If you’ve been waiting to replace your aging air conditioner or upgrade to a high-efficiency heat pump, you’ve probably heard the bad news. The Federal HVAC Tax Credit, formally the Section 25C Energy Efficient Home Improvement Credit, is no longer available for systems installed in 2026.

For nearly a decade, that credit helped Prescott Valley homeowners offset thousands of dollars on qualifying equipment. Now that it’s gone, the math and strategy have shifted.

Fiscor Plumbing and Air has helped homeowners in Prescott Valley and Northern Arizona navigate these transitions for over 20 years. Below is a practical breakdown of what changed, what didn’t, and how to still come out ahead this year.

What Actually Happened: The 25C Credit Sunset Explained

In July 2025, Congress passed the One Big Beautiful Bill Act (OBBBA), which set a hard expiration date for several residential energy-efficiency tax credits.

The Energy Efficient Home Improvement Credit (Section 25C) expired after December 31, 2025, and only equipment installed and placed in service on or before that date remained eligible. The companion Section 25D Residential Clean Energy Credit (which covered solar and battery storage) sunset on the same day.

The 25C credit previously covered 30% of installation costs (including labor) for qualifying HVAC equipment, with a yearly maximum of $2,000 for heat pumps and heat pump water heaters, and $600 for central air conditioners.

If your system was installed and placed in service on or before December 31, 2025, you can still claim the credit on your 2025 tax return filed in 2026. The deadline is based on the placed-in-service date, not the contract date. If you signed a contract in late 2025 but the equipment didn’t operate until January, the IRS considers it a 2026 install and ineligible.

For everything installed from January 1, 2026 onward, the federal tax incentive is, simply, zero.

What’s Still Available: The 2026 Savings Stack

The good news is that the federal credit was always one piece of a larger picture. Here’s what Prescott Valley homeowners can still tap.

1. APS Utility Rebates

Arizona Public Service operates a residential energy-efficiency rebate program that continues despite the federal sunset. APS reviews rebate amounts and qualifying equipment lists periodically. We strongly recommend confirming current rebate values directly with APS or your installer before signing a contract.

For income-qualified APS customers, there’s also an emergency AC replacement pathway tied to the utility’s Energy Support program. If you’re enrolled and your existing system fails, the program can offset a meaningful portion of replacement cost.

2. Efficiency Arizona (HEAR / HOMES Programs)

You can apply for the Home Electrification and Appliance Rebate (HEAR) and HOMES funds through the Efficiency Arizona portal. These are point-of-sale rebates, not tax credits, so the discount applies to your invoice immediately, rather than waiting for tax season.

Qualifying low- and moderate-income households may receive up to $8,000 for space heating and cooling heat pumps, up to $1,750 for heat pump water heaters, up to $4,000 for electric load service center (panel) upgrades, and up to $2,500 for wiring when installed in conjunction with qualified electrification work.

Eligibility is income-based and tied to your Area Median Income (AMI). Funds are limited and disbursed on a rolling basis, so timing matters.

3. Manufacturer Rebates and Seasonal Promotions

Major HVAC manufacturers we install, including BOSCH, Trane, Carrier, and Lennox, offer rotating consumer rebates throughout the year.

They offer seasonal rebates of $100 to $1,500 on qualifying systems, usually in spring and fall when installation demand is lower.

Spring (March to May) and fall (September to November) are the best times for manufacturer promotions. If you are not in an emergency, schedule your install during these periods to take advantage of utility rebate savings.

4. The Long-Term Efficiency Dividend

This is the savings stream that no policy can take away.

According to the U.S. Department of Energy, replacing a 10 to 15 year old central air conditioner with a modern ENERGY STAR-rated unit can reduce cooling-related energy use by 20% to 40%. (Source: DOE Energy Renovations Guide).

For a Prescott Valley home that runs cooling for six months out of the year, that’s real, recurring money, and it accrues every year for the 15-year service life of the equipment.

