, and several are capped by available funding. Confirm the current offer with the program or your contractor before you sign anything.
Federal credit questions
Is the 25C credit really gone?
Yes. Public Law 119-21, signed July 4, 2025 and commonly called the One Big Beautiful Bill Act, terminated the section 25C Energy Efficient Home Improvement Credit for property placed in service after December 31, 2025. The Inflation Reduction Act had extended it through 2032; that extension was repealed. The IRS has published FAQs covering the modifications to sections 25C, 25D, 25E, 30C, 30D, 45L, 45W and 179D.
What about the geothermal credit?
Section 25D, the residential clean energy credit that covered 30% of geothermal heat pump cost with no cap, was terminated on the same schedule — no credit for systems placed in service after December 31, 2025. Vermont’s up-to-$3,000 ground-source rebate survives, as does New Hampshire’s per-ton treatment. More on geothermal here.
I finished my project in December 2025. Can I still claim it?
If the property was placed in service on or before December 31, 2025 — installed and operational, not merely purchased or paid for — you claim it on that tax year’s return using IRS Form 5695. Keep the manufacturer certification statement, the invoice showing the in-service date, and any product identification numbers. Talk to your tax preparer; this page is not tax advice.
Is there any federal money left?
For an ordinary homeowner doing insulation or installing a heat pump in 2026, essentially no. The commercial section 48 investment credit still applies to geothermal at a 6% base rate, rising to 30% where prevailing wage and apprenticeship requirements are met, which has pushed some installers toward third-party-ownership and lease structures where the company claims the credit and passes savings through. That is a real option for geothermal, and worth asking about, but it is not a homeowner credit.
The state programs are still paying
Vermont at up to 90%, New Hampshire at 75%. Find out which one covers your address and what it is worth this year.