The federal tax credit that paid up to $2,000 toward a heat pump is gone — it applies only to equipment placed in service before 31 December 2025, with no grandfather. What remains in Boulder is utility rebates from Xcel Energy and an income-qualified county programme, both with hard deadlines.
All figures on this page were verified against the issuing organisation on 10 September 2026. Incentive programmes change, so check the linked sources before committing to anything.
The federal credit is gone, and most of the internet has not caught up
This is the single most important thing on the page, because acting on stale information here costs real money.
The Energy Efficient Home Improvement Credit — Section 25C, the one that paid 30% of costs up to $2,000 for a qualifying heat pump and up to $1,200 for other efficiency improvements — is no longer available for new work. The IRS states that the credit is allowed for qualifying property placed in service before 31 December 2025.
Section 25D, the Residential Clean Energy Credit, ended on the same terms. That is the one that covered geothermal heat pumps, so ground-source systems lost their federal credit at the same moment.
“Placed in service” is the phrase that catches people
This is where even pages that know the credit ended get it wrong.
The controlling event is when the equipment was installed and operational — not when you bought it, not when you paid, not when you signed the contract. Equipment purchased in late 2025 but installed in 2026 does not qualify. A deposit paid in December 2025 against a January 2026 installation does not qualify.
If a contractor tells you that you can still claim a federal credit because you ordered before the deadline, they are describing a rule that does not exist. There is no transition provision and no grandfather clause.
What that means for a quote you are holding
If a proposal you have been given nets out a federal tax credit, the bottom line is wrong by the amount of that credit. That is not a small discrepancy on a heat pump installation. Ask for the quote to be reissued without it.
What Xcel Energy currently pays
Xcel Energy supplies both electricity and natural gas in Boulder, so most households here deal with one utility for both sides of a heating decision.
Gas furnaces and boilers
Verified on Xcel’s residential heating equipment rebates page, 10 September 2026:
| Equipment | Requirement | Rebate |
|---|---|---|
| Natural gas furnace | 95% AFUE | $225 |
| Natural gas boiler | 95% AFUE | $225 |
| Natural gas boiler with sidearm (indirect) water heater | 95% AFUE | $325 |
Two conditions attach. The rebate requires that the new unit is replacing non-condensing equipment, and eligibility requires an active Colorado Xcel Energy residential natural gas account. Xcel’s own guidance on identifying the old equipment is that 86% AFUE and below is non-condensing, 87% and above is condensing.
Worth noting because several HVAC blogs currently state the opposite: the gas furnace rebate has not been discontinued. It was on Xcel’s live page on the date above.
Heat pumps — and why Xcel will not quote you a number
Xcel does pay heat pump rebates, and they are the largest incentives available here. What Xcel does not do is publish a fixed amount.
Its own page states that rebate amounts vary based on qualifying equipment and cannot exceed installation costs, and directs customers to verify the amount with their contractor. That is the whole of the public guidance.
We follow Xcel on this rather than repeating the per-ton figures circulating on other sites. Those figures may well be accurate for particular equipment, but they cannot be verified against anything Xcel publishes, and a rebate figure you cannot check is not a number to plan a purchase around. Get it in writing on the quote.
One structural requirement does matter regardless of amount: for most heat pump rebates the installing contractor must be part of Xcel’s Trade Partner Network. That is a question to ask before work is scheduled, not after.
The dates that decide everything
More consequential than the amounts, and the reason this page is worth reading now rather than in December.
- 1 October 2026. Xcel states that effective that date, customers who heat with natural gas from Xcel and install a heat pump may be eligible for a bonus, with amounts varying by the efficiency rating of the equipment installed. This is a forthcoming change, not one that has already happened.
- 31 December 2026. Invoices and installations must be completed by this date.
- 30 September 2027. Applications will be accepted until then — but only for work completed by the December 2026 deadline. A late application is possible; a late installation is not.
- 16 November 2025 (already in effect). Bonuses are no longer available to customers with existing electric systems — baseboard heat, or a heat pump water heater — who install a heat pump. Those customers remain eligible for standard rebates.
That last one is worth reading twice if you currently heat with electric baseboard, because it is precisely the household that a heat pump helps most, and the bonus that would have applied is no longer there.
Tax credits are not the same thing as the federal rebate programmes
A distinction worth holding onto, because the two get conflated constantly and only one of them ended.
Sections 25C and 25D were tax credits — you claimed them on a federal return. The separate federal home energy rebate programmes, funded by their own appropriation and administered state by state rather than through the tax system, are a different mechanism entirely and were not terminated by the same provision. They pay at or near the point of sale rather than at tax time, and they are typically income-tiered.
Because those programmes are run by each state, their current status in Colorado is a question for the state energy office — and the Colorado sources that would confirm it are not reachable from where this was researched, as explained below. So: ask, do not assume. If a contractor offers you a point-of-sale federal rebate, that is a plausible thing to exist, and it is also a thing to see documented before you count on it.
Boulder County EnergySmart: income-qualified only
Boulder County’s EnergySmart programme changed shape for 2026, and the change matters.
For 2026 it is income-qualified only. Verified on the programme’s own pages, 10 September 2026:
- Available to Boulder County residents whose household earns 100% of Area Median Income or less.
- Covers 50% of project costs, up to $2,000 per year.
- Applies to heat pumps, electric water heaters, insulation, induction stoves and similar efficiency and electrification upgrades.