Long-term savings from a properly sized, high-SEER2 system often exceed the 25C credit. The credit accelerated savings, but efficiency delivers ongoing benefits.

5. Financing and Service Discounts That Actually Work for HVAC

One of the biggest mistakes homeowners make after losing the federal HVAC tax credit is delaying replacement until the system fails. In Arizona’s summer heat, waiting too long can cause emergencies, higher repair costs, and preventable energy waste.

Many homeowners now use service discounts and financing programs to upgrade while preserving cash flow.

We offer 100% financing on qualified installations. Often, the new monthly payment is lower than your current energy costs with an old system. See our specials and financing options for details.

When the Tax Credit Vanished, Financing Stepped In: A Real Customer Experience

This was exactly the path Bill Waldeck took when he reached out to us. Bill was replacing an aging forced-air heating and cooling unit, a full-system replacement that, in past years, would have relied heavily on the 25C credit to reduce upfront costs. With that federal subsidy gone, financing became the deciding factor.

Our team handled the changeout quickly and professionally, and what stood out in Bill’s review was the financing terms, which were quick, fair and transparent.

In his own words:

It was a “highly professional company with fast and reliable workers” that “offered financing at a good and fair price.”

Read his full Google review here.

That mix of speed, professionalism, and accessible financing is what homeowners need now, as savings come from the installer rather than the IRS.

What We Recommend Right Now

If you’re a Prescott Valley homeowner with an aging HVAC system, here is the practical sequence we suggest:

• Start with a load calculation to determine the correct equipment size and tier. A free in-home assessment shows exactly what your home needs.
• Check Efficiency Arizona eligibility: If your household income qualifies, the HEAR rebate can be substantial, often larger than the old 25C credit.
• Confirm current APS rebate values with your installer when you get a quote. Programs change.
• Schedule your install during a manufacturer promotion if you are not in emergency replacement mode. Spring and fall are usually the best times.
• Run the financing math: A 60- or 120-month financed install with reduced monthly utility costs often produces net-positive cash flow from month one.

The 25C credit gave Arizona homeowners a federal subsidy for choosing the most efficient equipment tier, which pays back over 15 years through lower utility bills. Without it, the temptation is to choose a cheaper, lower-tier unit.

That is almost always the wrong choice in our climate because the operating cost difference between a baseline unit and a higher-efficiency variable-capacity system can be several hundred dollars per cooling season. The federal credit is gone, but the Arizona heat remains.

Smart Upgrades Still Pay Off: Let Us Show You How

For more than 20 years, Fiscor Plumbing and Air has been Northern Arizona’s go-to HVAC partner. Our technicians are trained, certified, and up to date with Prescott Valley HVAC needs.

With the tax credit gone, you need an installer who can secure every remaining incentive, size your equipment correctly, and stand behind the work. We have done this for two decades, and it is our commitment to your home.

Call us today or schedule a free in-home assessment.

FAQs

Can I still claim the 25C credit if I installed my system in 2025?

Yes. If your HVAC system was installed and placed in service on or before December 31, 2025, you can claim the credit on your 2025 tax return when you file in 2026.

Are APS rebates available for any HVAC contractor?

No. To qualify for most APS rebates, the installation must be completed by an APS-approved contractor and meet APS efficiency standards. Fiscor maintains that approval.

Will the federal tax credit come back?

There is no current legislation reinstating Section 25C, and industry analysts do not expect a near-term return. Plan around the incentives that exist today rather than waiting for federal action.

Can I combine an APS rebate with a manufacturer rebate?

In most cases, yes, utility rebates and manufacturer promotions are typically stackable. Your installer should run the combined numbers before you commit.

Is financing a smart option if I can’t pay upfront?

The monthly payment on a financed high-efficiency unit is often offset (or exceeded) by the monthly utility savings, making the net cost lower than continuing to operate the old system.