Federal tax breaks for energy efficient improvements are gone, but homeowners can still find financial incentives in addition to saving money on their utility bills.
If you missed the window of opportunity to get a federal tax break for installing a new heat pump or adding a solar array to your home, which are among the many financial supports for sustainable home improvements that disappeared at the end of 2025, don’t despair.
“Even as federal incentives shift and some credits phase out, homeowners still have access to meaningful savings through utilities, state energy offices, local weatherization programs and manufacturer incentives,” says Bob Swilik, vice president ofAeroseal Residential, a company that manufactures and installs duct and building envelope sealants for energy efficiency. “Start locally. Utilities increasingly treat efficiency as a grid resource, which means they are actively funding measures that reduce demand and ease pressure on infrastructure.”
Unlike tax credits, state and local programs often offer instant point-of-sale savings, says D.R. Richardson, CEO ofElephant Energy, a company that installs heat pumps, heat pump water heaters, solar systems and other energy efficient upgrades in homes.
“For example, in Massachusetts, the Mass Save program combines utility incentives, rebates and financing to reduce upfront costs by up to $8,500, and for some income-qualified homeowners, they can get zero-cost upgrades through turnkey programs,” Richardson says.
In many other states, there are state, municipal and utility rebates and incentives available for homeowners.
“Finding them is not always easy but a trusted contractor should be able to point you in the right direction along with searching local sustainability offices,” Richardson says. “Stacking available rebates can significantly offset a homeowners’ out of pocket cost for a heat pump and heat pump water heater.”
The charts below from Elephant Energy provide an example of potential savings:
In addition to rebates, financing tools for energy efficient upgrades are expanding, according to Swilik.
“Utilities, state programs, green banks and contractors increasingly offer low-interest financing, on-bill repayment programs and performance-based incentives intended to make energy upgrades more financially accessible without requiring homeowners to absorb the full upfront cost at once,” Swilik says.
Utility Company Programs
Utility companies are increasingly offering ongoing savings and grid participation programs in addition to rebates, Richardson says.
“Most major utilities offer rebates for insulation, air sealing, duct improvements, heat pumps and smart thermostats - measures that reduce both total consumption and peak demand on the grid,” Swilik says. “Reducing wasted energy is often less expensive than expanding generation.”
For example, in Colorado, Xcel Energy is getting into active demand management, Richardson says. They’re offering battery incentive programs such as “Renewable Battery Connect” that provide upfront payments up to approximately $5,000 in exchange for allowing the utility to draw on stored energy during peak demand.
“In states such as Massachusetts, utilities participating in Mass Save offer rebates for high-efficiency systems like heat pumps, discounted rates or programs tied to electrification (like winter heat pump rates) and free home energy assessments and weatherization incentives,” Richardson says.
In some states, including Colorado, Illinois, New York, Massachusetts and California, utility companies are tying incentives to verified improvements in overall home performance rather than funding specific individual upgrades in isolation, according to Swilik.
“This reflects a broader move toward managing demand through efficiency rather than building additional supply,” he says.
Government Incentives
State energy offices often focus initiatives on low and moderate-income households, Swilik says, along with older housing stock with high energy burdens.
“While programs vary by state, rebates commonly support weatherization, insulation, air sealing and high-efficiency HVAC upgrades,” Swilik says. “Because many of these programs operate on fixed funding cycles, timing matters. Incentives are often distributed on a first-come, first-served basis, which means homeowners who research options early in the planning process are better positioned to secure funding than those who wait until construction is underway.”
Manufacturer and Contractor Savings
Many manufacturers and installers offer rebates, low-interest financing or bundled pricing tied to high-efficiency projects for things likeheat pumps, solar systems and heat pump water heaters.
“The bigger opportunity is how installers package incentives into the upfront price,” Richardson says. “For example, in Massachusetts, Mass Save rebates can reach $8,500–$16,000 for heat pumps, with additional bonuses and financing layered in that combine manufacturer promos and utility rebates. This is especially critical for homeowners without large upfront budgets.”
