If you have been thinking about installing a heat pump “someday,” now is the time to take action.
If you pay taxes and own an old gas furnace, this year may be your last, best chance to earn a tax credit and save money. This year could be the end.
UPDATED July 15, 2025
As you may have heard, the “Big Beautiful Bill Act” did pass Congress and was signed into law on July 4, 2025.
This Bill terminates all of the home efficiency tax credits covered by IRS regulation 25C. After December 31, 2025, there will no longer be a tax credit for currently eligible space heating or hot water heat pumps. Nor will there be credits for electrical wiring, home audits, or energy-efficient doors and windows.
The Bill also terminates the solar tax credits currently covered under IRS 25D. After December 31, it will no longer be possible to claim a tax credit for solar panels, backup batteries, or solar installation costs.
Federal electric vehicle (EV) tax credits will be terminated for most vehicles purchased after September 30, 2025. This includes credits for new and used EVs, as well as commercial vehicles and home charging station installations.
For the foreseeable future, this Bill will end our opportunity to benefit from these tax credits. Use it or Lose it in 2025….
About Your Pocketbook…
Our economic analysis shows that many Ashland households can save money by installing a heat pump replacement. Heat pumps often cost a bit more to install than gas furnace equivalents. But this up-front cost advantage for gas can be largely offset by the $2,000 tax credit combined with the $900 Ashland Electric incentive.
Also, for many Ashland households, electric bills for operating a heat pump will be cheaper than gas. Electricity bills will go up, and gas bills will go down.
If you’re heating rooms with electric baseboards or other resistance electric heaters, then switching to a heat pump is guaranteed to reduce your electric bills. Energy Star rated heat pumps are at least three times more efficient than resistance heaters. Operating savings are also guaranteed if you switch to a heat pump water heater.
Why Bother?
For one thing, heat pumps provide both heating and cooling. A gas furnace or electric baseboard can only heat. If you don’t already have air conditioning or your air conditioner is old then installing a heat pump now is also a smart move —especially if you do it before the hot summer months.
Finally, did we mention that heat pumps produce virtually no air pollution?
A typical gas furnace spews at least 20 tons of carbon dioxide into the air over its lifetime. It also leaks methane every time it ignites. This super pollutant traps 80 times as much heat in our airshed as carbon dioxide in the short term. Heat pumps, meanwhile, run only on electricity, which in Ashland overwhelmingly comes from carbon-free sources (primarily hydroelectric).
You can find details of our Heat Pump Cost Payback economic analysis. Find Rogue Valley heat pump installers that we trust.
Last but not least, if you would like a free home assessment from one of our volunteer energy coaches, please fill out our signup form. It will only take a minute of your time. We promise.