The federal energy credits are gone.

If you are an HVAC contractor and a customer has asked you about the federal tax credit in the last few months, you have probably had an awkward conversation. The customer read something. The something was true when it was written. It is not true now.

On 31 December 2025, the federal energy tax credits that had driven high-efficiency equipment sales since 2023 ended. Not phased down — terminated. The One Big Beautiful Bill Act, signed 4 July 2025, accelerated the sunset of §25C, §25D, §45L, and §179D, and the IRS has confirmed the position directly in its published guidance.

What makes this difficult in the field is not the change itself. It is that an enormous volume of material describing these credits as available is still in circulation and still ranking well in search. Manufacturer literature in your warehouse references them. Training decks reference them. Articles written in 2023 and 2024 read as current because nothing about them says otherwise. Some contractors are still advertising equipment as "tax credit eligible," and a share of those are doing it in good faith.

This essay covers what ended, what survived, and what to say at a kitchen table when a customer expects two thousand dollars that is not coming.

What ended.

§25C, the Energy Efficient Home Improvement Credit. Terminated for property placed in service after 31 December 2025. This was the one your customers know about: 30% of project cost including labor, up to $2,000 for a qualifying heat pump or heat pump water heater, $600 each for qualifying furnaces and air conditioners, with a $3,200 combined annual maximum. It had been scheduled to run through 2032.

§25D, the Residential Clean Energy Credit. Terminated for expenditures made after 31 December 2025. This covered geothermal ground-source heat pumps, solar, and battery storage at 30% of installed cost with no dollar cap. It had been scheduled to run through 2034. For contractors who sell geothermal, this was the larger of the two credits by a wide margin — on a $38,000 geothermal installation it was worth $11,400.

§179D, the Energy Efficient Commercial Buildings Deduction. Terminated. This mattered to contractors doing commercial retrofit work, and to designers who could take an allocation of the deduction from a tax-exempt building owner.

§45L, the New Energy Efficient Home Credit. Terminated. This mattered to contractors working with production builders.

There is no grandfather clause.

This is the part that causes the friction, and it is worth being exact about it because you will be explaining it more than once.

The controlling event for §25C is when the property was placed in service — installed, operational, and ready for use. For §25D it is when the expenditure was made, which the statute defines as the date the original installation is completed.

So a homeowner who signed a contract in November 2025, paid a deposit, took delivery of equipment in December, and had it installed in January 2026 receives nothing. The contract date does not matter. The purchase date does not matter. The deposit does not matter. Installation completed on or after 1 January 2026 means no credit.

There is no transition relief and no provision for contracts signed before the Act passed. The IRS guidance addresses this directly and the answer is the same in every formulation of the question.

If you sold work in late 2025 that slipped into the new year — and most contractors have some — those customers are in this position. Some of them were told by someone that the credit would apply. That conversation is coming.

What survived.

The federal tax credits are gone. Direct rebate programs are not, and the distinction rests on how they were funded.

HEAR and HOMES. The Home Electrification and Appliance Rebates and Home Efficiency Rebates programs were funded by appropriation under the Inflation Reduction Act and distributed to state energy offices as grants. Because that money was appropriated and disbursed rather than delivered through the tax code, the Act did not claw it back. Programs continue in states that have launched them, on state timelines and state rules.

These are rebates rather than credits, which changes the customer conversation for the better in one respect: the money arrives at or near the point of sale rather than at tax filing, and for income-qualified households the amounts can exceed what §25C offered.

State tax credits and incentives. Several states operate their own efficiency programs independent of the federal ones. Unaffected.

Utility rebates. Unaffected, and in this trade frequently the most reliable incentive available. Utility programs are funded by ratepayers through the utility, not by the federal government, and they were never part of this legislation.

Manufacturer rebates and financing promotions. Unaffected — and in a market that has just lost a federal incentive, likely to become more aggressive as manufacturers work to hold volume.

What this does to the sale.

Three things follow, and the first one is the one contractors are slowest to fix.

Your payback math changed. A heat pump upgrade that penciled at a seven-year payback with a $2,000 credit may pencil at nine or ten without it. If your proposal software still includes the credit in its calculation, it is producing a number that is wrong in your favor — which is the worst kind of wrong, because the customer discovers it at tax time rather than at the kitchen table.

Check your proposal templates this week. Not next quarter.

Incentive knowledge became a differentiator. When a federal credit applied to every customer in every state, knowing about it was table stakes. What remains is fragmented — utility programs that vary by territory, state programs with income thresholds, manufacturer promotions with expiry dates. A contractor who maintains a current, accurate list for their service area can quantify a specific customer's actual incentive while a competitor is saying "there might be something available."

That is a sales advantage that did not exist eighteen months ago, and it costs about an hour a quarter to maintain.

You are now in the business of correcting misinformation. Politely, repeatedly, and without making the customer feel foolish for having believed something that was true last year.

What to say.

The accurate version, short enough to deliver without a lecture:

"The federal tax credit for this equipment ended on December 31, 2025. Anything installed in 2026 or later doesn't qualify — that's a change in federal law, not a change in the equipment. What is still available is your utility's rebate program and the current manufacturer promotion, and if your household income qualifies there may be a state rebate as well. Let me show you what applies to you specifically."

Two things that sentence does. It corrects the expectation without arguing about it, and it immediately replaces the lost incentive with the ones that remain — which keeps the conversation on the upgrade rather than on the disappointment.

What not to say is equally important. Do not tell a customer their equipment qualifies for a federal credit. Do not say you think it might. And do not advise on whether a 2025 installation still qualifies on their 2025 return — that is tax advice about a specific return and it belongs with their preparer. You can supply the installation date, which is the fact the preparer needs. Let them apply it.

One thing to do this filing season.

Customers who had qualifying equipment installed during 2025 can still claim §25C or §25D on their 2025 return, filed in 2026. Their preparer will ask them for documentation, and they will call you for it.

What the preparer wants is straightforward: an invoice showing equipment make and model, the AHRI certified reference number or equivalent efficiency documentation, and the completed installation date.

Make sure your 2025 job files can produce that quickly. Those requests will arrive through this spring and then stop permanently. A contractor who handles them well finishes the credit era with a set of customers who feel looked after; one who cannot find the paperwork finishes it differently.

A note on reading dates.

The broader lesson of this change is about sourcing rather than about refrigerant or credits.

A great deal of confidently written, professionally presented material about §25C remains available and appears current. It ranks well. It is published on sites that look authoritative. Some of it carries 2026 datelines because it was lightly updated without the substance being checked.

Before you tell a customer a credit applies — or a rebate, or an efficiency threshold, or a deadline — check the publication date on whatever you are relying on, and check it against the IRS or the program administrator directly. In a year when this much has changed, that habit is worth more than any single fact in this essay.