At the same time, the industry is more explicitly recognizing that equipment efficiency alone does not guarantee energy savings, Swilik says.
“A high-efficiency heat pump installed in a home with significant air leakage or insulation gaps will underperform relative to its design potential,” he says. “As a result, contractors are being pushed toward a more performance-based approach that prioritizes airflow, air sealing, insulation quality and overall energy loss as core inputs to system design, not secondary considerations.”
Savings Through Planning
Before making a major investment in new equipment, Swilik recommends a home energy assessment.
“In many older homes, issues like duct leakage and poor airtightness quietly drive up energy bills and limit the performance of upgrades such as heat pumps or solar,” he says. “Addressing those issues first improves comfort immediately and creates a more effective foundation for future investments.”
Reducing energy waste with insulation, air sealing and ventilation improvements can quickly lower demand and utility costs, Swilik says.
“The most effective projects follow a clear sequence: reduce energy loss, strengthen the building envelope, and then invest in technologies like heat pumps and solar,” Swilik says. “That order improves system sizing accuracy, increases long-term savings and prevents homeowners from paying for capacity their home doesn’t actually require.”
A phased approach can lower monthly operating costs to create savings for the next improvement, he says.
“The biggest mistake homeowners make is approaching upgrades one system at a time,” Richardson says. “A planned, whole-home approach, even phased, maximizes savings and avoids rework.”
Sidebar: Searchable Sites for Green Improvement Savings
Working with a provider like Elephant Energy or other companies that actively seek financing options for their customers can be the easiest way to combine programs for energy upgrades. In addition, homeowners can search:
How to Find the Green You Need to Upgrade Your Home’s Efficiency
Federal tax breaks for energy efficient improvements are gone, but homeowners can still find financial incentives in addition to saving money on their utility bills.
If you missed the window of opportunity to get a federal tax break for installing a new heat pump or adding a solar array to your home, which are among the many financial supports for sustainable home improvements that disappeared at the end of 2025, don’t despair.
“Even as federal incentives shift and some credits phase out, homeowners still have access to meaningful savings through utilities, state energy offices, local weatherization programs and manufacturer incentives,” says Bob Swilik, vice president of Aeroseal Residential, a company that manufactures and installs duct and building envelope sealants for energy efficiency. “Start locally. Utilities increasingly treat efficiency as a grid resource, which means they are actively funding measures that reduce demand and ease pressure on infrastructure.”
Unlike tax credits, state and local programs often offer instant point-of-sale savings, says D.R. Richardson, CEO of Elephant Energy, a company that installs heat pumps, heat pump water heaters, solar systems and other energy efficient upgrades in homes.
“For example, in Massachusetts, the Mass Save program combines utility incentives, rebates and financing to reduce upfront costs by up to $8,500, and for some income-qualified homeowners, they can get zero-cost upgrades through turnkey programs,” Richardson says.
In many other states, there are state, municipal and utility rebates and incentives available for homeowners.
“Finding them is not always easy but a trusted contractor should be able to point you in the right direction along with searching local sustainability offices,” Richardson says. “Stacking available rebates can significantly offset a homeowners’ out of pocket cost for a heat pump and heat pump water heater.”
The charts below from Elephant Energy provide an example of potential savings:
In addition to rebates, financing tools for energy efficient upgrades are expanding, according to Swilik.
“Utilities, state programs, green banks and contractors increasingly offer low-interest financing, on-bill repayment programs and performance-based incentives intended to make energy upgrades more financially accessible without requiring homeowners to absorb the full upfront cost at once,” Swilik says.
Utility Company Programs
Utility companies are increasingly offering ongoing savings and grid participation programs in addition to rebates, Richardson says.
