Federal Energy Credits Ended: What Coloradans Have

For a few years, a 30% federal tax credit shaped a lot of home improvement decisions. Heat pumps, windows, insulation, solar panels and batteries were all cheaper after tax time. Those federal credits are now over for new projects, and plenty of sales materials haven't caught up.

What ended

Energy Efficient Home Improvement Credit (Section 25C). This credit covered things like heat pumps, heat pump water heaters, insulation, qualifying windows and doors, and home energy audits. The IRS says you can claim it for improvements made through December 31, 2025. For improvements in 2023 through 2025, it was worth up to $3,200 a year, with category limits.

Residential Clean Energy Credit (Section 25D). This covered solar panels, solar water heating, geothermal heat pumps, small wind and battery storage. The IRS says it equaled 30% of the cost of qualified property installed from 2022 through December 31, 2025, and is not available for any property placed in service after that date.

What that means in practice

• If your project was installed in 2025, you may still be able to claim the credit on your 2025 tax return. Talk to a tax professional.
• If your project is installed in 2026 or later, the federal credits don't apply.
• If you signed a contract in 2025 but the work was installed in 2026, the "placed in service" or "installed" date matters, not the contract date. Ask a tax professional about your situation.

What Colorado homeowners still have

State heat pump tax credit. Colorado's credit is still running in 2026. Registered contractors claim it and pass on a discount: at least $333 for an air-source heat pump, $667 for ground-source or water-source, and $83 for a heat pump water heater. See Colorado's heat pump tax credit, explained.

Utility rebates. Xcel Energy offers heat pump rebates in Colorado. Customers of municipal utilities that work with Efficiency Works, such as Fort Collins, Longmont and Loveland, have their own incentive programs. Check current terms.

Local and income-qualified programs. In Boulder County, EnergySmart offers income-qualified households up to $2,000 in rebates. Some cities and counties run their own programs; check yours.

How to read old marketing

You'll still see ads and bids that say "30% back from the IRS" or "qualifies for the federal tax credit." If you see that on a 2026 bid:

1. Ask the contractor to remove it from the price comparison.
2. Ask what incentives actually apply, in writing.
3. Recalculate the payback period without the federal credit.

Online cost guides written before 2026 often mention federal credits too. They may still be useful for prices but not for incentives.

Does it still make sense?

Many projects never depended on the credit:

• Heat pumps still make sense when you need to replace both a furnace and air conditioner, when you want cooling for the first time, or when state and utility incentives apply. See our HVAC and heat pumps guide.
• Windows are usually replaced for comfort, condition, noise and appearance, not just energy savings. See our windows guide.
• Insulation and air sealing are often among the most cost-effective energy improvements, with or without credits.
• Solar economics now depend on electricity rates, your utility's net metering rules and any local incentives.

If you live in a north-metro suburb like Westminster and Thornton, check your bill to confirm your electric and gas utility, then start with that utility's rebate page. Rebate rules often require that you apply before installation or use a participating contractor, so look early.

Keep your records anyway

Even without a federal credit, keep invoices, equipment model numbers, AHRI certificates for HVAC equipment and window NFRC labels. State and utility programs ask for them, and buyers and appraisers increasingly ask what was upgraded and when.

Questions to ask before you sign

• Which incentives does this bid assume, and are they confirmed?
• Who applies for each rebate, and when?
• Does the equipment meet each program's requirements?
• What happens to my price if a rebate is denied?