What Is the Inflation Reduction Act — and What's Still Available in 2026?

What Is the Inflation Reduction Act — and What's Still Available in 2026?

Published by Home Incentives Hub | Updated May 2026

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You've probably heard the term "Inflation Reduction Act" thrown around a lot over the past few years. Maybe a contractor mentioned it when quoting a heat pump. Maybe you saw it referenced on a government website. Maybe you're just wondering whether any of it still applies to you.

The answer is: yes — but the landscape changed significantly at the start of 2026. This article explains what the IRA was, what changed, and most importantly, what real money is still available for your home right now.

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What Is the Inflation Reduction Act?

The Inflation Reduction Act (IRA) is a federal law signed in August 2022. It was the largest climate investment in U.S. history — approximately $369 billion directed toward clean energy, energy efficiency, and reducing carbon emissions over a decade.

A significant portion was specifically designed to help American homeowners upgrade their homes: cleaner heating and cooling systems, better insulation, solar panels, electric vehicles, and more.

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What Changed in 2026

In mid-2025, Congress passed the One Big Beautiful Bill Act, which significantly altered the IRA's incentive programs for homeowners. The key change: several major federal tax credits expired on December 31, 2025.

Specifically, these credits are no longer available for work completed after that date:

• Section 25C — the Energy Efficient Home Improvement Credit (heat pumps, insulation, windows, panels)
• Section 25D — the Residential Clean Energy Credit (solar panels, battery storage)
• The $7,500 EV tax credit for new electric vehicles

If you completed qualifying work before December 31, 2025, you can still claim these credits on your 2025 tax return filed in 2026. And if you had unused solar (25D) credits from prior years, those carry forward. But for new installations in 2026, these tax credits are gone.

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What's Still Available in 2026

The good news: two major federal rebate programs survived intact — and they're distributing billions of dollars to homeowners right now through state agencies. For many homeowners, these rebates are actually more valuable than the expired tax credits ever were, because you don't have to wait until tax season to see the money.

1. HEAR — High-Efficiency Electric Home Rebate Act

HEAR (also called HEEHRA) provides direct, point-of-sale rebates on qualifying home upgrades. The discount is applied at the time of purchase — no waiting for tax season.

HEAR is income-qualified, with the highest rebates going to lower- and moderate-income households:

Income Level	Rebate Amount
At or below 80% AMI	Up to 100% of project cost
80–150% AMI	Up to 50% of project cost
Above 150% AMI	Not eligible

What HEAR covers:

Upgrade	Maximum Rebate
Heat pump (space heating/cooling)	Up to $8,000
Heat pump water heater	Up to $1,750
Electric stove or cooktop	Up to $840
Heat pump clothes dryer	Up to $840
Electric panel upgrade	Up to $4,000
Insulation, air sealing, ventilation	Up to $1,600
Electric wiring upgrades	Up to $2,500

Total HEAR rebate per household capped at $14,000.

HEAR is administered state by state. Some states, including California, have already fully reserved their single-family HEAR funds as of early 2026. Check Home Incentives Hub for your state's current status.

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2. HOMES — Home Owner Managing Energy Savings

HOMES rebates are for whole-home energy retrofit projects. Unlike HEAR, HOMES is not income-restricted.

Energy Savings	Max Rebate (all incomes)	Max Rebate (low income)
20–35% reduction	Up to $2,000	Up to $4,000
35%+ reduction	Up to $4,000	Up to $8,000

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3. State and Utility Programs

State energy offices and utility companies run their own programs completely independent of the federal changes — rebates, low-interest loans, on-bill financing, and PACE financing. Stacking a HEAR rebate with a utility rebate can still result in thousands of dollars off an upgrade.

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How the Numbers Stack Up in 2026

A moderate-income homeowner installing a $12,000 heat pump in an active HEAR state:

Incentive	Amount
HEAR rebate (50% at 80–150% AMI)	-$4,000
State energy office rebate	-$1,000
Utility rebate	-$500
Out-of-pocket cost	~$6,500

For a low-income household at or below 80% AMI, the HEAR rebate alone could cover the full system cost.

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What's No Longer Available

• Solar panels — the 30% federal tax credit (25D) expired December 31, 2025
• Heat pump tax credit (25C) — expired; HEAR rebates partially fill this gap for income-eligible households
• EV tax credit — the $7,500 new EV credit ended
• Battery storage tax credit — expired with 25D

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Act Sooner Rather Than Later

HEAR and HOMES funding is finite and administered state by state. California's single-family HEAR funds were fully reserved by February 2026. The homeowners who act now will access programs that may not exist in the same form next year.

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The Bottom Line

The IRA's landscape looks different in 2026. The federal tax credits are gone. But billions of dollars in direct rebates — through HEAR, HOMES, and state and utility programs — are still actively available. For lower- and moderate-income households, the rebates are actually more generous than the tax credits ever were.

Visit homeincentiveshub.com to find incentives available for your home today.

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This article reflects the incentive landscape as of May 2026. Program availability, funding levels, and eligibility rules change frequently. Home Incentives Hub updates its database daily. Always consult a tax professional for advice specific to your situation.