“Most major utilities offer rebates for insulation, air sealing, duct improvements, heat pumps and smart thermostats - measures that reduce both total consumption and peak demand on the grid,” Swilik says. “Reducing wasted energy is often less expensive than expanding generation.”
For example, in Colorado, Xcel Energy is getting into active demand management, Richardson says. They’re offering battery incentive programs such as “Renewable Battery Connect” that provide upfront payments up to approximately $5,000 in exchange for allowing the utility to draw on stored energy during peak demand.
“In states such as Massachusetts, utilities participating in Mass Save offer rebates for high-efficiency systems like heat pumps, discounted rates or programs tied to electrification (like winter heat pump rates) and free home energy assessments and weatherization incentives,” Richardson says.
In some states, including Colorado, Illinois, New York, Massachusetts and California, utility companies are tying incentives to verified improvements in overall home performance rather than funding specific individual upgrades in isolation, according to Swilik.
“This reflects a broader move toward managing demand through efficiency rather than building additional supply,” he says.
Government Incentives
State energy offices often focus initiatives on low and moderate-income households, Swilik says, along with older housing stock with high energy burdens.
“While programs vary by state, rebates commonly support weatherization, insulation, air sealing and high-efficiency HVAC upgrades,” Swilik says. “Because many of these programs operate on fixed funding cycles, timing matters. Incentives are often distributed on a first-come, first-served basis, which means homeowners who research options early in the planning process are better positioned to secure funding than those who wait until construction is underway.”
Manufacturer and Contractor Savings
Many manufacturers and installers offer rebates, low-interest financing or bundled pricing tied to high-efficiency projects for things like heat pumps, solar systems and heat pump water heaters.
“The bigger opportunity is how installers package incentives into the upfront price,” Richardson says. “For example, in Massachusetts, Mass Save rebates can reach $8,500–$16,000 for heat pumps, with additional bonuses and financing layered in that combine manufacturer promos and utility rebates. This is especially critical for homeowners without large upfront budgets.”
At the same time, the industry is more explicitly recognizing that equipment efficiency alone does not guarantee energy savings, Swilik says.
“A high-efficiency heat pump installed in a home with significant air leakage or insulation gaps will underperform relative to its design potential,” he says. “As a result, contractors are being pushed toward a more performance-based approach that prioritizes airflow, air sealing, insulation quality and overall energy loss as core inputs to system design, not secondary considerations.”
Savings Through Planning
Before making a major investment in new equipment, Swilik recommends a home energy assessment.
“In many older homes, issues like duct leakage and poor airtightness quietly drive up energy bills and limit the performance of upgrades such as heat pumps or solar,” he says. “Addressing those issues first improves comfort immediately and creates a more effective foundation for future investments.”
Reducing energy waste with insulation, air sealing and ventilation improvements can quickly lower demand and utility costs, Swilik says.
“The most effective projects follow a clear sequence: reduce energy loss, strengthen the building envelope, and then invest in technologies like heat pumps and solar,” Swilik says. “That order improves system sizing accuracy, increases long-term savings and prevents homeowners from paying for capacity their home doesn’t actually require.”
A phased approach can lower monthly operating costs to create savings for the next improvement, he says.
“The biggest mistake homeowners make is approaching upgrades one system at a time,” Richardson says. “A planned, whole-home approach, even phased, maximizes savings and avoids rework.”
Sidebar: Searchable Sites for Green Improvement Savings
Working with a provider like Elephant Energy or other companies that actively seek financing options for their customers can be the easiest way to combine programs for energy upgrades. In addition, homeowners can search:
Rewiring America Programs searchable by address.
DSIRE database A comprehensive national database.
Energy Star rebate finder A searchable database by Zip code for financial incentives for Energy Star certified products.
The U.S. Energy Department maintains a database of state energy offices where residents can search for programs.
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By Michele Lerner, Associate Editor
Michele Lerner is an award-winning freelance writer, editor, and author who writes about real estate, personal finance, and business.Also Read