- All work must be completed and invoiced between 1 January 2026 and 31 December 2026.
- Awarded first-come, first-served while funding is available.
- Funded by the county’s Sustainability Tax.
The programme publishes the income thresholds by household size on its income-qualified rebates page, and they are the figures to check rather than an estimate.
How these stack
Combining incentives is allowed and is where the real money is, with one important cap.
EnergySmart states that its income-qualified rebates can be combined with rebates from utilities and other entities — as long as the total combined rebate does not exceed 50% of the total project cost. So a Boulder County household at or below 100% AMI could in principle combine an Xcel heat pump rebate with an EnergySmart rebate, up to that ceiling.
That ceiling is the thing to model before signing. Two incentives that individually look additive can be capped when combined, and a quote that assumes both in full may overstate what you will actually receive.
What this page is not telling you, and why
Colorado operates its own heating incentives, including a state-level heat pump tax credit administered through registered contractors.
We are not describing them here. The Colorado Department of Revenue and Colorado Energy Office pages that carry the authoritative terms are not reachable from where this was researched — both return an HTTP 403 block — and an incentive described from memory is worse than one not described at all, because a reader may act on it.
What you should do instead: ask any contractor quoting you for the state credit to show you the current Colorado Department of Revenue form and the amount, in writing, on the quote. A contractor who is registered to pass through a state credit will have that documentation readily available. If it cannot be produced, treat the figure as unconfirmed.
We will add this section when the source is verifiable.
What a correct quote looks like
The incentives equivalent of a correct diagnosis. A quote that handles this properly does four things.
It separates equipment and labour from incentives. You should be able to see the full installed price before anything is netted off, and each incentive listed individually with its source named.
It states which incentives are applied for by whom. Some are claimed by the contractor and passed through as a discount; others you apply for yourself after the work. Those are very different cash-flow positions, and a quote showing a single “after rebates” figure hides which you are in.
It names the conditions. Trade Partner Network membership, the non-condensing replacement requirement, the AMI threshold, the installation deadline. Each is a condition that can disqualify a rebate after the fact.
It does not include the federal 25C or 25D credit for work placed in service after 31 December 2025. If it does, the arithmetic is wrong.
And one thing to ask directly: what happens to the price if a rebate is denied? The answer tells you who is carrying that risk. It is a fair question and a revealing one — much like the questions in the outdoor lockout sensor your heat pump probably does not have, which covers a commissioning detail no rebate pays for and which determines what the system actually costs to run.
Whether the equipment being quoted suits your house at all is a separate question, covered in what a heat pump is supposed to do on a cold Boulder morning.
Frequently asked questions
Is the 25C tax credit still available? No. The IRS states the Energy Efficient Home Improvement Credit applies to qualifying property placed in service before 31 December 2025. There is no grandfather provision.
I bought equipment in 2025 but it was installed in 2026. Do I qualify? No. “Placed in service” means installed and operational, not purchased. The installation date is what counts.
What about the geothermal credit? Section 25D, which covered ground-source heat pumps, ended on the same terms.
How much is the Xcel heat pump rebate? Xcel does not publish a fixed figure. Its guidance is that amounts vary by qualifying equipment, cannot exceed installation costs, and should be confirmed with your contractor. Get the number in writing on your quote.
Did Xcel stop paying gas furnace rebates? No. As of 10 September 2026 its live page listed $225 for a 95% AFUE gas furnace, $225 for a 95% AFUE boiler, and $325 for a boiler with an indirect water heater, where the new unit replaces non-condensing equipment.
What is the deadline for Xcel heat pump rebates? Installations and invoices must be completed by 31 December 2026. Applications are accepted through 30 September 2027, but that later date does not extend the installation deadline.
Can I combine Boulder County and Xcel rebates? Yes, subject to a cap — EnergySmart states the total combined rebate must not exceed 50% of the total project cost.
Who qualifies for the Boulder County EnergySmart rebate in 2026? Boulder County households at or below 100% of Area Median Income. The programme is income-qualified only for 2026, covering 50% of project costs up to $2,000 per year, for work completed and invoiced within the 2026 calendar year.
Talk to us
Boulder HVAC Pros works across Boulder and the surrounding communities. If you want a quote that separates the price from the incentives, call (720) 764-0399, or see heat pump installation in Boulder.
For the wider picture of what drives a Boulder winter bill, see winter comfort, safety and heating costs in Boulder.
Sources
All verified 10 September 2026.
- Internal Revenue Service, Energy Efficient Home Improvement Credit (placed in service before 31 December 2025) — https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit
- Xcel Energy, heating equipment rebates, Colorado residential (furnace and boiler amounts, non-condensing requirement) — https://co.my.xcelenergy.com/s/residential/heating-cooling/heating-equipment-rebates
- Xcel Energy, residential heat pumps (deadlines, 1 October 2026 bonus, 16 November 2025 change, Trade Partner Network, rebate amounts not published) — https://co.my.xcelenergy.com/s/residential/heating-cooling/heat-pumps
- Boulder County EnergySmart, available rebates — https://energysmartyes.com/rebates/
- Boulder County EnergySmart, 2026 income-qualified rebates (100% AMI, 50% of project costs to $2,000/year, combining cap) — https://energysmartyes.com/rebates/income-qualified-rebates/
- City of Boulder, list of Boulder utilities (Xcel Energy supplies electricity and natural gas) — https://bouldercolorado.gov/list-boulder-utilities
